Wednesday, April 09, 2008

The Crisis of Disappearing American Jobs

I’ve been a computer consultant for decades. During the “tech bubble” of the late 90s, when programmers like me were in great demand, I started working at the San Francisco corporate offices of Gap Inc. Ever since, they've paid me well to design MS Excel spreadsheets, automated with vba code. Aside from a couple of short intervals between contracts, these assignments have been my consistent meal ticket.

A new management team has decided to cut costs by outsourcing all programming work to India. My last day is a week from Friday. Aside from being a possible milestone in my own life… the movement of jobs off-shore is a big issue in the current political debate. I’ll be blogging about the political, economic, and spiritual significance of the phenomenon. It may take a few postings to do so, but I’ll at least get started today. Anyone who disagrees with my views is always invited to comment, letting me know where you think my thought-process has gone wrong.

By sending the work off-shore, Gap is losing my proven skills, and my years of experience with their specific needs. They’re losing my availability to present my work face-to-face, with no language barrier. Due to these factors, it may take 3 or more workers in India to replace me. But since the Indians work for a fraction of what I get paid, Gap can hire several of them to replace me, and still save significant money.

The city of San Francisco requires local businesses to provide certain benefits to all employees, such as sick leave and health benefits. This translates into a few extra dollars per hour in costs that get passed on to the Gap. So even if multiple Indians working long hours run up combined salaries that rival my own, the cost of these mandates could tip the balance, making outsourcing the rational choice for my employer.

Why are the Indians willing to work for so much less compensation than I am? If I demand $50/hour to write computer code, why are they doing it for the rupee equivalent of $10? Mustn’t we conclude that their lives are far less comfortable than my own? That the $10 is more vital to them than the $50 is to me?

A little examination reveals that the correlation between money and happiness is non-linear. (Even the Bible says something like that, though in less precise terms.) For someone struggling to provide a family with the most basic necessities of life, each dollar earned is a meaningful boost to his happiness (or decrease to his suffering, if you prefer). But once we get a beyond having to worry about paying the rent, greater earnings, perhaps surprisingly, have little to no effect on happiness.

To be honest, I don’t expect this job loss to downgrade my lifestyle at all. But who knows. Maybe I’ll never find another job at this level. Maybe I’ll have to spend time and effort learning new skills, making myself more productive and useful, in order to get a new job. While I’m retraining, maybe I’ll have to give up a few trips to Vegas, or downgrade my Netflix subscription. It’s highly improbable that the effect will be much more serious than that.

I may lose some luxuries, while a few Indians get help climbing out of poverty. Who could possibly be such a narcissist, such a jingoist, as to consider this a bad thing??

(Yes, of course, many Americans getting laid off are worse off financially than I, and they must give up more than luxuries. That’s irrelevant to my point, which is that the typical working-class American losing his job is wealthy compared to the Indians who are gaining them.)

So what’s with the furor in the US, particularly among Democratic primary voters, against globalization and outsourcing? Why are the candidates demogoging about free trade causing jobs to “disappear”… as if those jobs cease to exist when they leave our borders? (Tangentially: at an Obama rally, a supporter actually ranted that NAFTA is responsible for his job getting outsourced to India… and Barack had to gently remind him that India isn’t in North America.)

Kindly contemplate this issue, and I’ll share more of my own thoughts in an upcoming post.

[In an unrelated matter: I have a sneaking suspicion that some readers of this blog may be interested in a new documentary, “Peyote to LSD: Psychedelic History,” airing on the History Channel, Saturday April 19 at 10 PM.]

11 comments:

Anonymous said...

"By sending the work off-shore, Gap is losing my proven skills, and my years of experience with their specific needs. They’re losing my availability to present my work face-to-face, with no language barrier. Due to these factors, it may take 3 or more workers in India to replace me. But since the Indians work for a fraction of what I get paid, Gap can hire several of them to replace me, and still save significant money."

Like you Stuart, I have strong Libertarian leanings. I believe in letting business men do what they feel they need to do for the vialbility of their business. However the above struck me. Using lots of hardware and software, when I find myself dealing with tech support from India it's a mixed bag. At the same time I thoroguhly enjoy the effort and gracious attitude. Maybe we have to bear with it, have compassion while they catch up. Can you imagine having to do your work in Hindi?

Stuart said...

Anony wrote...
At the same time I thoroguhly enjoy the effort and gracious attitude. Maybe we have to bear with it, have compassion while they catch up.

I've had just a few hours of working with Rajesh, the head of the off-shore group that I'm transferring my responsibilities too. God knows that his attitude and work-ethic are miles ahead of my own.

As an Information Tech person, I appreciate the power of "brute force" methods. That is, it's surprising how often you can find solutions using little more than vast amounts of calculating power. So perhaps the ability/willingness of the off-shore team to work hard and long will overcome whatever difficulties are caused by language and logistics.

I'm not at all certain that this is the case; it'll be interesting to see. (I'll know whether or not the outsourcing has worked, based on whether or not Gap comes crawling back to me after a few months.)

Doug said...

