It’s hard not to regard the announcement of a new Honda plant coming to Greensburg as good news for the state. However, this story by Ted Evanoff of the Indy Star (and this most excellent comment from Paul O’Malley), suggest that the new plant won’t be an unmitigated blessing.
Our state and local governments are subsidizing Honda to provide more of the same to Indiana. It’s most likely a net positive to the State since Honda will most likely pay a good wage to a lot of people who will in turn spend their money locally, thereby benefiting a great many Hoosiers, not just those who land jobs at the new plant.
However, there are some opportunity costs involved. Money, labor, and ingenuity spent on manufacturing cars will not be available for riskier but potentially more beneficial entrepreneurial ventures down the line.
“Often when you bring in an established concern that’s going to employ 2,000 people, you don’t get the growth possibility that you would if you put your money on a young Bill Gates who has three employees now but will have 30,000 in the future,” said Jon Teaford, professor of urban history at Purdue in West Lafayette and author of the book “Cities of the Heartland: The Rise and Fall of the Industrial Midwest.”
Mr. O’Malley suggests:
It is possible too that our long time emphases, first on agriculture, then on manufacturing, encouraged an attitude that education is not important. Our high school drop out rate has for years stood out as being much higher than the national average. See the Kids Count Data Book for 2006. Perhaps the recent increase in the age for dropping out from 16 to 18 will help here.
. . .
Growing up in Marion I heard many of my parents’ friends, who generally ran small manufacturing concerns, talk about how when GM came to town in the 1950’s they thought it would be great, but in the long run how it proved a disaster for the community because of some of the attitudes it fostered. In part they were just griping about having to compete with Generous Motors’ wage scales, but I think too they had a point about believing that we could actually do something for ourselves.
When I took my first gainful employment in the mid 1980’s I was assigned by my employer to San Jose, California. The most shocking thing to me about California was the attitudes of my neighbors. So many of them really believed that they too could start a business and make a million, or ten. Indiana will never be a place attractive to our children until we learn something of that attitude, rather than believing that an auto assembly plant is way of the future.
I don’t think anyone is suggesting we not go after projects like the Honda plant, but we should be ambitious. These good manufacturing jobs should be regarded as somewhere in the middle of our economic development strategy, not as its pinnacle. Governor Daniels talks a good game about having a high tech vision for Indiana’s future, and perhaps he’ll deliver on some of that. But, from reading Kemplog’s excellent coverage of the Concentrated Animal Feeding Operations (CAFO) activity in Indiana, it seems the Daniels administration is all too successful in attracting businesses that will have our citizens and local governments wading through oceans of pig shit trying to make a buck.
As Mr. O’Malley suggests, our long term strategy needs to involve educating our children, making education a trait that is revered rather than something that is regarded as vaguely suspicious, and then keeping the educated children in Indiana to re-invest in the state.
These are important thoughts. The short-term news on Honda is really great, and it will be a boost to the southeastern part of the state. I do agree that there is an opportunity cost issue – although I don’t think it is economic so much as psychological. “See,” say the people who want it to be 1971 again, “we told you that we could just get a big auto plant and all will be well. We don’t need to worry about people starting their own businesses or getting an education.” I’ve heard people in Fort Wayne make the argument that this happened in the mid-1980’s when the GM truck plant saved us from the loss of International Harvester’s manufacturing plant, and it’s a strong argument.
I am optimistic that over the past twenty years an increasing number of Hoosiers understand that building a Great Big Factory isn’t the only part of our state’s economic development and we will continue to invest in other areas such as the 21st Century Research & Technology Fund, our universities, and of course K-12 education, as well as better supporting entrepreneurs. Manufacturing is and will continue to be an important part of the Hoosier economy, but it will not be the huge job generator that it was in previous generations. I could go on and on about this topic, but I won’t this morning.
Honda plants are great, but let’s not take our eyes off the ball.
Exactly. This is great for Indiana, but we shouldn’t be satisfied, and we shouldn’t be complacent. Hoosiers are good at making stuff, but we should also be good at thinking up stuff to make. And, as for the CAFOs, we should be skeptical about whether we want to be the pig-waste sewer of the world.
