NPR:
For years, Americans have had their phone calls about credit card bills and broken cell phones handled by people in the Philippines or India. But American firms are starting to bring call centers back to the U.S. — and this time around, they are hiring more people to work in their own homes.
Ten years ago, it made a lot of sense to outsource these jobs overseas. But that’s changing. Increasingly, companies that want to outsource their customer service jobs are happy with these domestic arrangements.
High inflation and double-digit annual raises in some sectors are pushing up the cost of labor in India. At the same time wages in the U.S. are falling and companies are rethinking the trade-offs associated with outsourcing.
But:
Experts say outsourcing is still accelerating for jobs in IT services and manufacturing. Phil Fersht, an outsourcing analyst, says even before the recession started, companies were starting to realize that offshoring wasn’t the best option for other services.
In other words, the wage scale in the US has fallen so far that it’s cheaper to hire folks at home to do the lowest paying jobs. The better paying jobs, like IT and manufacturing, are still going overseas.
In fact, US labor is so cheap now, that outsourcing companies in India are outsourcing jobs to the US. From FT.com:
Pramod Bhasin, the chief executive of Genpact, said his company expected to treble its workforce in the US over the next two years, from about 1,500 employees now.
“We need to be very aware [of what’s available] as people [in the US] are open to working at home and working at lower salaries than they were used to,” said Mr Bhasin. “We can hire some seasoned executives with experience in the US for less money.”
I trust I don’t have to underscore the irony inherent in that last story.
Finally, if unemployed folks find jobs, those jobs are likely to be lower paying. From the New York Times:
For years, long before the recession began, job growth had become increasingly polarized in this country. High-paid occupations that require significant amounts of education and training grew rapidly alongside low-wage, service-type jobs that do not, according to David Autor, a labor economist at the Massachusetts Institute of Technology.
The growth of these low-wage jobs began in the 1980s, accelerated in the 1990s and began to really take off in the 2000s. Losing out in the shuffle, Dr. Autor said, were jobs that he described as “middle-skill, middle-wage” — entry-level white-collar positions, like office and administrative support work, and certain blue-collar jobs, like assembly line workers and machine operators.
and
A new analysis by the National Employment Law Project, a liberal advocacy group, takes a different approach, identifying industries that have experienced job growth in 2010 and examining their median wages. It is a blunter measurement because it focuses on whole industries, within which there is often great diversity in income. Economists also cautioned that it was still too early to know exactly which sectors would eventually lead the way in a sustained recovery.
Nevertheless, the law project analysis offers a snapshot of where the employment growth has been so far. It found that job expansion to this point had been skewed toward industries with median wages that are low to middling, with a disproportionate share of job growth happening in industries whose median wages fell below $15 an hour.
Given that our entire economy revolves around consumer spending, it’s difficult to imagine how an abundance of low paying jobs will provide “recovery.” If this is the wave of the future, more foreclosures and bankruptcies await.
Tags: jobs, low-wage jobs, outsourcing
We’ve talked a lot about how the bill the House came back into session to pass yesterday afternoon saves hundreds of thousands of jobs and prevents cuts in important public services.
Not everything about how it was paid for was good – there was a lot of bowing to deficit peacockery involved. But there’s one thing I do want to highlight about how it was paid for:
Closing Loopholes That Encourage Corporations to Ship Jobs Overseas (Offset of $9.8 Billion)
- Eliminates tax provisions that encourage companies to ship jobs overseas, beginning in 2011.
- The foreign tax credit is designed to prevent double taxation (i.e., full taxation by both a foreign country and by the United States) of income earned abroad. However, companies have devised schemes essentially shifting the burden of their foreign income tax onto the U.S. Federal government. These transactions enable companies to operate offshore with essentially little or no tax liability to either the U.S. or the foreign government.
- This abuse of the foreign tax credit encourages companies to move jobs offshore to avoid U.S. taxation.
- Foreign tax credit abuse is among the IRS’s top compliance concerns for large corporate taxpayers.
- In 2004, U.S. multinational corporations paid an effective U.S. tax rate of just 2% on their $700 billion of foreign active earnings.
- Includes Obama Administration provisions to crack down on corporations that split foreign tax credits from the income subject to foreign tax, allowing them to take advantage of the foreign tax credit to reduce their U.S. taxes even though the foreign income remains overseas.
- Also eliminates unintended tax incentives for companies to move U.S. assets overseas, ensuring that foreign tax credits are not provided for income that is not subject to U.S. tax.
- Limits the use of aggressive tax planning techniques that take advantage of anti-abuse rules in the tax code to avoid U.S. tax and generate additional foreign tax credits.
- Republicans have fought to keep, and even expand, these kinds of loopholes for years.
Naturally, Republicans spent a lot of time talking about how this bill would raise taxes.
To which I say: Yes. Yes, it does raise taxes. ON CORPORATIONS TRYING TO SHIP JOBS OVERSEAS.
I don’t know about you, but I’m fine with that.
Tags: FMAP, jobs, outsourcing
Well, here’s one way to solve the problem of the depressing numbers of US jobs that are lost to overseas competitors.
