U.S. jobs jumping ship
U.S. jobs jumping ship
Date: Thursday, March 13, 2003 10:28 PM
H-1B and JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
Donna Bradley's plight is finally getting some publicity thanks to CNN.
We live fairly close to each other and have had many conversations
about the H-1B scandal. Donna told me several times that she is a not
going to go down without a fight, and vowed that she was going to get
her story in the news. CNN exposure to a national audience proves that
she definitely succeeded.
This is a bona-fide welfare-mother-to-working-mom story. Unfortunately
this story will have a sad ending if she is forced back to welfare.
Donna is jobless and on the verge of losing her home, and that is a
crime that our government bears responsibility for allowing. H-1B is
shutting her out of her career.
Donna's brother discusses some of his concerns with the article in a
letter that follows the CNN article. I also have some concerns although
overall the article does a better than average job of discussing many
aspects of outsourcing and the effects of worker displacement by using
H-1B.
I'm very disappointed that the reporter, Mark Gongloff, repeated the
industry propaganda that, "In the 1990s, it seemed all one had to do to
buy a ticket to Easy Street was learn a programming language or how to
manage corporate computer networks." It was probably easy for college
grads to get entry-level jobs, and there were a few that probably made
good salaries, but the 1990s were very tough for programmers that were
over the age of 40. Gongloff probably wouldn't have made such a
statement if he had spent some time at Norm Matloff's site
http://heather.cs.ucdavis.edu/itaa.real.html :
5.6 Shunned Even Though Possessing a ``Hot'' Skill
In many cases, even if an older programmer does have a ``hot''
skill, he/she still may find it difficult to get work. Bill
Halchin is a case in point. In the spring of 1998 Sun
Microsystems Vice President Ken Alvarez, who had been heavily
lobbying Congress for an increase in the yearly H-1B quota,
stated that he needed to hire H-1Bs for operating system
kernel development because he could not find American
programmers in that field. Halchin, who had nearly 20 years
of kernel experience, with a resume reading like a Who's
Who of industry firms, applied to Sun. He did not even get
an interview. After four months of unemployment, he finally
found a programming position at another firm.
Halchin had a similar experience in the spring of 1999 with
Ecutel of Alexandria.
Gongloff made another common mistake when interpreting the Forrester
Research that ostensibly claims that offshore workers do better quality
work than US workers. That statement by Forrester was based on an
opinion survey of company spokespeople. Companies use the skill issue
as a pretext to justify their abandonment of American workers. Cost
reduction is their only rationale but they prefer to denigrate their
American workers by kicking them in the face while they are mortally
wounded.
Gongloff said, "Bradley's experience is not yet the norm in this
country." I don't know how he came to that conclusion because I live in
the same area and can't find employment either. Letters arrive at
ZaZona.com from all over the country with similar stories of despair.
His implication that Donna isn't "the norm" is very patronizing even if
he didn't mean to be. Too many people are reporting similar experiences
to deny that finding a job in high-tech is rapidly becoming hopeless.
I would suggest he read some "Horror Stories" at:
http://www.zazona.com/shameh1b/Horror.htm
Donna interviewed for a job that pays between $30 and $35 an hour when
she used to make $45 an hour. Unfortunately there was nothing mentioned
of the countless times that Donna couldn't get interviews. The company
with the $30 an hour job didn't hire her even though she would be
taking a significant pay cut. More emphasis should have been put on
Donna's arduous job search and it's surprising that no mention was made
that H-1B is one of the major reasons that she can't find a good job.
Donna understands that the influx of H-1Bs into the Phoenix area has
glutted the job market - and she explained that to Gongloff.
I asked Donna if she would take a job for $30 an hour so that she could
keep her house and of course she said she would. Unfortunately
companies won't give her that option. My experience parallels Donna's -
salaries are rarely an issue because companies in the Phoenix area
aren't interested in interviewing.
US professionals are being forced into accepting salaries that are
rapidly spiraling downward. Societal problems will occur if the
corporate globalists are allowed to pit the American middle class
against workers in third world countries. Gongloff implied that Donna
was caught in this trap but he could have spent just a little more
space discussing the human issues involved. Donna Bradley was a welfare
mother of five children that was assured that if she sacrificed and got
a high tech education she could get off welfare and live the American
dream. Her career in IT lasted about 15 years and now may be over
because politicians like Sen. John McCain proudly co-sponsored H-1B.
http://www.zazona.com/shameh1b/Library/Politicians/McCain.htm
http://money.cnn.com/2003/03/13/news/economy/jobs_offshore/index.htm
U.S. jobs jumping ship
Cheap offshore labor is not just for manufacturing any more -- is your
job heading overseas, too?
March 13, 2003: 3:50 PM EST
By Mark Gongloff, CNN/Money Staff Writer
NEW YORK (CNN/Money) - As painful as February's big job cuts were,
what's even more painful is that many of those jobs are never coming
back, as U.S. employers in a wide range of industries move more and
more jobs overseas.
That's old news for manufacturers, who have been cutting jobs and
moving them offshore for decades, but it's a trend that's also starting
to gather steam in a number of service industries, especially
information technology, formerly one of America's best-paying
industries.
