Is the Fear of Competition From Offshore Firms Driving U.S. Jobs Overseas?

SSON News and Analysis
Posted: 07/09/2012

There appears to be no end in sight to the face-off between rival overseas business markets such those in Asia, Latin America and Eastern Europe—that offer labor and business process services at a comparative advantage—and the United States of America.

The United States began outsourcing manufacturing and engineering jobs to foreign countries including Japan and China as early as the 1980s, and at that time global free trade economists viewed the move as acceptable because they believed that the U.S. should export low-paying jobs, but maintain a creative stance. On the contrary, the progress of free trade and globalization over the last few years has caused great disparity and fear within the American economy. "[Those] corporations that offshore American jobs are dismantling American’s future," asserts economist, Paul Craig Roberts.

American workers, especially IT employees, are dealing with massive job loss because U.S. companies have begun contracting business processes including HR, Finance, and IT work on a much broader scale—to foreign markets that offer competitive pricing—hoping that those contracts would translate into significant cost savings that would give U.S. companies a competitive edge and greater leverage .

"Companies in the U.S. are [compromising the livelihood] of American employees, especially technology workers in the IT field whose jobs are being outsourced to overseas locations," says a group of dissatisfied U.S. technology workers.

The question is: What will American workers do when there are not enough creative jobs to meet their needs? ... Join the overseas companies, perhaps.

"Although everyone loses a job at some point during [his/her] career, the outsourcing of [ones] livelihood is difficult," says Lenny, a senior IT administrator at a N.Y.-based firm. "When people are faced with the unknown and routine has been disrupted, they have to find alternative ways to adapt. Nevertheless, it’s difficult for one to accept the changes, if he/she doesn’t have a support network—in this case, the U.S. government," adds Kim Berry, a computer programmer for 19 years.

According to Berry, the United States government is facilitating foreign competition and loss of U.S. jobs. "I think there should be a market-base solution to end the granting of H-1B visa status to foreign workers and U.S. employers should raise workers’ salaries to attract recent college grads and train them," he says. Berry adds that if the goal of Congress is to mitigate the practice of overseas outsourcing, then there should be limitations on extending the visas of those foreign nationals. In fact, "There is no reason to grant H-1B visas, but unfortunately since industries have more money to lobby than the U.S. Government; the power is in their (industries) hands," Berry deduces.

Outsourcing has slowed the growth rate and caused a negative impact on the number of jobs and opportunities for IT workers, states Berry. "The government should pass a bill for U.S. companies to hire and train a general workforce to [gain the skill set] that they need to become competitive for their own country and the economy in the future. "India is doing it, so why can’t we?" Berry says.

Berry said that he commends Senators Chuck Grassley (R-Iowa), Dick Durbin (D-Ill.) and Bernard Sanders (Independent) for taking a stand on behalf of American workers at risk of losing their livelihoods to outsourcing. In their efforts to continue working to close H-1B and L visa loopholes, Senators Grassley and Durbin sent letters on June 14, 2007 to Emilio Gonzalez, the director of the U.S. Citizenship and Immigration Services, inquiring how the agency is addressing fraud and abuse of the programs.

In addition, Senator Sanders along with Senator Grassley offered an amendment to the Immigration Reform Bill—Amendment 1332, to prohibit U.S. companies that have announced mass lay-offs of American workers from receiving new visas of any kind, unless those establishments can prove that overall employment at their businesses would not be reduced by the lay-offs.

Senator Sanders also proposed that the cost of H-1B visas for American employers be raised from $1,500 to $5,000 per visa, and the revenue be used to fund scholarships for American students in the disciplines of Math, Science and other hi-tech areas of study.

"Those [moves are first steps] to leveling the playing field and giving America a chance, too," says Berry.

In response to industry observers who stated that productivity is the real perpetrator of U.S. job loss to the overseas market, and not outsourcing; Berry says, "The evidence is there that we have lost manufacturing to China and services to India at an alarming rate, and that argument could only be made if wages are the same in India and China as it is in the U.S.. "The idea was to bring other countries up to U.S. standards of living, and now the idea has been driven down to that of third-world countries. It is clear [that] the U.S. has given up on its standard of living."

As for American IT employees working as contract programmers (technology workers offering their expertise to complete a variety of technical tasks on a temporary basis), "It would fill a certain void, but only temporarily," says Berry. "Sometimes it may not be worth it, especially when [American workers] may be shelling out as much as a $500 fee to compete for a two-week job. Someone in Russia may wind up getting paid $100 to do the job anyway; it would make more economical sense for that person since the cost of living is cheaper there."

Although the Senate passed a Sanders amendment to increase the fee employers pay for H-1B visas to bring in foreign workers, the Immigration bill was defeated on June 28, 2007 after senators voted 53-to-46 to set aside the legislation. According to Senator Sanders’ spokesman, Michael Briggs, observers are apprehensive that reform will not occur until the next U.S. President takes office. Meanwhile, "what the American government needs to do is offer U.S. companies an incentive to keep technology jobs in the U.S.," maintains Berry.

SSON News and Analysis
Posted: 07/09/2012

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