We went to the State Museum yesterday. They have an exhibit about the future. I wish I could remember the name, but it escapes me. We didn’t have as much time to spend there as I would have liked, we had tickets to IMAX and the show was about to start.
The premise of the exhibit was that you are helping a family of today answer some hard questions (genetic engineering was one of the topics), and then the exhibit takes your input and fast forwards into the future.
I was surprised that the announcer was hilighting Indiana’s “agricultural heritage” 50 years into the future. I realize that we will always have some degree of that, but both the agricultural and industrial ages left us some time ago. Holding on to these as the “bread and butter” of our economy can’t be too good of an idea, and I don’t even know anything about economics!
By the way, I recommend you see the State Museum at least once. I wish we would have had more time there!
Doug,
CAFO’s are a product of the soon to be ending era of cheap oil and natural gas, combined with suburban sprawl. If you do not have CAFO’s what do you have??? Traditional mixed grain, fodder, and livestock agriculture, if not on the individual farm at least within a farming community. One local dairy, cow and pig farmer for every X number of grain and fodder operations. You know old fashion relatively labor intensive vs energy intensive family farming.
Well a combination of massively misallocated government agribusiness subsidies and several decades of deregulated natural gas production(thank you Ronald Reagan) making ammonium nitrate based fertilizers so cheap as to render traditional otherwise known as “organic” farming uneconomical are to blame. CAFO’s only make sense in a world of very cheap chemical fertilizer where animal manure is a industrial waste material instead of a recycled agricultural input as it has been since the dawn of civilization.
Also suburban sprawl has made it almost impossible to run a small livestock operation with in a mile or two of a subdivision. That means largely forgeting about Marion and its surrounding counties having anything remotely to due with rearing livestock. I am old enough, sad to say, to remember riding in the car before air conditioning just outside of the Indianapolis or Cincinnati and smelling traditional farm smells. Remember just over 25-30 years ago when a trip on any Indiana interstate of state road or stop at a railroad crossing would involve the passing of a livestock trailer on its way to a local meat processing plant? Seriously, we have traded the burden of those mildly unpleasant smelly memories which were born by large segment of the population , for the real discomfort and possibly serious unhealthy risks of the relative few living anywhere near a CAFO.
Not to sound like a broken record. But the end of Cheap Oil and Natural Gas may spell the end of
CAFO’s along with energy wasteful industrial agriculture long before government regulation.
Old economy v. New economy
When I first saw this phrase my head wanted to explode. WTF!!!! Seriously Doug, what the hell are you and the Indianapolis Star smoking these days.
The truth is the New Economy has turned out to be a massive bust and fraud for millions of Americans. The sad truth is that this is hardly being reported in the press. The combination of H1-B and L1 immigrant technology work visas has destroyed the domestic labor market of information technology workers. Corporate America has decided that it perfers a low pay less skilled immigrant indebtured servant work force to an American one. This is a significant reason that the current economic recovery has been a jobless one outside of the food service, retail and housing sectors.
Seriously, Doug if you compared the economic well being of today’s 35 year old union carpenter, plumber, electrician or pipe fitter with an IT worker you would find that because of college costs and massive unpaid overtime and outsourcing that the Union tradesman was better off financially and faced a more secure economic future than the average IT worker. Not to mention that IT workers face a massive untalked about age discrimination problem once they reach 40 years of age.
Politicians keep mentioning continuing education and job training as a solution for IT workers. Sorry, but American Corporations have clearly shown a preference for less skilled and cheaper indebtured immigrant/outsourced labor vs highly trained and experienced American workers.
Seriously you and the Indianapols star are really out of touch. Working for “Bill Gates”. WTF, are you serious. The Bill Gates of the world are personally lobbying Congress and throwing millions of dollars around to help him drive down wages and outsource IT jobs to indebtured immigrant/outsourced labor.
One of the hallmarks of the New Economy that high school guidance counselors steered so many bright ambitious kids towards was to avoid the union trades and go for white collar “knowledge worker” jobs. Unions were out of date, knowledge workers did not need unions because they could relie on the enlightened corporate welfare model of employment instead. BullSh*t!!!
