White-Collar Blues

The loss of more than 2 million jobs so far in the Bush administration has been a particular source of anger among Democrats. This was highlighted in early October with an announcement by air-conditioner maker Carrier that it was moving 1,200 jobs from Syracuse overseas—a major blow to that upstate New York city.

Continued job losses during what is supposed to be a slow recovery are leading to calls for new laws to protect American manufacturing. In fact, there is a much graver threat to American workers.

Economists studying workforce issues say as many as a third of the jobs lost since 2000 were white-collar, ranging from customer service representatives and computer programmers to accountants, engineers and lawyers.

Indeed, the big story in coming years may be how corporations are “offshoring” the very jobs pro-globalization politicians and academics have long said are the American laborer’s salvation.

“People always had this class bias,” says Marcus Courtney, president of the Washington Alliance of Technology Workers in Seattle, a unit of the Communications Workers of America that is attempting to organize workers at Microsoft and other technology companies. “They’d say, ‘Geez, of course blue-collar jobs will go overseas. Those workers are just caught in the past. If they’d just go back to school they’d be fine.’ But what do you say now to the X-ray technician, the accountant or the engineer with a master’s degree when their jobs go overseas?”

According to Forrester Research, a Boston-based consulting company that tracks business trends, between 2000 and 2015 the United States could lose as many as 3.3 million jobs overseas, a good number of them high-paying and white-collar. And that’s a low-end estimate. Others see losses double that amount.

IBM recently told employees it was planning to shift thousands of white-collar jobs to other countries. That should come as no surprise: besides contracting out many of its own back-office operations overseas, IBM is a leading provider of corporate outsourcing services. The company recently announced it was taking over most back-office operations of Procter & Gamble’s, with much of that work going overseas to an IBM outsourcing subsidiary. IBM’s outsourcing operation also handles much of the finance department operations for BP, one of the world’s largest oil companies.

Corporate managers are loath to attribute the loss of white-collar jobs to simple cost saving—preferring to say they are “strategically refocusing” on their “core competencies”—but cost-cutting is driving this trend. Countries like India, South Africa, China and the Czech Republic have countless well-educated computer experts, accountants, mathematicians and economists, fluent in English and ready to work for a fraction of what their U.S. counterparts would demand.

Offshore outsourcing of white-collar jobs also is easier than moving factories overseas. Producing goods overseas for sale in the United States always has been a risky endeavor. There are shipping risks (a pre-Christmas dock strike, for example, could erase a year’s profits), exchange rate unpredictability, country risks and, of course, labor problems at home.

White-collar job shifts don’t pose these problems. With no products involved, there are no tariff issues. And should one outsourcing country develop political troubles, the contract could be shifted to another provider in a different country. Meanwhile, with few U.S. white-collar workers unionized, resistance is minimal.

Indeed, one particularly ugly aspect to this new phenomenon is that U.S. companies fly in foreign workers, have their American workers train them, and then send them back to their overseas homes with the American trainer’s job. “People put up with this without complaint because they’re afraid if they complain it may hurt their severance payment or job recommendation,” said the CWA’s Courtney.

“Attitudes are changing,” Courtney says, noting that his local’s subscriber list has grown from 2,000 to 16,000 in the past six months. “But there’s a long way to go,” he says.

Meanwhile, strategies aimed at saving manufacturing jobs, such as tax credits, retraining funds, federal contract “buy American” requirements and the like, will do little to stem white-collar job flight.

“Congress and elected officials just have failed to grasp that this is a threat to America’s middle class,” Courtney said. “This is not about free trade; it’s about job exportation.”