Outsourcing America: What's Behind Our National Crisis and How We Can Reclaim American Jobs
By Ron Hira and Anil Hira
Amacom, 236 pages, $22
Ron Hira and Anil Hira tell readers what companies know well: Outsourcing is an ''irreversible megatrend" that is sapping the US job market and threatening the lifestyles of US professionals and workers pulled into its vortex.
The magnitude of what former presidential candidate and businessman Ross Perot famously called that ''giant sucking sound" -- the flow of US jobs overseas -- is difficult to prove due to an absence of reliable federal data. The US Bureau of Labor Statistics' attempt to track offshoring data is dismissed as unreliable by analysts on both sides of the issue.
But Ron Hira, a public policy professor at Rochester Institute of Technology who is widely recognized for his work in this area, and Anil Hira, a political scientist at Simon Fraser University in Vancouver, present a clear and convincing picture.
It's not just about the unemployed, such as the former XXXXX call-center workers in Fairhaven, Mass., who trained their replacements in India and backed them up on the most difficult customer calls prior to their 2004 layoffs. And it's not only about whether the most vulnerable jobs are technical or service or about the disturbing trend by companies to break down computer tasks into ''modules" -- the high-tech version of Adam Smith's division of labor -- so that lower-skilled, overseas workers can complete them efficiently.
The authors propose that offshoring explains the ''jobless recovery" early in the Bush administration and lackluster and often low-quality employment growth during the recovery. Corporate profits expanded 62 percent from the end of the 2001 recession until early 2004, they said, and labor compensation rose 2.8 percent. ''We are supposedly out of recession, but the labor market has yet to recover," they write.
The Hiras compiled a stunning chart of major corporations' employment in India alone: Cognizant 13,000; Hewlett-Packard 10,000; Oracle 6,000; IBM 6,000; and General Electric 2,500. Even Perot-founded EDS employs 1,500 there. Companies are reluctant to acknowledge publicly that one job in India often comes at the cost of one US job. They argue the Bangalore office serves customers in nearby Asian markets.
Corporate America would like us to believe that, in the long run, offshoring is good for them and therefore good for the country. The Hiras throw those arguments out. Take one popular argument: as skilled workers overseas become more scarce their wages will rise, too, relieving downward pressure on US wages. But India and China combined crank out five times more engineering graduates every year than the United States, a seemingly endless supply.
The Hiras' last chapter has the requisite policy prescriptions, from worker protections to research support. But for those who blame offshoring for eroding US living standards, the first step is getting Congress to notice. The plight of US employees apparently isn't enough. Perhaps the disturbing future portrayed in this book will get their attention.
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