Right now I want to scream!!!! Seriously there is a very good reason that enrollment in computer science programs across the country have fallen by up to 60% in the last 5 years. It is not because kids today are not smart or hard working enough. It is because they know the jobs are not there. Nor do they do not want to be over 40 and unemployed or seriously underemployed like their fathers and uncles, folks like myself. My neice wants to marry are really nice smart kid. He is finishing up his NURSING degree, instead of the computer science/technology degree his high counselor recommended because he wants a job he thinks will not be outsourced. He tells me that while most nurses are not unionized, that enough of them are and nurses in general are politically active enough that they do not have to worry amount a massive immigrant indebtured servant work visa program. Smart kid!!!
Seriously Doug, you are a lawyer perhaps you might what to read some of the congressional/legal testimony on the H1-B and L1 visa programs. Start with Matloff’s testimony to Congress and the Michigan State Bar
http://heather.cs.ucdavis.edu/Mich.pdf
http://heather.cs.ucdavis.edu/itaa.real.pdf
Also maybe you might want to spend some time looking at Professor Norman Matloff’s website.
His archive of emails, articles and congressional testimony pdfs can be found here:
http://heather.cs.ucdavis.edu
http://heather.cs.ucdavis.edu/archive
Also visit these websites:
http://www.ieeeusa.org/policy/issues/H1bvisa/index.html
http://modernpatriot.blogspot.com/
http://www.washtech.org/
http://www.programmersguild.org/
http://www.techsunite.org/
http://www.displacedtechies.com/
Seriously Doug, are you even aware that across the nation the previously notoriously libertarian Perot voting computer programmers
are considering forming a labor union???
The Republicans may to a person be wildly corrupt pro-outsourcing but are you even aware that when the equally corrupt DLC Democrats(Lieberman, Charles Schummer, and Hilary) wanted to hand the Virginia Senate nomination to corporate lobbist hack and ITAA (Information Technology Association of America) President Harris Miller, the Darth Vader of IT outsourcing. That Miller was stopped cold in the primary last month only because there was an out of the blue massive grass roots revolt spearheaded by pissed of IT workers that made sure the nomination went to James Webb instead?
See: http://modernpatriot.blogspot.com/
Are you aware that our very own Republican Congressman Hostetler is a major ITAA bagman and pro corporate outsourcing goto guy in the House.
Please Doug I am going to hound you on this until you comment.
Sorry to make your head explode Llamajockey!
Things that would help mitigate the downsides of the “new economy” for ordinary workers is unionization and “fair trade” policies. It’s not the “old economy” (sorry to use those somewhat meaningless terms) that is helping plumbers and carpenters – it’s the fact that they’re unionized and it’s very hard to outsource their jobs. As it is, our workers have to compete with workers in places where there are no worker protections and no environmental protections.
But I think we need a mix, and I would prefer that the mix be heavier on emerging technologies than on confined feeding operations.
While I’m not angered like llamajockey, I do agree with some of what he is saying. The push to get everyone into college just creates cheep labor at a new level, that’s all. Being in IT, I have seen that. I went to school but did not complete because a) Schools STILL don’t understand what to teach about IT and b) I was LOWERING my lifetime paycheck by paying for school and becoming more dull on my skills.
Yes, I think it is important to have the oppertunity to go to college for certian jobs. However, I am starting to view it more as a union WITHOUT the job protection benefits. Many HR people have told me that a diploma is required even though they agree that most grads need to learn on the job. It is a tax that you have to pay to get an interview, not a means to become more skilled at your trade IN MANY CASES. For some fields (law, medicine), skills are honed in extra schooling. In other fields, money is wasted on meaningless theory and an interview pass.
Even though I have been against unions in the past, I feel that a technology union might be a better answer than 4-year school for technology. Having a master/journeyman/trainee system for IT would be MUCH more effective than learning 3-year stale networking theory in school. It would also open the door to more people who won’t go to 4-year school because they either need to be working right out of HS or they don’t learn in that way. Many “rich kids” who just don’t learn well in a classroom are paid through 4 (or 7) years of school just to get some paper for Mom and Dad, wasting everyone’s time. What if instead they worked in a field they enjoyed and worked their way up?
