Your Job May Be Next!|
William F. Jasper
The New American, March 10, 2003
Millions of U.S. jobs, as well as thousands of independent businesses, face extinction under policies that favor importing cheap labor and exporting production.
The mood in the conference room was light and festive. It was just two weeks before Christmas 2002 and many of the 300 or so Dell employees were getting set for the holidays and year-end vacation time as they gathered at Dell’s campus in Austin, Texas, for a “town hall” meeting. They were ill prepared for the message that senior vice president Jeff Clarke was about to deliver. Meetings of this sort were usually big on awards, recognition, and introductions of new products and project teams. And despite the market drubbing of tech stocks in general, Dell had posted another banner year in sales, growth, and profits. The company also benefitted from a nice cash balance, Mr. Clarke noted. Then came the bad news. The company was announcing new personnel “attrition goals” of 10 percent per year, about double the normal attrition rate. These positions would not be filled in the United States, Clarke explained. They would be filled by new hires in India, China, and other countries where Dell is shifting business.
Audible gasps came from the employee audience, a hi-tech assemblage of Dell software engineers, electrical engineers, test engineers, group managers, and administrative talent. A Dell employee who attended the meeting told The New American: “A definite pall came over the crowd. It did not make for a happy Christmas.”
Although Clarke’s announcement came as a shock, there had been hints of an impending axe-fall. In 2000, Dell had announced the launching of its China Design Centre in the People’s Republic of China (PRC). A steady trickle of Red Chinese engineers, project planners, and managers had been brought to Dell’s Austin campus for training, and some U.S. Dell employees had made the trek to China for four-to-six-month stints to train Chinese personnel there. Around the Dell headquarters in Austin, employees had begun wryly referring to the “Chinese invasion” as “training our replacements.” Few expected that the replacing would start so soon.
Dell’s sparkling new China Design Centre in Shanghai joins similar research and design centers in China, Russia, and India built by Microsoft, Motorola, Boeing, General Electric, and other corporate titans. The hi-tech centers are a distinctly new development, in contrast to the huge number of foreign manufacturing plants — especially in Mexico and China — built by U.S. companies over the past couple of decades. These early rounds of “globalization” cost millions of U.S. jobs, but various experts assured us that this should not concern us because these were blue collar “rust belt” jobs. Old technology, they claimed. Manufacturing is passé, they said. The U.S. would enter the new global economy with the new technology. Information, services, cutting-edge research and development — these would be the clean, high-paying jobs that would keep America on top.
But guess what? After years of strip-mining America’s industrial base, U.S. corporate elitists and their political allies in Washington, D.C., Beijing, Mexico, Moscow, and elsewhere are now looking to dispense with upscale white collar jobs as well. College grads who obtained degrees in computer science and engineering are finding themselves replaced by Third World counterparts willing to work for 20-50 percent less pay. In corporate globalese this replacement process is euphemistically called “outsourcing.” Adding insult to injury, many of the replacement foreign workers received tax-subsidized educations in U.S. universities.
According to Business Week:
In a recent PowerPoint presentation, Microsoft Corp. Senior Vice-President Brian Valentine — the No. 2 exec in the company’s Windows unit — urged managers to “pick something to move offshore today.” In India, said the briefing, you can get “quality work at 50% to 60% of the cost. That’s two heads for the price of one.”
The same issue of Business Week offered this glib forecast:
Now, all kinds of knowledge work can be done almost anywhere. “You will see an explosion of work going overseas,” says Forrester Research Inc. analyst John C. McCarthy. He goes so far as to predict at least 3.3 million white-collar jobs and $136 billion in wages will shift from the U.S. to low-cost countries by 2015.
