Offshoring of High-Tech and Professional Jobs
What is "Offshoring?"
It used to be that a company or government-agency hired employees to do the work that needed to be done. In turn, those employees used the money they earned to buy products, pay taxes, and build a better life for themselves and their children.
Then employers found they could cut costs and increase profits by "outsourcing" work to sub-contractors whose non-union workers were paid minimum-wages with no benefits. They claimed such outsourcing was necessary to be competitive and would result in less expensive goods and lower taxes. But mostly it resulted in bigger corporate profits and higher pay for CEOs.
Yet in the U.S. even minimum-wage workers are protected by some wage, hour, health, and safety regulations -- weak though they may be. And the minimum wage in America is still much higher than the going rates in low-wage nations like China, India, Russia, and so on. So many corporations and government agencies began "offshoring" to sweat-shop nations overseas the manufacturing production that used to be done here.
Now, with the advent of advanced communications and computer technology, offshoring is being extended to white-collar and professional-level occupations. In the last few years, "information-based" jobs that once provided a decent middle-class living for millions of Americans are being moved overseas, and the move offshore is rapidly accelerating. Recent studies predict that as many as 3.4 million such jobs will be offshored in the coming decade.
The high-technology sector is particularly vulnerable to offshoring, and this includes the jobs and projects of business and technical writers. For example:
- A recent survey found that 86% of corporate executives expect to send more technology jobs abroad in the next year, compared with 32% two years ago.
- The Gartner Group estimates that 10 percent of all U.S. technology jobs will be moved offshore by 2005, and that up to 25 percent of traditional information technology jobs will be relocated from developed to developing countries by 2010.
- According to the Information Technology Association of America (ITAA) programming/software-engineering job are the most likely to go overseas (67 percent), followed by network design (37 percent) and web-development (30 percent). (Note that these three kinds of job categories generate the majority of technical writing work.)
- Computer programmers that would cost $56 per hour in the United States are available in China for $12.50 per hour.
- Law firms are employing legal assistants and paralegals in India for a third of the $18-24 per hour that they typically pay U.S. workers in these positions.
- This year (2004) an estimated 150,000-200,000 individual tax returns were prepared in India, compared to only 1,000 in 2002 and 20,000 in 2003.
The effect of exporting high-tech and professional jobs overseas is already being felt. In 2003, unemployment among electrical engineers was 7% and among software engineers it was 7.5%. Those unemployment rates will steadily increase as more and more work is sent offshore. Though statistics are not separately tracked for technical writers, all evidence indicates that the situation is not significantly different from that of engineers.
Moreover, the enormous pay disparities between America and low-wage nations also has an inevitable impact on the wages of people who still have jobs in the U.S. For example, the average U.S. salaries for application developers, database engineers and system administrators -- positions identified by Business Week as vulnerable to offshoring -- fell by 17.5 percent, 14.7 percent and 5.4 percent, respectively, between 2002 and 2004.
Who Benefits from Offshoring?
The offshoring of high-tech and professional jobs is just the latest aspect of globalization policies that have been developing for several decades. Multi-national corporations, with the assistance of international monetary institutions and governments around the world, have been pursuing profits at the expense of decent wages. They do this by promoting a "free trade" agenda that directly pits workers in low-wage countries against workers in other countries, in a global race to the bottom. The net result is an unprecedented increase in wealth for the world's financial elites.
These global trends have been manifested in the United States. The gap between the rich and poor is greater today than it's been in 50 years. In 1960, the gap in terms of wealth between the top 20% and the bottom 20% was 30 fold. Now it is more than 75 fold.
This increasing disparity of wealth has been achieved through unprecedented tax benefits to the wealthy, stock market manipulations, embezzlement and fraud, and of course, the systematic driving down of the price of labor through globalization and offshoring.
In the past decade, executive pay has risen 313% while worker pay barely kept pace with inflation. (If average worker pay had risen at the same rate as executive pay between 1990 and 1998, average worker pay would have been $110,399 in 1998, rather than the actual $29,267, and the minimum wage would have been $22.08, rather than $5.15 per hour.)
Who is Hurt by Offshoring?
Offshoring benefits the already wealthy, but what about the rest of us? What about the 95% of the population that are neither corporate executives nor wealthy stockholders? For us the truth is quite different. For us, our real income adjusted for inflation has stagnated or dropped. Over the last two decades vital services, schools, health care, public transportation, and the social safety net have been cut. And as more and more of us lose our jobs to offshoring, or are forced to take a pay cut to compete with offshore wages, not only our incomes, but our quality of life will decline at an accelerating rate.