Comparing the job security of construction trades jobs to IT jobs misses several points:
1. Construction workers, union or not, work when there is work to be done. They benefit from a strong economy and they suffer during a weak economy. No disrespect intended (I think that construction jobs are good jobs and I have a lot of respect for people who can build things), but they do not bring wealth into a community. They take the wealth that is there and move it around. (A good thing, but not the same as increasing the state or nation’s wealth). Nursing is the same way. If there is no one in the community who can afford health care there will not be a market for nurses. These are both occupations that may make great sense for any given person – I’m not knocking them at all – but they don’t address the basic economic development question of increasing the wealth of our community, state, or country.
2. No question that the status of American workers (of all types) is less secure today than our parents and grandparents experienced. That’s just tough luck for those of us in the late-boom and post-boom generations. The useful question is to see what we can do about that. I believe that the valuable concept in the “new economy” (which is a really annoying phrase, I agree) is that we (as Hoosiers, as Americans) have to continually develop new ideas and THAT is where the value is. If someone else in the world can do it, they can probably do it cheaper than we can. (I’m not applauding this phenomenon, just describing it. It makes me a bit queasy where I think it might end. However, I am confident that ranting and whining are NOT good strategies for improving our economic outlook.)
3. Easier said than done, but part of what we need to figure out is how to take advantage of (I don’t mean that in a bad way) the growing markets in Asia – yes, those folks are economic competitors but think about how much stuff they are starting to have the resources to buy.
4. I definitely agree with you, Jason, that there are undoubtedly better ways of educating folks than college. The issue of lifelong learning is probably THE major issue for most of us, and “going back to school” isn’t always the best answer. You point out a good model in apprenticeships. In areas that are changing so rapidly, such as IT, this makes even more sense.
And Doug, thanks for starting this conversation. Obviously you have struck several nerves. If I might say, it is a more significant and far-reaching discussion than daylight savings time.
More significant than Daylight Saving Time?!?!
But seriously, the issue of education is an interesting one. Certainly the cost/benefit ratio of a 4 year college degree is not positive for everyone. In retrospect, I suspect my 4 years in undergrad were some of the least intellectual of my life — though I learned a pile of real world skills that have come in handy.
On the other hand, to have a well functioning democracy, I think we need our citizens to be educated beyond the ability to simply do a job. They need to learn how to think and to educate themselves, both to better carry out their civic duties and to be more flexible and adaptible when their economic environment changes.
Easier said than done, for sure. Economic realities are such that many folks simply have to get out of school and get to work. Then, while they’re working, their jobs take so much out of them that, at the end of the day, it’s all they can do to microwave a dinner, flop down on the couch for a half hour of TV, and get to bed so they can get up and do it again so they can pay their rent at the end of the month. Not really a situation conducive to reading up on the latest developments in nanotechnology or the finer points in the county council’s proposed bond issue.
Sorry on the DST thing, I just couldn’t help myself.
The issue is EDUCATION versus TRAINING. A trained person knows how to do a job (perhaps even a very difficult job). The educated person has a bit broader view of the world. We need both. Of course, since our current approach to K-12 education is to beat any non-ISTEP-related curiosity about anything out of both teachers and students, I’m not sure how we are accomplishing either.
“The issue is EDUCATION versus TRAINING.” I cannot agree. Education and training are not opposed, they relate to different things. An education, as Doug says, is essential for our civic duties. Training has to do with our economic lives. Certainly one can support the other, but the basic purposes are not the same. We need everyone to be educated.
Of course you are right, Paul. I didn’t mean to imply that we could or should only have one. My point is that they are two different things, as you say.
Jason,
It is important to understand the differences between what an IVY Tech like technical trade school and what a tradition university offering a Computer Science degree is trying to accomplish for those wishing to enter a computer related field.
Technical trade schools are concerned about a narrow yet specific range of technical qualifications that have a very limited marketable shelf life with which their graduates can enter the workforce. These schools have their place but again without a supportive employer offering a real carreer path and a continous learning and mentoring environment, and those are hard to find these days, lots of these graduates can find themselves unemployed in a few years.