This is a massive shift that bespeaks far more than the number of jobs and the billions of dollars on the bottom line. It concerns the critical competitive edge that the U.S. has enjoyed due to our innovation and technological leadership. That competitive edge is disappearing. It is being given away — to our competitors and even to our avowed enemies. The Business Week quotes above came from the magazine’s extraordinary February 3rd cover story, which ran under the alarming heading, “Is Your Job Next?” This was followed by a long cover subtitle: “The next round of globalization is sending upscale jobs offshore. They include basic research, chip design, engineering — even financial analysis. Can America lose these jobs and still prosper?”
The very obvious answer to Business Week’s question is a resounding no! These hi-tech jobs are not luxuries that we can allow to be nonchalantly discarded. They are critically important, as are many of the low-tech jobs exported to foreign lands in recent years. Manufacturing does matter. It is essential to a strong national economy, especially for a world power like the United States with sizeable defense imperatives. We will have little hope of prosperity if we allow our nation to depend on competitors or outright adversaries for basic parts, supplies, technologies, and resources. America needs a solid base of the “old,” ”dirty” industries of mining, metallurgy, oil, coal, timber, steel, agriculture, and manufacturing, not only for prosperity, but for survival. All of our hi-tech advantages on the virtual battlefield will quickly prove a hollow reed if we do not have the means to produce arms, munitions, equipment, transportation, food, and clothing for our forces on the real battlefield.
Under the vaunted “globalization” process, some indeed are prospering and will continue to prosper. But only an elite few. America’s middle class is being squeezed and is in danger of being wiped out. If the process is permitted to continue, we will be reduced to a nation of peons ruled by a political-corporate elite indistinguishable from their socialist counterparts in China. In that tragic land, the privileged ruling class, the Communist Party’s nomenklatura, live in regal splendor while the toiling masses grovel in wretched servitude.
Don’t Worry, Be Happy
Incredibly, Business Week (BW) answers its own question by suggesting that the predicted hi-tech job hemorrhage — already underway — may benefit the U.S.! “By spurring economic development in nations such as India,” BW avers, “U.S. companies will have bigger foreign markets for their goods and services.” How so? The same promises were made regarding low-tech jobs for the “China market.” But we have found after three decades of “spurring economic development” in China that the PRC allows few of our products to reach Chinese markets. Each month China erodes more of our economic infrastructure and job base with cheap goods produced by slave labor and new factories subsidized by loans, credits, and guarantees from the U.S. government, the World Bank, and the International Monetary Fund. As Dr. Roger Canfield, author of the new book China’s Trojan Horses, told The New American, “Our largest export to Red China is empty cargo containers and American jobs. Beijing turns around and sends those containers back to us with slave-labor-produced goods that continuously undercut more and more American-based businesses and our nation’s security. For every dollar that we make from exports to China, we spend six dollars on imports from China. China’s Communist government then uses this huge cash windfall as a strategic weapon to bribe our politicians and businessmen, buy military hardware, and obtain critical technologies and long-term productive assets that will continue to widen the trade gap — while we get consumables.” India is following much the same pattern.
Nevertheless, as Business Week notes, “Intel Inc. and Texas Instruments Inc. are furiously hiring Indian and Chinese engineers,” as are many other U.S. companies. According to that magazine voice of the Establishment corporate community, this trend should not alarm us since “a case can be made that the U.S. will see a net gain from this shift — as with previous globalization waves.” “In the 1990s,” BW continued, “Corporate America had to import hundreds of thousands of immigrants to ease engineering shortages. Now, by sending routine service and engineering tasks to nations with a surplus of educated workers, the U.S. labor force and capital can be redeployed to higher-value industries and cutting-edge R&D.”