"By 2004, more than 80 percent of U.S. executive boardrooms will have
discussed offshore sourcing, and more than 40 percent of U.S.
enterprises will have completed some type of pilot or will be sourcing
IT (information technology) services," Gartner Inc. (IT: Research,
Estimates), a technology consulting firm, said in a study late last
year.
U.S. businesses, battered by a three-year bear market in stocks and an
economy that can't seem to find its footing, are developing a taste for
super-cheap overseas labor in developing countries, where workers are
increasingly better-trained, especially if they've spent significant
time working in the United States on temporary visas.
A recent survey of 145 U.S. companies by consultant Forrester Research
found that 88 percent of the firms that look overseas for services
claimed to get better value for their money offshore than from U.S.
providers, while 71 percent said offshore workers did better quality
work.
That's news that can't stay quiet for long, and companies like
Microsoft (MSFT: Research, Estimates), Intel (INTC: Research,
Estimates) and CNN/Money parent company AOL Time Warner (AOL: Research,
Estimates) already are responding.
"Over the next 15 years, 3.3 million U.S. service industry jobs and
$136 billion in wages will move offshore to countries like India,
Russia, China and the Philippines," Forrester analyst John McCarthy
predicted in a report last year. "The IT industry will lead the initial
overseas exodus."
What spending slump?
While tech spending by U.S. businesses has been underwater since the
tech bubble of the late 1990s popped in 2000, countries such as India,
China, Ireland, Israel and the Philippines all are experiencing a boom
in exporting IT services.
"Analysts who predicted India's software exports to the United States
would drop on account of shrinking IT spending in that country were
surprised to see exports actually rise to this region," the National
Association of Software and Services Company, an IT industry
association in India, said recently.
NASSCOM predicts that the Indian "business process outsourcing"
industry -- a narrow category that includes customer-support call
centers -- will export $21 billion to $24 billion worth of services by
2008 and employ more than 1.1 million Indian workers.
Those workers -- in one narrow segment of the outsourcing industry in
just one country -- would replace about 1 million U.S. workers,
according to consulting firm Gartner.
"This is not counting the offshore services provided by other countries
such as the Philippines, Ireland and Jamaica, or the other IT services
that are likely to [use] offshore resources," a Gartner study said.
"The scale of job migration potential is quite significant."
To be sure, these countries all compete with each other for business --
in its 2002 annual report, Indian outsourcing firm Wipro Ltd. (WIT:
Research, Estimates) warned "wage increases in India may prevent us
from sustaining [our] competitive advantage and may" hurt profits --
but they all provide cheaper labor than the United States.
The Contact Center Association of the Philippines, an industry group
for suppliers of customer support call centers, boasts that Filipino
workers' salaries are just a quarter to a fifth of those in the United
States, with programmers earning $250 to $700 a month, compared with
$1,600 to $3,600 in the U.S., and project managers making $700 to
$1,150 a month, compared with $3,600 to $7,100.
Irresistibly lured by such rock-bottom costs, a wide array of companies
-- including Microsoft, Intel, Citigroup (C: Research, Estimates),
Hewlett-Packard (HPQ: Research, Estimates), Procter & Gamble (PG:
Research, Estimates), AT&T (T: Research, Estimates) and AIG (AIG:
Research, Estimates) -- all have turned to Filipino companies for call
center and other IT services.
In one call center in Pampanga province, 850 Filipinos answer customer
service calls for Internet service provider America Online, a member of
the AOL Time Warner family.
Broader impact still distant
Most economists believe the offshore outsourcing trend is not
substantial enough yet to have a big impact on the broader U.S. economy
-- imports of business services account for less than 1/20 of 1 percent
of gross domestic product, the broadest measure of the nation's
economy.
But economists are starting to take note of the trend.
"If it's not a big story yet, it could become one," said Josh Bivens, a
labor economist at the Economic Policy Institute, a Washington think
tank that focuses on labor issues.
At the least, it's not making the weak job market in the United States
any better. Employers cut 321,000 jobs in February, bringing employment
outside the farm sector down to 109.2 million, the Labor Department
reported last week, ringing alarm bells about the health of the U.S.
economy.
Nearly 8.5 million people are unemployed, which gives workers who do
have jobs less leverage when asking for a raise; as a result, wage and
salary growth has begun to slow, and that in turn is threatening
consumer spending, which fuels more than two-thirds of the economy.
IT workers feel the pain
In few areas has the competition for jobs had a bigger impact on wage
growth than in the IT industry. In the 1990s, it seemed all one had to
do to buy a ticket to Easy Street was learn a programming language or
how to manage corporate computer networks.
Those good old days are long gone, with unemployment rising, IT
spending in a deep slump and software services moving offshore.
What's more, some IT professionals and immigrant groups complain that
U.S. employers manipulate the H-1B visa system, which allows
college-educated people from overseas to work in the United States for
up to six years. They're supposed to be paid a "prevailing wage," but
many employers pay them as little as possible. With such cheap labor
available right here in the United States, there's even less reason for
IT wages to rise.
