Archives @ S.O
Posted 7/30/2003 in Miscellaneous
Slumping Over the Border

A few years ago, kids without college degrees were pulling in large salaries playing around with computers. It was good enough for their employers, as long as the techs knew their stuff. But American industries don't really trust people without degrees and years of experience under their belts. It's no wonder that when the chance arose to hire degreed employees on the cheap, ailing tech firms jumped into India with both feet.

But, given the fact that so many Silicon Valley start-ups lost everything (even their fancy chairs) in the late nineties, shouldn't American tech workers still be able to compete? After all, with each collapse more and more technology workers were being turned out on the streets, which should have made their individual bargaining power grow weaker and weaker. Prospective employees aren't likely to drive a hard bargain when the odds of getting a job at all go against them.

Part of the reason for this was the overwhelming number of independent contractors. Why tie themselves down to one company? they thought to themselves. Direct employment was a laughable concept during the high point of the tech bubble. It was for chumps who didn't have balls to sell themselves.

What contractors came to discover was that, much to their surprise, they were expendable. It was only the bizarre set of circumstances fostered by the tech boom that allowed them to temporarily flip the concept of "contract workers" on its head. Initially, independent contracting was a tool that employers used to avoid having to waste money on benefits for employees from whom loyalty was not a required trait. Like the casual sexual relationships of the sixties and seventies, what once seemed like the last word in freedom became a precarious and somewhat risky lifestyle, after the bloom left the rose.

Contractors are still out there, of course. But many of their jobs were cancelled after companies realized that they could hire full time employees at a lower cost. Better still, many of these were salaried positions for which they weren't obliged to pay overtime.

Late in the technology bubble, companies realized that while they might be able to run their own networks more cheaply in-house, contracting was still a good idea - only for lower tier positions. Call center workers (technical support and customer service, for example) were never really part of the "tech worker" tribe. All it takes, in most cases, to run an adequate technical support operation is a good set of flow charts; why not have your former consultants whip up a few and hand them out to a huge, almost completely unskilled workforce?

While you're at it, why not let another company worry about hiring, firing, training, and other human resource time wasters? Let them do all the tedious, time consuming work and ship the results to your call center when they've finished. Now that some of the wage pressure was off, this seemed like the next logical step. American tech workers keep getting cheaper and cheaper to employ.

But not cheap enough, it seems.

While not as whiney as the labor forces of other nations, Americans can complain pretty loudly. Worse still, for employers at least, are all those inconvenient laws which exist to protect their workers. The Americans with Disabilities Act and the Family Medical Leave Act require employers to give costly considerations to their employees. These costs are inherent in the system; not much can be done to defray them. How much simpler it is to just leave these annoying regulations behind and move on to greener (we're talking about mean green) pastures.

At one time the cost to move certain jobs overseas was greater than employing a governmentally protect workforce. Now, with huge advances in telecommunications (the very ones that created a class of over-paid technical prima-donnas) it's quite reasonable to have people in Southeast Asia take calls and program software for American companies. This was bound to happen, just as it did for manufacturing jobs. When the cost of transporting manufactured goods to the U.S. from Asia became cheap enough, industry jumped at the chance to do just that.

Given the globalization of the world economy, this tactic is as inevitable as capitalism itself. Under this new axiom of labor markets, you can bet that, given enough time, you job will move to another country. The second they figure out an efficient way to do it, corporations wouldn't think twice about sending any job far away from American shores (God help us if they can manage that with supermarket checkers and baristas).

Why India? Why Korea and other parts of Southeast Asia? Well, jobs seem to be flowing only one way - from nations with lots of worker's rights legislation to nations with relatively little. The same thing happened in the manufacturing sector; the difference here is that the countries benefiting from an influx of tech jobs have very good public schooling systems (at least where their middle classes are concerned).

It costs a hell of a lot of money to get a college degree in the U.S. Not so in India. Little wonder then that companies aren't really interested in dealing with people trying to recoup their exorbitant educational expenses unless they really have to.

Companies need to drive costs down to compete. If they drive them down a little, they can lower prices and move more product. If they drive them down a lot they can lower prices and increase profits. No company in its right mind (that is, serving its shareholders) would think about forgoing the latter option, just to keep jobs in a particularly expensive country.

So, to answer the question posed at the beginning of this column: American workers are hampered by the very laws created to protect them; by the expensive educational system which educates them; by the technologies which once made them valuable; by the stock market pressures that they rely on for their retirements; and, the least talked about reason of all: The utter lack of patriotism on the part of our nation's corporate citizens.



-B. C. Silvia