From Green Bay to Bombay

Offshoring costs US jobs, tax dollars

While all the telecommunications commercials tell us globalization is bringing the world closer together into one big happy, wired family, Wisconsin's experience shows that corporate-style globalization is actually pulling people apart.

Globalization is creating a more divided world, polarized between an international elite enjoying mega-wealth and those without wealth and power, whether we live in Mexico City, Milwaukee, Baltimore or Belarus.

Instead of an interconnected global village, we are witnessing global pillage on a grand scale: Ordinary citizens are losing job security and a democratic voice as corporations roam the globe to find the lowest wages, weakest environmental laws, and the most pliable governments.

This form of globalization enshrines "investor rights" while often trampling on human rights. It winds up pitting workers across the planet against each other, while both toil madly in a race to the bottom. In this race, decent wages, environmental conditions, fair taxes, and democracy are all excess baggage tossed aside in order to lure investment.

A couple examples from Wisconsin illustrate this trend. A private firm called eFunds Corp. now administers electronic benefit cards for New Jersey's recipients of welfare and food stamps. The company had utilized a 600-worker call center in Green Bay to handle questions from recipients. Wages at the Green Bay call center ranged from $7.50 to $12 an hour, according to a National Public Radio report. They offered entry-level jobs for workers lacking extensive experience and training.

Then, last February, eFunds sawed off the ladder of opportunity in Green Bay. The jobs handling New Jersey's inquiries were shifted to Bombay, India, nearly 8,000 miles away. While eFunds officials declined to discuss wages in India or the precise number of jobs lost in Green Bay, the New York Times recently pegged typical call-center wages in India at roughly $200 a month. Forrester Research of Cambridge, Mass., projects that this type of "off-shoring" could result in the loss of 3.3 million American jobs by 2015.

Defending the shift of jobs as a prudent move, eFunds vice president Robert Azman stated, "outsourcing is one route to attaining a competitive advantage for financial services companies facing increased competition and tighter margins."

Mr. Azman somehow neglected to mention that all the savings in labor costs from this public contract wind up in eFunds' corporate account, not the public treasury. As one New Jersey welfare official stated, "But we're not saving taxpayer dollars. The only group that saves dollars is the company." An infuriated New Jersey state Sen. Shirley Turner declared, "This is another example of privatization victimizing people. They're using tax dollars to take jobs out of this country."

Eventually, the protests of New Jersey's public officials forced eFunds to return call-center jobs to the state from India. Nonetheless, eFunds -- perhaps emulating the New Jersey-based Sopranos -- managed to extort an additional $886,00 from Jersey taxpayers. This increase amounted to "a 22% increase that effectively cost the state nearly $100,000 a job," the Wall Street Journal noted June 3. Meanwhile, the state Senate unanimously passed a bill requiring state contractors to use US employees. However, the Journal reports, "the business lobby, caught off guard, mounted a fierce lobbying campaign, so now the bill is hung up in committee in the Assembly." Opponents of such legislation warn that it would violate the rules of the World Trade Organization.

Such legislative battles are flaring up in at least four other states, as New Jersey is not the only state to see its public-service contracts shifted offshore by taxpayer-funded private corporations. For example, Wisconsin's food-stamp inquiry system has also been "off-shored" to India. Under a contract with Citicorp Services, questions in English about our Wisconsin food-stamp program are now handled in India. (Spanish-language questions are routed to Tampa, Fla., despite a plentiful supply of Spanish speakers in higher-wage Wisconsin.) Former Wisconsin congressman and Milwaukee mayoral candidate Tom Barrett has blasted the export of the food stamp project to India as "reprehensible."

Critics of "offshoring" like Barrett argue that this kind of "cost-cutting" is remarkably shortsighted: Through the use of tax dollars, foreign workers are exploited, ex-welfare recipients in the US are deprived of the chance to earn a decent wage and become taxpayers, and meanwhile firms like eFunds pocket the savings on wages.

Thus, poverty is being reinforced in the US while misery in India is being exploited, all at taxpayer expense. Worse, we are likely to see more of this if the Bush administration has its way with the proposed Free Trade Agreement of the Americas, which would put virtually all public services up for bidding by for-profit corporations.

But the shift of technology jobs to low-wage sites like India may produce a profound shift in political support for "free trade" in the US. This time around, not only manufacturing and relatively low-end call-center jobs are at stake. Highly-paid professional jobs are also on the chopping block.

In the past, while a strong majority of Americans have consistently expressed hostility in polls to free-trade agreements like NAFTA, the World Trade Organization, and Permanent Normalization of Trade Relations with China, there was often a sharp dividing line based on class status and the level of formal education. In general, college-educated professionals could usually be counted upon to follow behind elite corporate, political, academic and media opinion-shapers as they expressed unanimous, zombie-like faith in the virtues of shipping "low-value" jobs overseas and replacing them with high-wage, high-tech jobs. US professionals have tended to sneer at the anxieties of blue-collar workers watching manufacturing jobs get shipped off to low-wage, high-repression Mexico and China.

But a vastly-reshaped environment now confronts professionals in the US, thanks to satellite technology that facilitates the export of those same high-wage, high-tech jobs to places like India. Many college-educated workers are now wondering, "Is Your Job Next?," as ominously asked on the Feb. 3 cover of Business Week. Highly-paid and well-educated US workers in chip design, engineering, and financial analysis now watch their own jobs being undermined by the use of low-paid but highly-educated workers in Russia, India, China, and elsewhere, offering corporations savings of 60%, 70%, or sometimes even 95% on labor.

After recounting one shift of jobs after another, the Business Week editorial nonetheless attempts to soothe anxious professionals by arguing that the US merely needs to "do what it has in the past and move up the value-added ladder to create new products and services," as if the economic battlefield were not still littered with a still-mounting toll of blue-collar casualties.

Still, Business Week warns: "If it can re-start its growth engine, the US has nothing to fear from the great white-collar migration. But if it doesn't, there may be serious trouble ahead."

The battle in New Jersey that began with the eFunds call-center jobs may signal the opening of a new front in the much larger war over the investor-rights model of globalization. And a new contingent of newly-nervous professionals could potentially join the fight.

Roger Bybee is a Milwaukee-based writer and consultant.

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