Business Week is being intentionally deceptive here on several points. First, there was never any “engineering shortage” in the U.S. to necessitate importing foreign engineers. In fact, with the downsizing of the U.S. military and layoffs from the defense contractors and aerospace industries, there was a huge domestic surplus of qualified engineers, programmers, and other technical specialists to supply corporate America’s needs. But not at the Third World wages sought by the corporate elitists. So the corporate lobbyists prevailed on Congress and President George Bush (the elder) to pass legislation in 1990 creating the special H-1B visa program allowing a flood of alien hi-tech workers into the U.S. According to figures compiled by eWEEK, the number of H-1B visas granted annually hit an all-time high of 355,605 in 2000. Since then the number has been capped at 195,000 visas annually. The H-1B program has already handed between 800,000 and one million hi-tech jobs to these foreign workers, many of whom are far less qualified than American engineers, programmers, and technicians forced to take lower-paying positions.
Dr. Norman Matloff, professor of computer science at the University of California at Davis, points out that “Microsoft only hires 2% of its applicants for software positions,” and that this rate is typical in the industry. “Software employers, large or small, across the nation, concede that they receive huge numbers of résumés but reject most of them without even an interview,” says Matloff. “One does not have to be a ‘techie’ to see the contradiction here. A 2% hiring rate might be unremarkable in other fields, but not in one in which there is supposed to be a ‘desperate’ labor shortage. If employers were that desperate, they would certainly not be hiring just a minuscule fraction of their job applicants.” The real reason for importing workers under H-1B is the same one used to justify exporting jobs to outsource workers overseas: to avoid paying realistic salaries to U.S. hi-tech workers. As Forbes magazine noted: “Indian programmers working in the U.S. on temporary H-1B visas typically earn 25% to 30% less than their naturalized colleagues.” The Wall Street Journal likewise, was stating the obvious when it reported that “recruiting foreign talent is cheaper than hiring Americans.”
The H-1B workers officially are not immigrants; they are “temporary” workers. However, like the desperate engineer shortage, this too is a fraud. When the H-1B legislation was passed in 1990, industry lobbyists said it was a temporary fix only necessary for a few years. However, in the year 2000, after the H-1B was renewed, Texas Instruments and other hi-tech firms said that they would need H-1B for “the next 20 years.” Moreover, like every other visa category (student, tourist, business, etc.), H-1B workers know that the Immigration and Naturalization Service rarely enforces the policy. Many H-1Bs leave the jobs they used to enter the U.S. and melt into the population, the same as other illegal aliens.
The displaced American hi-tech workers have organized some effective campaigns causing Congress to feel some heat. The tech industry and the H-1B lobbyists are concerned that the present economic climate may help this politically savvy domestic labor force prevail. The H-1B program may go down the tubes this year. Thus, many tech firms have already been ramping up an alternative route for foreign workers through the little-known L1 visa program.
As reported recently in eWEEK, “the L1 visa has clear advantages for employers.” “Technically,” eWEEK’s Lisa Vaas reported in a January 6th article, “the L1 is an intra-company transfer visa that allows U.S. companies to import employees from foreign subsidiaries, affiliates or parent companies. One big plus for the L1 — at least in the eyes of employers — is that there’s no limit on the number that can be issued each year.” Another advantage Vaas points out is that the L1 can be used to import large numbers of workers at one time. She reports that the number of L1 visas granted climbed from 112,124 in 1995 to 294,658 in 2000. And its use appears to be going up. Software company Wipro Technologies, a Bangalore, India, division of Wipro Ltd., exemplifies why this is so. eWEEK reports that “according to Laxman Badiga, chief executive of talent transformation and external relations at Wipro, the company can get L1 visa applications approved four to eight weeks faster than it takes to process an H-1B visa.”
Wipro figures prominently not only in the H-1B and L1 import game; it is also a major player in exporting or “outsourcing” U.S. “information technology” (IT) jobs. As a major partner of Lucent Technologies, Inc., Wipro’s India-based software engineers are replacing many of Lucent’s U.S. employees. In the sprawling office complexes of Wipro’s various subsidiaries throughout India, thousands of hi-tech IT workers process information and handle work once done by Americans. Wipro IT workers, for instance, process insurance claims for major U.S. corporations, sift research for pharmaceutical companies, and handle customer service telephone calls long distance from the U.S. for banks, credit card companies, and Internet providers. Other Indian giants such as Tata Consultancy Services and Infosys Technologies provide similar services to corporate America. If the person answering the 800 customer service line for your American Express card, your Citibank statement, your Dell computer tech support, or your CompUSA service contract talks with a heavy Indian accent, it’s likely because he or she is an Indian and is speaking to you from Bangalore, India, if not from a H-1B “temporary” office in the U.S.