"I talked about salary with a company last week, and they were paying
between $30 and $35 an hour," said Donna Bradley, an IT specialist in
Mesa, Ariz., who's been out of work since August 2002. "In August I was
making $45 an hour."
It didn't matter; Bradley, 49, didn't get the job and is selling her
house and moving to Maryland to live with her daughter while she
continues to look for work.
"The irony is that I was a single mother, and I raised five kids by
myself and put myself through school," Bradley said. "I bought my first
house in 1999 -- that was a very big deal for me -- and now I have to
sell it, only because they won't hire Americans. It's devastating."
Still, Bradley's experience is not yet the norm in this country. Many
firms have found that there are difficulties -- including the risk of
inspiring anger among their U.S. workers -- in moving white-collar jobs
offshore. For that reason, most U.S. companies are still just dipping
their toes in the water.
"We saw this in manufacturing -- firms started off slow and stayed
close to home," said labor economist Heather Boushey of the Center for
Economic and Policy Research, another Washington think tank. "But then
it hit a 'moment,' and many more firms started doing it because it
became impossible to compete without workers overseas.
"We're not there yet in the non-manufacturing sector, by any stretch of
the imagination," she said.
Mr. Gongloff,
First, I'd like to thank you for your article on the outsourcing that
is currently taking place in the IT industry. I am concerned that most
Americans, thinking this "only" affects highly paid IT workers, are
missing the point of the long-term impact of this corporate behavior.
The impact to taxes collected on the federal, state and local level
will be quite drastic
in the future. The impact to America's consumer economic engine will be
devastating.
Donna Bradley is my sister. I've been in the IT business myself for
over 25 years. When she was on welfare, I encouraged her to pursue IT
as a career because IT seemed like a sensible solution to her financial
and emotional situation. I'm sad to say that I was wrong. I console
myself with the knowledge that organizations like the Gartner Group who
were also touting
IT as the 'field of dreams' have proven to be just as wrong. It is a
very small consolation.
I find myself in a similar situation as my sister and thousands of
other IT folks. I am a consultant also.Two years ago I brought a team
of 6 (six) IT workers to do an outsourcing contract at a Hartford CT
based insurance company owned by Citigroup. Since that time, our team
has made many improvements in the processes that were in place at our
client's site and
have received very favorable reviews for our work from the management
that brought us in for this task.
However, the situation has changed recently. Citigroup has greatly
expanded its relationship with InfoSys, the Indian outsourcing company.
Citigroup's stated position was clear at a recent employee meeting
where it was announced that all outside contractors would be replaced
with InfoSys personnel. What this means is that my team of folks have
now been asked to train the InfoSys folks to do the job we have been
doing for the past two years, despite the apparent satisfaction with
our contract fulfillment. We even offered to match the rates InfoSys
was providing in order to retain our workers but Citigroup would not
entertain the idea.
Mr. Gongloff, please recognize that I understand the corporate desire
to reduce costs but IT jobs are not the only jobs that can be done
cheaper and they will certainly not be the last to be replaced. They
just represent the first tier of jobs with a cost payoff that can be
replaced with cheaper labor overseas.UTC is in the process of and has
already made significant
progress in transferring Engineering work overseas.
The United States is a very small country when compared to the total
population of India, China, Russia, the Philippines and other populous
third world countries where workers rights, environmental concerns and
pay scales differ dramatically from our own. Almost every job in
America (including yours) is potentially at risk because of the
seductive lure of a disparity in wages and other job place limitations
we have in the U.S. that are lacking in these countries. The
industrialized countries of Europe and Japan will suffer the same fate
as the U.S. as well in time.
These limitations are in place in the U.S. because we fancy ourselves
to be a 'good' and 'righteous' people.We protect those who, as
individuals, can not protect themselves. For us to allow our corporate
execs to abandon these principles just for a quick buck for themselves
is wrong and maybe should even be made criminal. This outsourcing trend
is truly the biggest
threat to our long-term national security and quite likely an even
bigger threat to our long-term survival as a nation.
It won't matter a twit if we catch Osama or depose Sadam if most
Americans are out of work and unable to finance the activities of this
country through our tax base because of the lower rate of pay that will
be created. The displacement of workers that a continued expansion of
outsourcing will have on our economy cannot be underestimated. L1 and
H1B visa programs are allowing IT worker, engineers, nurses and even
hairdressers to be replaced by 'cheaper' workers already.
These programs are not limited to these fields. No field is safe. It is
no accident that the corporate executives making these decisions hail
these offshore workers as 'better'. I don't know of too many exec's
that believe they are making a wrong decision while they are
implementing it or any execs that will stop such actions if any sign of
success can be shown. The financials ARE compelling.
Destruction of our economic way of life is the eventual goal of
terrorists. I'd hate to think they will just sit back while we do it to
ourselves or let Americas corporations do it for them .
I hope you recognize the seriousness of this threat and that you will
use your voice to make others aware of this very real attack upon our
shared American lifestyle. Thank your for your time.
Steve Hultgren
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