The Job Export Machine

Date: Wednesday, July 23, 2003 10:27 PM

JOB DESTRUCTION NEWSLETTER

www.ZaZona.com

Early last year I attended a small gathering with Ralph Nader. I asked
him what his position on H-1B was. He explained that he was opposed to
all forms of worker exploitation including H-1B. Nader talked in detail
and exhibited a very thorough grasp of the issues.

Since then I haven't seen anything Nader has put down on paper opposing
H-1B so I was very happy to see this editorial. His remarkd concerning
outsourcing, H-1B, and L-1 are well worth reading.

http://www.nader.org/interest/070903.html

In the Public Interest

The Job Export Machine
July 9, 2003

In the past four decades, many millions of manufacturing jobs in this
country have been shipped overseas or to South America. This transfer
was supposed to be part of the "win-win" process of free trade. But 27
straight years of growing trade deficits with the rest of the world
makes one wonder: who's winning?

Conventional economists and their Republican and Democratic converts
try to cushion this job export machine by saying that the large
majority of jobs in this country are white collar not blue collar. The
implication is that white collar jobs are not as easy to export.

Well, welcome to the computerization age. U.S. companies are rushing
headlong to export computer programming work to countries like India
and Malaysia and now China where English-language proficiency and cheap
labor cut costs by more than two-thirds. Payroll processing, airline
passenger billings, insurance computer applications, new software
designs are only some of the labor that is done in foreign countries
for U.S. companies.

Last week's Computerworld magazine calls "Offshore's Rise" relentless.
By next year the article reports "Forty percent [of U.S. companies]
will have completed some kind of pilot program or will be using
nearshore or offshore services. IBM and Accenture Ltd were named as
firms pushing what the research firm, IDC, says is the dominant trend
in the Information Technology services industry. IDC adds that forty
two percent of the application management contracts now contain some
offshore component.

It is difficult to find any estimates regarding the total number of
American jobs displaced in this sector. But Gartner Inc. uses the
jargon "human resources outsourcing services" and puts a $46 billion
price tag on them for this year.

Moreover U.S. firms are opening subsidiaries in countries like India to
compete with Indian firms for outsourcing business. Accenture CEO Joe
W. Forehand is reported by Computerworld as comparing the trend to the
previous exodus from the U.S. of many manufacturing operations. "The
way we look at it, the industrialization of IT [information technology]
is a reality and we have to embrace that," he said.

IT has been in a bit of a slump, not to mention the rest of the
computer industry. So, when outsourcing is combined with massive
layoffs in this country and the continuing inflow of lower wage
computer technology workers under H-1B and L-1 work visas, it is not
surprising to see the gloom besetting American technology workers.

Unlike H-1B visas which are supposed to receive prevailing wages (but
often do not), the L-1 does not oblige employers to pay workers
prevailing wages and there is no cap on the number of these visas that
can be awarded foreign workers.

With over 500,000 workers in this country on "temporary" H-1B visas,
supposedly meeting a domestic dearth of skills, the L-1 visa workers
are supposed to be just transfers between subsidiaries and parent
companies. In fact, reports the New York Times, "They are now routinely
used by companies based in India and elsewhere to bring their workers
into the United States and then contract them out to American companies
-- in many instances to be replacement for American workers." The
number of workers replaced is unknown, according to the Times.

All this upsets the Organization of the Rights of American Workers, a
nonprofit group based in Meriden, Connecticut. Its president, John
Bauman, believes that a recovery in this industry will not bring back
the American jobs due to both outsourcing and these special visa
programs so strongly desiredby Silicon Valley companies.

When these concerns are raised to international economists, one of
their replies is "Don't you know what an extraordinary job machine is
the U.S. economy?" Well, it has lost 2.6 million jobs since February
2001. More important is that at least one third of our economy's full
time -- nearly 50 million workers -- do not earn a living wage! The
federal minimum wage, adjusted for inflation since 1968 would be around
$8 an hour. Instead, it has remained at $5.15 an hour, exerting a
downward pull on lower income wages generally.

Someday the pollyanna belief that the U.S. economy always replaces the
jobs it loses overseas with new jobs here, as we keep racing ahead of
other countries with modern technology and new or redundant services,
may run into a contrary riptide that no set of spurious statistics can
obscure.

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Rob Sanchez is board member of NAEA - www.NAEA.US

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