While the offshoring of high-tech and professional jobs is a relatively new phenomenon, one that is just taking off, it is quickly becoming a significant new element contributing to the long-term decline that we have all experienced in our incomes, in the security of our families, and in the fabric of our lives. This is not just a personal, individual issue because as work and wealth are offshored, our communities degrade and our friends face the despair of unemployment. For example:
- Increased unemployment. In addition to those whose jobs have been sent offshore, this also includes those who worked in businesses that once provided goods and services to those who can now no longer afford them. Unemployment has a multiplier effect. With increased unemployment comes increased crime, increased family stress and aberrant behavior, and higher government costs for unemployment, welfare, and public health.
- Long-term economic depression. As good-paying high-tech jobs are moved overseas, more and more professionals are forced into dead-end, low-paid service jobs, the community as a whole becomes poorer and poorer. Unlike the offshoring of manufacturing jobs in the past, there is no expanding economic sector in the United States to buffer the impact of high-tech offshoring. Instead, we see a new phonomenon: the jobless "economic recovery."
- Increased taxes. With fewer people employed, and many forced out of good-paying jobs into low-wage or part-time jobs, over-all tax revenue declines but the cost of government does not. In fact the cost of government increases when the economy stagnates. Since tax evasion is one of the reasons corporations move offshore, we can be certain that they're not going to take up the burden once carried by white-collar professionals. So who is left? Those of us still working will have to shoulder an ever-increasing share of total government cost.
- Increased pollution and environment degradation. The natural environment does not recognize political borders. A major reason for offshoring is to avoid environmental regulation. By moving offshore to low-wage nations with no environmental controls, corporations are free to pollute to their stockholders' content. But the increased pollution of air and ocean that results inevitably affects us along with everyone else.
Offshoring Democracy
The move to offshore our jobs is not just an economic issue, it is also a fundamental issue of democracy.
It has been 150 years since Lincoln said, "Four-score and seven years ago our fathers brought forth on this continent a new nation, conceived in liberty and dedicated to the proposition that all men are created equal...." He was referring to the centuries-old struggle for democracy -- the idea that we should all have a voice and a vote in that which affects our lives. The idea that government, the economy, and civil society should benefit everyone, not just the wealthy favored few.
Slowly, through long and bitter struggle over 200 years, we have fought to achieve that goal. And we have made significant progress: labor unions gave workers some voice in their conditions of labor, women and African-Americans won voting-rights for all, anti-discrimination laws were passed as were regulations restricting the worst abuses of corporate power, mandating minimal protection of the environment in which we live, and so on.
The wealthy, the powerful, and the corporations they control have always resisted popular democracy. They want no limits on their unfettered power, no hindrance to their greed. As unions won higher wages and better working conditions, they moved the jobs to non-union states. Now they are moving the jobs to nations where unions are brutally suppressed.
Similarly, as cities, states, and the nation as a whole begin to reflect popular democracy by passing laws to protect workers and the environment, corporate interests responded. They started gutting our power to do so with so-called "free-trade" treaties such as NAFTA and FTAA that take that power out of our hands and place it in the hands of un-elected bureaucrats appointed by the trans-national corporations.
Offshoring our jobs to low-wage nations like China that have no democracy, no civil rights, no unions, no environmental protection, and no privacy laws is another example of their determination to undermine and destroy any democracy that allows the working many to resist the power of the wealthy few.
Two hundred years ago our ancestors fought for political freedom on Concord Green and Bunker Hill. A hundred and fifty years ago, 400,000 union soldiers, black and white, gave their lives to end slavery. Seventy years ago our parents and grandparents endured hardship and persecution to build unions that protect working people. Forty years ago we marched for freedom, ended segregation, and extended voting rights to all.
To the corporate moguls, offshoring is a way to reverse these 200 years of social progress. Through offshoring and globalization, they intend to create a "race-to-the-bottom" as nations and communities compete with each other over who will work for less, who will accept the most pollution, who will stand for the most abusive and exploitative working conditions.
Today, it is our turn to defend and expand the freedoms that so many struggled so long to achieve. This includes uniting with worker and community organizations across the country and across the world to oppose globalization and fight for the rights of all working people.
Related Documents:
Check out < frequently stated misconceptions > and myths about offshoring.
Read about government support of offshoring.
Read about the threat to personal security posed by offshoring.