The mixed bag analogy is apt. I work for Boeing commercial airplanes, and our latest, greatest product (the 787 Dreamliner) is in essence an 'offshore' product. The majority of the airframe is manufactured outside the U.S., then flown to Seattle for the final assembly. While forecasting significant future savings once everything is up and running, the program is experiencing long and costly delays due to all sorts of 'global supply chain' issues.

But before anyone points to that example as a reason for protectionism, I offer that it has been equally frustrating, if not more frustrating to work with some of the American suppliers than the foreign ones. Bad management can screw things up no matter what language it is spoken in.

Wages in many parts of India are rising rapidly, as are the quality and costs of living. Indian companies have begun running into trouble finding qualified talent, even from a very large pool of domestic engineering/computing graduates, because the quality of education varies tremendously there. This is true the world over, there simply aren't enough technically trained people to meet the demand for those skills. Thus Indian firms have to offer higher pay in order to get and retain good employees. It wont be long (at least in historical terms) before the pay gap closes.

Your skills are still in high demand. If you play your cards right you might end up doing your old job as a high paid contractor instead of regular minion. That happens fairly often in the aerospace world. :)

For Each problem In Outsourcing.Examples
Call FindSilverLining(problem)
Next problem

Best of luck during your transition!

- Doug

Stuart said...

Doug said...
For Each problem In Outsourcing.Examples
Call FindSilverLining(problem)
Next problem


:). My brother, a prof at the famed MIT Media Lab, has taught me that programming is more than just a tool for controling machines. It can also be used as a language for humans to communicate mind-to-mind.

I'm curious as to how many meditators come from computer related fields (vs the humanities, religious studies, business, etc). My own computer work involves taking complex problems, and examining them so meticulously that a profound step-by-step simplicity appears. This examination is not helped by wants or opinions, nor by I/my/me-thinking. It's accomplished through perceiving the process with clarity, precisely as it is.

To me, programming is a practice that's very much in harmony with formal meditation.

Doug said...

The state of complete absorption in which the best coding gets done is a very tangible form of what Zen practitioners (in theory) aspire to in all our activities. :) In general, people say they enjoy their jobs more when they can achieve that sort of unfettered involvement in what they are doing. Psychologists call it "flow."

http://en.wikipedia.org/wiki/Flow_(psychology)

- Doug

Anonymous said...

"My own computer work involves taking complex problems, and examining them so meticulously that a profound step-by-step simplicity appears. This examination is not helped by wants or opinions, nor by I/my/me-thinking. It's accomplished through perceiving the process with clarity, precisely as it is."

Hello Stuart,

Really enjoyed your reflection. I was an English/Art History student, then community development type in architecture, all idea and opinion bound. Turbulent has been my life and I thought that passion was the way.

Now learning programming, just a little and new software, and it relaxes my mind, gives me real solace. I think you have a point.

Keeping you in my (ahem!) prayers if that's ok. That you are kept from excessive anxieties during your transition. Your mind has been a good companion to me since I have been reading your logins on many varied sites.

Peace

Stuart said...

Thanks for your very kind post, Anony. If indeed true nature connects us all, like eggplants on the same vine, then maybe we really can help each other with prayers. Praying may be a little different from the mantra repetition I do... but it's the intention behind it that matters.

But I hasten to add that I really don't expect problems from my job transition.

One thing that helps: I realize that for my particular skills, there are a few employers who will pay very high wages, some very low, and lots in the middle. If I strove to squeeze the highest possible profit from my work, I'd always be anxious about losing it. So instead I stay satisfied with the middle of the bell curve. This way, if I lose one job, there's little stress about finding another one at the same level.

Stephen C. Rose said...

Sorry, Stuart. Gap HQ in NYC is a few floors beneath where I live and work.

Since Obama is my biggest concern I will suggest that you are encountering politics -- Barack is a globalist extraordinaire. But he is also bound and terermined to make things better here. A hat trick. Only doable with a 65 percent majority and some skillful organizing. Barack is perfect for this task. Amazing we've come this far.

As to what we do.

My hope is that he is serious about moving beyond the oil economy. If so there will be jobs we have not even imagined yet.

Meanwhile I hope you are able to find a creative and remunerative alternative source of income.

All the best, S

Stuart said...

Stephen C. Rose said...
Obama is my biggest concern

Good luck with your efforts in supporting Obama. I've been closing following the race, and am blogging some thoughts about it today.

Global Citizen From India said...

Why are the Indians willing to work for so much less compensation than I am? If I demand $50/hour to write computer code, why are they doing it for the rupee equivalent of $10?

---------

Thats because a chocolate bar that would cost two doallrs in america costs only 40 cents in india. You are probably aware that the cost of living in san fransisco is far higher than most cities within america itself.

Probably you are not aware that there are many americans who travel to India does good shopping (books, jewelry, clothes, cutleries, etc). Because they are 5times cheaper in India.

The Indian agrees for a 10 $ against the 50 $ you demand is only because what takes 50 $ to survive for you takes only 10 $ for the indian to survive.

Thats just a simplified economics for you. However my heartfelt sympathy to you for running out of action. But im sure its temporary.

Stuart said...

Thanks for your comments, Global Citizen From India. For now, Gap has hired me back, as my particular experience with their systems gives me some value beyond what they get from outsourcing.