For example right now on the radio for the first time in years you are hearing lots of ads on the radio for training for would be Microsoft administrators and technicians. Great, Microsoft desperately wants to role out a new product line and discontine support for older software. Problem is a shortage of techs who can help Microsoft and its customers role out these new products. Now lots of folks are being enticed to pay Microsoft or a Microsoft training vendor good money, in fact over pay, for what they may hope to be career in the computer technology field. However, there is no guarrantee that lots of other kids will have the same idea resulting in many folks having spent good money and not having a job. Too bad but Microsoft and the Tech schools make lots of money on these unfortunate kids just the same. Those with a job may only have one as long as there is a industry wide increase in IT capital spending to support the current Microsoft product role out. Also if layed off they may have to pay to go through the entire Microsoft recertification process all over again at their own expense. Regardless of the fact that there are only minor changes between product releases. Jason this is one area where a union makes lots of sense. Unions could help insure these workers have the training and apprenticeships needed to do the job without being exploited. Also they can help members find work during the various ebbs and flows of IT capital spending cycles.
Now when it actually comes to true computer programming, software development and computer engineering jobs, for the most part a true university degree with at least a minor in computer science is a huge help but not an absolute necessity. Sure you hear legends about the college drop you became a software billionaire. But first of all Bill Gates for example went to an elite prep school and dropped out of HARVARD. Besides Gates just so happened to have priceless family connections to key senior IBM staff and at other companies. That combined with a championship poker player’s wits and bluffing skills and a totally ruthless business mindset made Gates rich not his programming or even project management skills. For the most part the best programmers I have met are widely educated and have a great combination of logic, linquistic, communication and analytical skills. College helps alot but master degrees and a PHD are not required. The one or two successful programmers I have known without a four year degree were truely complusive autodidacts.
Again software developers are expected to continously pick up new skills and learn new programing languages. This of course is best done with a combination of classes, mentoring and especially on the job training and TEAMWORK.
Comparing the job security of construction trades jobs to IT jobs misses several points.
Karen,
Sorry but you are so very wrong. I hate to say this but when labor market economists who have studied the nature of software development and attempt to find ways to deal with many of its self-destructive and irrational aspects they often compare it to the construction trades. Labor economists who recommend unions as a solution for the software industry specifically point out to how unions have helped to rationalize and organize complex engineering and construction related labor management tasks. The simularities go beyond labor isses.
In fact for decades software development methodologies have directly borrowed terminology from the construction industry. Both fields have project managers, requirement specialists, architects, administrators, modelers developers, inspectors, installers, constructors of of all various specialities, testers…..
Construction workers, union or not, work when there is work to be done. Really now !!! Tell me about it. Remember first of all a large percentage of software developers at all different levels and job titles have always routinely worked as contract employees. No work, slow economy or the job ends, and you get laid off at a moments notice. Today many older IT workers over 40-45 can only work as independent contractors simply because age discrimination is so prevelant that the only way they can land an assignment is through back door networking contacts inspite of their proven skills and track record. Do you honestly think there would be many 45-50 year old electricians, iron workers, carpenters…. if it was not for labor unions and union hiring halls.
Unions can offer a major advantage to companies in that they can reliably hire large numbers of workers at a prevailing wage rate while under the union contract. Even more important unless the boss is an absolute nitwit or abusive the union will make sure the worker is kept on the job until the task is completed. In times of tightening labor demand, there is no fear that workers will jump ship because the guy next door is offering a few bucks more an hour. If you can understand how tough it would be building a skyscraper and have your key ironworkers walk off the job to work on the building across the street for a couple of more bucks an hour, then double, no quadruple the cost and time delay for a key IT workers leaving a large software development project. When key workers leave a project management’s solution is to have other workers pull double duty and work more unpaid overtime. Which of course only leads to pissed off burned out, depressed workers, crazy bosses and more turnover. Turnover has always been a huge problem and expense in the IT industry. Want to know who have been computer employers worst enemies? Themselves because until the created the H1-B and L1 visa programs because they were constantly trying steal trained employees from each other.
You see hear is the dirty secret. Employers are having to freely admit that H1-Bs and L1 Visas, outsourcing and offshoring are saving them on average at best 10-15%. Even though for example an H1-B visa employee are often paid up to half of what an American worker would make at the prevail wage. (The prevail wage is intentionally meaningless the way the H1-B law is written.) L1 Visa workers often make even far less. Believe me there are lots of kickback and under the table deals. Also H1-B visa workers are often young, less experienced and far less qualified than the American worker. The really dirty secret and attraction for the H1-B and L1 visa worker is that they are essentially for up to 6 years an indebtured servant. They can not jump ship to a different employer who might be willing to pay more money without risking their immigration status and certainly their green card sponsorship if they wish to become a US citizen.
