Labor battles to keep tech jobs

The political fight over the export of U.S. tech jobs to low-wage countries, or "offshoring," is coming to a boil in Sacramento.

California, with its size and large number of high-tech companies, is an important state in the fight, but statehouses from coast to coast are seeing similar battles over restrictions on offshoring.

Big corporations want to use it to help their bottom lines, and see nothing wrong with the practice. Organized labor sees it as a mounting threat to hundreds of thousands of U.S. jobs, and the debate is expected to boil up to the national policy level as state-law skirmishes intensify and election-year rhetoric heats up.

Anti-offshoring bills sponsored by organized labor now in the Legislature propose:

• A ban on offshoring state-contract work
• Requiring that corporations doing business in California report where they employ their workers -- in-state, out of state or in other countries, and
• Limiting the processing of certain information, such as that related to homeland security or medical records, outside the United States where there's no legal recourse against those who might misuse it.

In a Sacramento talk last week, Bill Archey, the Washington D.C.-based chief of AeA, the large national electronics-industry association, sang the praises of exporting U.S. jobs by tech giants. He vowed to challenge any protectionist state legislation opposing it, saying such moves would make other trading nations retaliate against the United States.

Here, eight bills pending in the Legislature -- down from 13 a few months ago -- battle the offshoring of tech jobs.

The AeA has helped kill 10 job protectionist bills across the country, said Archey, but 22 states have bills pending.

Angie Wei, legislative director for the state labor federation, said more than 30 states have joined California in introducing bills proposing that state agencies contract only with companies that perform work in the United States, not overseas.

What's the big deal? The visit by the national association chief gives some idea of the stakes. Archey, at the Sacramento seminar last week co-sponsored by the California Chamber of Commerce, said there's no reliable tally of U.S. tech jobs lost to offshoring.

He compared worries over offshoring to the unfounded fears in the late 1980s and early 1990s that Japan would become the world's dominant economic power. He said tech jobs lost over the past three years can be blamed less on offshoring than on weak global and domestic economies, as well as increased productivity.

He called offshoring a long-term benefit for the United States, leading to lower prices and more productivity, allowing companies here to better compete with countries which are catching up with the United States in education, skills and infrastructure.

Acknowledging "a fair amount of pain" from the loss of U.S. jobs shifted offshore, Archey warned that protectionist legislation to curb it could lead to harmful retaliatory tariffs against U.S. high-tech products. That, he said, would hurt the U.S. economy and its tech sector.

Countries such as India are getting what had been U.S.-based software jobs, said Archey, because "they do it cheaper, as well as better. We as Americans have a lot of difficulty dealing with that."

Archey said schools in China and India are now churning out technology-trained graduates, lamenting that there's no mass interest in math and science courses among U.S. teens to fill the next generation of jobs. He sees that gap being filled by growing numbers of tech-trained students in other countries.

"Engineering (school) applications (in the U.S.) have declined by 23 percent over the last 20 years," he said. "Why? Because it's hard. Most kids don't want hard."

Students wanting higher grade point averages take easy classes to get them, he said.

Beyond that, in his research paper, Archey reports, "Currently, all studies indicate that many of our brightest kids are turned off by careers in these fields and think that people who enter them are just geeks, nerds or dorks. High-tech workers need to change the attitude."

He said U.S. software programmers in particular need government help with retraining, and that U.S. schools need to boost math and science.

"The world is changing, folks," said Archey. "I'm not sure how much we're up to it."

Aw, come off it: Techies and organized labor, put out of work because of offshoring in Greater Sacramento and across the country, don't buy Archey's line. They've watched state agencies and companies such as Oracle Corp., Hewlett-Packard Co. and Intel Corp. export their jobs to India and China.

Ian Fletcher, vice president of government relations for the American Engineering Association in Fort Worth, Texas, is a major skeptic.

"The issue is, despite the clouds of intellectual squid's ink being spewed by big business, very simple," he said this week. "They want cheap labor, period."