Pink Slips Made in the U.S.A.
America’s white collar work force is facing the same twin battering rams of imported cheap labor and exported production that have ravaged our country’s blue collar work force for years. Millions of American jobs in basic resource industries as well as manufacturing, residential and commercial construction, food processing, textiles, hotel and restaurant services, landscaping, nursing, and health care have gone to alien workers (both legal and illegal) here in this country, while millions more jobs have been outsourced to foreign lands. It has become a familiar, bitter story in cities, towns, and communities across the country, as layoffs are announced, pink slips are issued, and factories are closed down. The jobs often reappear at new factories in Mexico, Indonesia, India, China, and dozens of other countries. But the jobs in those factories don’t go to U.S. workers, of course. The blue collar job drain has not let up; many more companies will move off-shore in coming years, or simply sell out to foreign corporations or larger U.S. companies that have already set up operations overseas.
Bob Davis, general manager of Modern Die Systems Inc. of Elwood, Indiana, has been watching this development for years with a mixture of alarm, sadness, and disgust. “Our government has set it up so that it is unprofitable to manufacture here in the U.S.” he told The New American. Mr. Davis noted the tremendous disincentives to production posed by taxes, regulations, employee medical insurance, and labor union obstruction — the combined effects of which are driving many businesses into the ground, or out of the country. Occupying a hi-tech niche in the tool-and-die business, Modern Die Systems has managed to keep going, but it has had to cut its work force by about half of what it was several years ago. The company used to be very busy producing stamping dies for the automotive, appliance, electrical, recreational, heating and air conditioning, and defense industries. But, as Mr. Davis noted, “Much of my business has gone to Mexico.” So have many area employers.
Dan Neuendorf, the company’s president, told The New American about an example that typifies the dire situation he and other manufacturers face. “One of our customers in Indiana asked us to give him a quote on some metal stamping dies,” he said. “We quoted a price that was as low as we possibly could go and still make any profit. But they could get it for one-fifth of our price from Red China.”
Bob Davis said, “I told the customer that there is no way that we could match that price, but that it would be unfair and immoral for me to ask free men to work for the same wages as slaves. The company’s owners are patriotic, Christian men, and they agreed that since they didn’t need it right away they could let us produce it as fill-in work, according to our schedule, so that we could keep the cost down.” But not all stories turn out so happily. Under tremendous pressure to cut prices, thousands of businesses opt for cheaper imported labor and/or foreign production facilities. Mr. Davis lists some of the recent losses. RCA has closed or drastically reduced its plants in Bloomington, Indianapolis, and Marion, laying off thousands. Lau Corp. of Indianapolis, a heating, ventilation, and air conditioning manufacturer, is moving assembly lines to Mexico. So is Revcor, a Carpenterville, Illinois-based producer of air conditioning fans and blower wheels. Huffy Bicycle, located in Celina, Ohio, is all but out of business, thanks to pressures from China and Mexico. Then there is the recent sale of Indianapolis-based Magnequench Inc. to China, eliminating around 400 jobs. But the Magnequench deal involves far more than jobs; it involves the sale of very sophisticated technology used to produce critical parts for smart bombs (see the article on page 17).
What is especially galling to Bob Davis is that ongoing government policies favor these trends that are killing the goose that laid the golden egg. “Our country’s entire production capability will be stripped bare if this continues,” he says. “And with it will go all of the jobs and small and medium-sized independent businesses that are the bedrock of the American middle class.”