So lets say an employer has the choice between an American worker making $35 dollars an hour and a H1-B worker making $20. The more experienced US worker will have to learn new skills on the job, but will reach maximum productivity in 3 months while the H1-B programmer will take 9 months to reach 80% productivity and two years to reach 100%. However, the average US worker turnover in your hellish IT sweatshop is 30 months per employee which costs you on average 3 man months in lost productivity. While the H1-B visa turnover rate is 4 years and you do not even have to offer a pay raise. I think you can start seeing the attraction of H1-B/L1 visa workers simply because of their indebtured worker status.
So it should now be more clear why so many labor market economists see unions as a worthwhile solution to IT industry labor problems and a better alternative to insane global labor market abitrage.
Dear llamajockey:
I expressed no opinion one way or the other about the value of unions in construction or in IT. What I did say was that construction jobs and nursing “do not bring wealth into a community. They take the wealth that is there and move it around. (A good thing, but not the same as increasing the state or nation’s wealth).”
Software developers, like auto assembly workers or reinsurance underwriters, typically sell things to people far beyond the boundaries of the communities they live in. Their work brings wealth INTO a community. People who work in construction, health care, retail, and services (whether they are lawyers or nurse’s aides) are paid by the businesses and individuals who live in that community. New wealth comes from the first type of business, and redistributed wealth (within the community) comes from the second.
The fact that lots of IT projects are managed with similar words and concepts as construction projects is a testament to the value of those management concepts. The fact that highly skilled employees in each industry are needed for jobs points out the relevance of skilled labor, whether construction, IT, or some other kind. But neither of those similarities addresses the issue of what kind of businesses Indiana needs to develop.
My point was that the State needs to keep focusing on developing jobs that require a high degree of skill, include constant innovation, and as a result are difficult to instantly off-shore. This doesn’t mean thumbs up or thumbs down to entire industries – as you say, some IT jobs have been off-shored. And in industries such as auto manufacturing, there are definitely jobs that do meet the criteria I listed.
That is not to say that there are not highly skilled workers in service businesses – obviously there are, and construction is such an industry. But the whole point of this discussion was the topic of how the State should focus its economic development. When there’s lots of wealth in the community, industries such as construction tend to take care of themselves. The workers within those industries can take care of themselves in several ways; a historically successful approach has been unions.
Not arguing with you, llamajockey, just trying to clarify what I was talking about.
Karen is referring to what we export, and she is quite right that such activities are necessary to bring money into a community with which to buy imports. I will quibble a little with on services though, which may be export oriented. To use one of Karen’s examples, lawyers, it is true that they probably don’t bring much money from outside into the typical small county seat in Indiana, but can you doubt they bring riches to Washington, DC?
I think though that we are better off fostering our own export industries rather than trying to attract transplants from other regions. Transplants can come and go depending upon where labor costs are lowest. Communities are hard put to accumulate capital from such activity. But an industry based in your community, one that has substantial, protected intellectual content to its products, either through trade-mark (luxury goods, certain consumer goods) or patents, is in a position to accumulate the capital needed to foster real growth in community. The best examples in Indiana of smaller communities that have prospered from home grown industry may be Columbus and Warsaw. Some of the auto oriented cities, such as Anderson, have suffered for decades.
I mentioned Marion earlier, which had a more diverse economy than Anderson, and which included businesses for electrical wiring, a wire rolling mill, glass, paper products, food processing (ice cream and ketchup) color television picture tubes, grey iron castings and plastics as well as auto parts (and even at one time auto assembly). Much of that diverse economy had been built by local business people. After GM arrived in 1954 almost nothing new came, or was started, for decades, both due to the high wage scale GM brought and an attitude of self satisfaction. Much of Marion’s diverse economy slowly withered, and wasn’t replaced.
We typically spend heavily for infrastructure improvements to attract a major new, but transplant type, industrial development. This is an “industrial policy” whether we want to call it such or not. Wouldn’t a less intrusive industrial policy be one that established small industrial parks with shells, that is modern buildings, available as locations for local businss to start? Given that our zoning laws often restrict what we can do in our garages it might even be termed fair compensation for the taking zoning represents.