To Archey's plaint that there's no next generation of U.S. scientists in sight, Fletcher responded, "How can we get kids to major in technology disciplines in college if they see all the jobs going abroad?"

In his published point-by-point reply to the corporate offshoring arguments, Fletcher pulls no punches.

"Sometimes, they don't even give rational arguments, just slick puffery about the wonderfulness of capitalism, technology and trade, often combined with insinuations about offshoring's opponents," he writes. "They are masters of question-ducking, subject changing and deliberately misframing the opposing position."

Fletcher, citing many years of U.S. trade history, doesn't think protectionism is a bad thing; he thinks it's necessary to preserve American jobs. While acknowledging that protectionist laws can be flawed, he favors a simple approach: "Put a tariff on anything that is imported."

But he's not expecting any national political movement until most of the country sees offshoring as a crisis. He sees that coming some time after the November presidential election, when he predicts a national economic downturn will turn up the pressure for political action.

Wei of the state labor federation has her own set of stats to argue against the effects of offshoring. Of 3 million jobs lost in the United States over the past three years, "at least 15 percent of those jobs have reappeared overseas."

Among the labor group's other contentions:

• Offshoring of state and local government technology contracts will grow from $10 billion in 2003 to $23 billion in 2008.
• An average computer programmer in San Jose earns $77,690 a year, plus benefits. The same job in India pays $10,900.
• U.S. corporate profits grew by 57.5 percent -- from $635 billion in the first quarter of 2001 to $1 trillion in the fourth quarter of last year -- "while unemployment continues to last longer than it has in decades."

Other states have acted against offshoring. Arizona Gov. Grace Napolitano has issued an executive order banning offshoring of state contracts, while the governors of Missouri and Michigan have ordered job preferences for in-state or U.S.-based vendors.

Indiana Gov. Joseph Kernan recently canceled a state contract with a large software company in India, Tax Consultancy Services. That prompted Indiana Republican state Sen. Jeff Drozda to introduce a bill requiring that all state work be done in the United States.

In Minnesota, Republican Gov. Tim Pawlenty required that companies disclose any work being done outside the United States and took steps to encourage keeping state work within U.S. borders.

Techies talk: Kim Berry, 45, a local engineer activist who strongly opposes offshoring, called AeA's arguments "propaganda that's very well calculated." He bristles at the notion that experienced techies like himself need to be retrained because of offshoring. He's been able to find local tech work after leaving H-P voluntarily, but not at the pay he used to get.

The only retraining offered to one 48-year-old tech worker he knows was to become a nurse. Another couldn't find any work besides selling cars.

He doesn't think American techies lack skills or that skilled labor is scarce; U.S. techies aren't being hired, he believes, because it's cheaper to hire elsewhere. He sees no tech jobs advertised in newspapers, and notes the continuing demand for H1-B visas, which corporations have used to import workers from India and other countries into the U.S.

He's thinking about going to law school.

Mark Blackburn, 50, a Sacramento database architect, has been unemployed for nearly two years, having last worked on two state contracts. Just by monitoring his e-mail, he's noticed the number of tech job openings is about 5 percent of the number posted during the tech boom five years ago. Jobs that used to pay $120,000 a year, he said, now pay half that.

An advocate of a free marketplace, Blackburn generally agrees that protectionism might go overboard. "There might be better methods," he added, "perhaps tax credits for companies who rehire displaced U.S. workers."

He's figuring out what other fields he can plug into. He's looked at alternate healthcare, the maritime industry or going overseas to find a tech job -- even to India where the lower pay goes further.

"A major reason offshoring costs less is that other countries don't steal (tax) 60 percent of the money these professions make," said Blackburn.

Like engineering association chief Fletcher, local techie Berry notes that U.S. tariff waivers helped get companies like NEC Electronics to put its semiconductor plant in Roseville, so it could sell into the U.S. market.

"When it comes to offshoring, protectionism shouldn't be a bad word," said Berry. "It's our only way of stopping our standard of living from averaging out to India. When I leave my home, it's normal that I lock my door."