Close down the office that tracks the statistics:
President Obama’s budget would eliminate the International Labor Comparisons office and transfer its 16 economists to expand the bureau’s work tracking inflation and occupational trends. The White House says the cut, estimated to save $2 million, is one of many difficult decisions the president was forced to make to control spending.
It sure is hard not to be cynical about this. In fact, it’s impossible not to be. Obama has called for NAFTA style trade agreements expanding into Panama, Columbia, and South Korea. These sorts of trade agreements have proven deadly for US workers. But, hey, if they close down the office that tracks the data - we’ll never know just how deadly.
In related news, a small group of legislators have filed a bill that would cause the US to withdraw from NAFTA.
The bill spearheaded by Rep. Gene Taylor, a Mississippi Democrat, would require President Barack Obama to give Mexico and Canada six months notice that the United States will no longer be part of the 16-year-old trade pact.
“At a time when 10 to 12 percent of the American people are unemployed, I think Congress has an obligation to put people back to work,” Taylor said.
He argued NAFTA has cost the United States millions of manufacturing jobs and hurt national security by encouraging companies to move production to Mexico.
The high unemployment rate makes it the “perfect” time to push for repeal even though past efforts have failed, he said.
It will be interesting to see if this goes anywhere.
Tags: jobs, NAFTA, outsourcing
by Becky Angelo—Ohio
I talked to a woman in Akron area, who is retired from a company who has sold out to another company who is outsourcing. The way they are doing it is that if a current employee refuses to train people from India they are bringing in they will be fired no questions asked. They are also getting rid of a few employees at a time instead of all at once. This isn’t all. All former employee’s that are retired are losing their health care insurance starting jan 09.
Tags: health care, jobs, outsourcing
by Sergio D. Acosta—Missouri
I met with a young man that was passionate about ending tax credits to big corporations that send American “blue collar” jobs out of the country.
It was awesome to talk with someone that understood the struggle and supported our cause.
Tags: jobs, outsourcing
by DeAndra McCollum—Ohio
One of the great inspirations that I had on turf was when I knocked on an elderly person’s door. I was told her who I was, and explained that I was fighting to keep jobs in Ohio and lower the cost of health care. She said it was a coincidence because her husband’s job was just shipped to Mexico and told me how hard it was for them to pay their bills. They may lose their home pretty soon if her husband did not start doing something. The only income she had was the disability she receives of $600 a month and she thanked me for what I was doing and said good luck to me. So that made me feel great that I was doing something to help someone especially an elderly person.
Tags: health care, jobs, outsourcing
by Jennifer Hofelich—Pennsylvania
This elderly woman I spoke to in Duryea, PA told me that many years ago she was hurt in a fork lift accident at her job, leaving her unable to work. Years later, her company shipped their jobs overseas along with her health care benefits. She has had two strokes since and is relying on Medicare to pay 80% of her medical costs.
She went on to describe the horror her family has endured fighting the health care system. But as she recounted tales of cancer, strokes and not being able to pay, her eyes welled with tears and her face with sorrow.
I talk to people all the time about job outsourcing and the health care crisis, but this conversation was especially disturbing. As I watched tears stream down her face, I was reminded just how REAL these problems are…and that they happen to REAL people and REAL families in this country-EVERY SINGLE DAY!
Tags: health care, jobs, outsourcing
by Chris Antonneau—Michigan
We were out canvassing in Royal Oak, MI the other night when I met this great older lady. I talked with her about the importance of correcting the problems with our health care system. She agreed we need change and need it soon. She signed up as a member and was also willing to help with her voluntary dues for the year. I thought to myself this lady is helping her state and country out greatly and maybe she will be willing to do more.
So then I talked to her about the need to pass “Hire MI First”—a plan to make sure Michigan workers build Michigan development. She wasn’t sure about writing a letter to her state representative at first. After I reminded her how important it is to let OUR politicians know how we feel, she said well I was just sitting around doing some scrap-booking so I should be able to write that letter for you.
About 20 minutes later, my coworker and I needed to wrap things up for the night, but before we did, we stopped by her house and sure enough. In her door was a great letter highlighting the importance of jobs in Michigan.
Tags: health care, jobs, outsourcing, taking action
by Kara Kukovich—Pennsylvania
Recently, while canvassing in Forks Township, I knocked on a gentlemen’s door and told him we were fighting to keep our jobs from being outsourced. “Yeah, my job’s being outsourced,” he said. He said he worked for a company designing dyes and tools and that in August, his job is going to Mexico and China!
Tags: jobs, membership, outsourcing
by David Delanoy—Pennsylvania
Today is my observation day. One of the gentlemen I talked to left me with a feeling of accomplishment. When I spoke to him about outsourcing of jobs, he seemed to get sad. He explained that he had lost his manufacturing job and has yet to get back on his feet. By the time I got finished explaining things, he was fired up and ready to go! He signed up as a member with a smile and thanked me for doing this kind of work.
Tags: jobs, outsourcing, taking action
