Outsourcing: Exporting Good American Jobs

As working families across the country struggle with historic joblessness, the Bush administration supports corporations that send work overseas.

By Susan Ellen Holleran

HARRISBURG, PENNSYLVANIA

For EarthLink CEO Garry Betty, 2003 was a very good year. Betty took home almost $1 million — $346,790 as a bonus — for cutting EarthLink's workforce by one-fourth, leaving 1,300 people out of work. In January 2004, he announced 1,300 more job cuts. In the process, EarthLink, a major Internet service provider, closed its call center here, sending 400 jobs to India and the Philippines — a stunning local example of the nasty phenomenon known as outsourcing.

Many of the 400 who lost out are from AFSCME families. They had studied to prepare themselves for cutting-edge positions and enjoyed helping customers deal with hi-tech problems. That describes perfectly Jason Swope, fiancé of AFSCME member Andrea Alexander.

The 27-year-old Swope, Alexander says, was a technical specialist who "really enjoyed his job and the people he worked with and helped." Love of job, and four years' service, didn't help: In February, he was shown the door, and he's still looking for a job that pays anywhere near as well as the one that was taken from him.

Alexander (a member of Local 1224 of Council 90) now bears the burden of supporting the couple, and their two-year-old son, on her salary as a clerk II with Pennsylvania's state educational-services agency. "It's been stressful," she admits. "Jason is real worried, especially with our wedding coming up in a couple of months."

EarthLink not only victimized its employees, it also made them train the low-wage replacement workers and threatened to take away their severance pay if they spoke publicly about the situation. The loss has hit this state capital hard, both psychologically and economically. Meanwhile, EarthLink has doubled Betty's bonus.

The outsourcing epidemic — the United States' response to the global economy gone haywire — is eating up good American jobs. Every month in this country, the AFL-CIO says, about 68,000 lose theirs. And the problem is growing. According to the Bureau of Labor Statistics, there were more mass layoffs in January 2004 than in any previous January for the nine years that such records have been kept. Those jobs, say economists, aren't coming back.

The jobs that are being exported include many that involve high technology, ranging from customer-call centers handling banking, credit cards, mortgage applications, insurance claims and real estate appraisals to X-ray reading, medical transcription, software development and computer programming. These are fields that once held a promising future. Some are private-sector jobs; others are public. In fact, for residents in 40 states plus the District of Columbia, questions about Food Stamps are being answered at call centers in India.

HERE TODAY ... When N. Gregory Mankiw, chairman of Bush's Council of Economic Advisers, called the current penchant for overseas outsourcing "a good thing," he demonstrated the administration's disregard for America's working families. Even House Speaker Dennis Hastert (R-Ill.) felt forced to disagree. "I understand that Mr. Mankiw is a brilliant economic theorist," said Hastert. "But his theory fails a basic test of real economics. An economy suffers when jobs disappear."

Since the Bush administration came into power, our country has lost nearly 1.5 million jobs, the worst since Hoover was President. This is hardly the time to encourage outsourcing, but that is what Bush's corporate cronies are doing. They have been hitting the news shows bragging about the wonders of "free trade." And after cutting worker-training funds for three years in a row, Bush now says that training is the solution to disappearing jobs.

"Training for what?" asks AFL-CIO Industrial Union Council Exec. Director Bob Baugh. Even high-skilled jobs are being sent offshore. He believes that the major job exporters "are trying to hide from a very dangerous political issue — for them — and this is what they come up with: Let's just blame the workers because they don't have enough skills and education."

BAD ECONOMICS. Corporate America has marshaled its cadre of economists to sell the public on the importance of maintaining free trade. But economist and New York Times columnist Paul Krugman sees things differently: Free trade is "viable only if it's backed by effective job-creation measures and a strong domestic social-safety net."

The Bush administration fails in both categories. It has lost millions of jobs, and its fiscal policies have made gaping holes in the safety net. Today, it takes longer than ever for even college-educated workers to find a new job. Despite this and the fact that unemployment coverage ran out for more than 750,000 in February, the White House and its congressional allies are actually blocking a vote that would extend benefits.

A number of congressional Democrats, including U.S. Reps. Rosa DeLauro (D-Conn.) and Barney Frank (D-Mass.), and Sens. Christopher Dodd (D-Conn.) and Jon Corzine (D-N.J.), are working on legislation to discourage outsourcing. Corporations currently receive tax advantages when they send jobs overseas. AFSCME is lobbying for laws that would close those loopholes and give workers who lose their jobs through outsourcing protections that exist under the Trade Adjustment Act.

At least 33 states are considering bills to protect their residents' jobs. Most favor domestic vendors for state contracting.

In Michigan, Gov. Jennifer Granholm (D) recently signed two orders extending legal preferences for Michigan-produced goods and services — to ensure that the state government was not contributing to job loss. In a television interview, an advocate of outsourcing attacked state Rep. Dianne Byrum (D) for these efforts, saying, "It represents a tax on Michigan consumers." Byrum's response: "I think we're investing in our state. These are Michigan-paid tax dollars that are going to be used for our people."

KERRY'S PLAN. Presidential candidate John F. Kerry has developed a comprehensive plan to create 3 million jobs during his first 500 days as President. It will eliminate all the tax breaks that encourage companies to move jobs overseas. Kerry will jump-start the effort with a New Jobs Tax Credit. Funding for the credit will come from a one-year tax holiday encouraging companies with large foreign holdings to reinvest in America — and pay the taxes such reinvestment will generate. He also wants to help our economy regain its competitive edge by working to lower health care costs, modernize our information infrastructure, make energy more affordable and increase investments in education.

Anti-Outsourcing Hero

Lou Dobbs has long been a business journalist and television commentator. But in the past couple of years, he has emerged as a strong critic of the business world on ethical issues.

When scandals broke about the corporate abuses like Enron and WorldCom, Dobbs was one of the few to voice his anger about the damage crooked CEOs do to our society.

More recently, he has been using his bully pulpit as anchor and managing editor of CNN's Lou Dobbs Tonight to document corporate greed that fuels the growing outsourcing of American jobs. Almost every show spotlights an example of this problem. Dobbs is also working on a book, tentatively titled Exporting America: The Betrayal of the American Dream.

The Coalition of Labor Union Women has given Dobbs its 2004 Ms. Award as a tribute to his fight for ethical corporate governance and against the wholesale destruction of our labor market.