Karen,
I think you miss understand a number of things concerning the outsourcing movement by corporate America. It does not matter if the company is in the business of producing a good or service for sale globally or is providing a purely domestic good or service. For example when IBM’s global consulting services division declares in the paper that it will hire 30,000 software developer’s in India it has every intention of being able to use L1 visa to import tens of thousands of these workers into the United States to work on purely domestic IT development projects. The job lost to outsourcing might be at an Indiana based utility, bank, hospital, auto insurer…..
IBM expects to be able to import these foreign workers no questions asked, with no regards to prevailing wage or whether there are numerous US IT workers put out on the street who could do the job. The end result is the same thousand of American IT workers at IBM consulting services and at the Indiana based companies loose their jobs. However, first the US IT workers will be expected to do what is called a “Brain Dump”. That is for several months train their foreign replacements in knowledge that took themselves years to acquire, often the product of hundreds if not thousands of hours of unpaid overtime to their former employers in return for an extra month or two of severance.
Nor is impact that outsourcing is having on a corporation’s ability to prosper through innovation an issue stopping outsourcing/offshoring. Read Dr. Matloff or for that matter read any classic management book on creativity and innovation in the work place. The “HP WAY” anyone. What are the keys to innovation? How about talent, trust, respect, proximity, inspiration, spontaneity, methodology and teamwork. Hard to pull of when folks are spread around the world and the goal is for your new foreign “teammate” is to replace you at half the cost. Innovation is nice but when you are a CEO making hundreds of times what your average employee makes in a year do you really care if your company will be around in 3 or 4 years.
Karen, the problem you are having is that you are confusing what many Economists are now more appropriately calling Global Labor Arbitrage with what you think is Neo-Classical Free Trade. see http://en.wikipedia.org/wiki/Arbitrage Arbitrage is an entirely different thing from what we learned in Economics 101 as mutually benefitial free trade. Arbitrage is the exploitation in the pricing discrepancies between two markets. It is not fair or free trade in that it clearly does not benefit both parties. In fact arbitrage can be and often is clearly exploitive of several parties at the same time. The only true beneficiary is the Arbitrage agents.
If you have any doubts read what the author of what more 75% of college freshman still use as their introductory Neo-Classical economics text book and Nobel prize winner Paul Samuelson has to say about outsourcing:
http://heather.cs.ucdavis.edu/Archive/Samuelson.txt
Clearly Samuelson does not believe that outsourcing is Free Trade. He sees it as arbitrage as well.
Also read what no-nonsense traditional conservative, former Wall Street Journal editor and Reagan assistant secretary of treasury Paul Craig Roberts has to say about outsourcing.
http://www.vdare.com/roberts/labor_arbitrage.htm
http://washingtontimes.com/commentary/proberts.htm
http://www.chroniclesmagazine.org/cgi-bin/roberts.cgi/The%20Economy/Outsourcing/index.html
http://www.itpaa.org/modules.php?name=News&file=article&sid=1927
http://www.businessweek.com/magazine/content/04_12/b3875614.htm
Furthermore, I disagree in part with Paul Craig Roberts. The only job security one has is be in a strong union because any domestic job can be outsourced viva global labor arbitrage. Norman Matloff provides an example where the Clark County School District in Nevada created an uproar when it t used the H1-B visa program to import teachers from the Phillipines for $27,000 a year. The school district was claiming a teacher shortage. No the only teacher shortage was finding teachers willing to work for $13.50 an hour in a booming suburban school district. Read: http://heather.cs.ucdavis.edu/Archive/H1BTeachers.txt
Another example. Karen perhaps you forget but about 10 to 20 years ago the nation’s major Hospital and HMO chains were screaming about an acute Nursing shortage. It seems the big corporate interests were wanting to import tens of thousands of nurses from the Phillipines, India and Ireland. Nurses across the country were lucky that Nursing unions in California and on the East Coast got angry. They even went on strike and the public backed them.
A small percentage of Nurses belonging to labor unions fought the lobbying attempts by Healthcare industry giants to drive their salaries into the ground through immigrant indebtured labor.
What happen to IT workers is that we were not politically organized and to this day not a one of us belongs to a union. We were asleep while the Republicans and the DLC Democrats sold us down the river.