Twenty years ago, a left-of-centre politician had to be really clumsy to lose votes in Riverdale, the east-end district where I live (in Toronto).This was because of what one New Democrat who used to mine elections here with extravagant success called "the solid, working-class base."
Today a candidate can't count on anything.
One reason is that the working class has vanished, at least what we used to think of as the working class - tradesmen, mechanics, factory workers, folks who were happy to belong to unions because the unions made them strong.
Burger flippers and Starbucks servers and Home Depot clerks who collect minimum wage, or a buck or two above it, aren't working class, they're the working poor, and they don't have a very substantial local presence. (Riverdale's cleaning ladies get paid far more an hour than these people.)
A lot of teachers live here, but despite their unionist inclinations, they're no more working class than doctors with their unionist inclinations. There are a lot of independent professionals who keep the renovators hammering noisily along. And there are an enormous number of people in what is called "the knowledge industry." A knowledge worker can be loosely defined as anybody who spends the workday at a computer, and they often make a whack of dough. Riverdale has become solidly, almost exclusively, middle class.
But the knowledge industry is about to vanish - poof! - and when it does, so will a huge part of Riverdale's middle class; disappear as completely and rapidly as the working class did (and not just in this neighbourhood; everywhere in Canada and the U.S.). What I want to know is who will buy cappuccinos and shop at Home Depot and The Bay when this happens? What work will be left for the working poor when the distinctly non-carriage, middle-class trade that kept them going is gone?
Economics isn't my strong point - the cocktail hour is my strong point - but I can watch TV and read newspapers as well as anybody who flunked Grade 13 math, and I'm worried as hell.
Not long ago, 60 Minutes did a piece about call centres moving to India. Not long before that, call centres were the great hope for survival in the Maritimes, given that everything else down there was failing. Guess what: People will answer phones in New Delhi for a lot less dough than anybody in Moncton.
Companies that have recently moved their call centres to India include American Express, Sprint, Citibank, Delta Airlines. Phone Hewlett-Packard or IBM or Dell for technical assistance and you're talking to India. Google is headed there. If you have an MRI at Massachusetts General Hospital, it will likely be analyzed by a radiologist in India. Two hundred thousand U.S. income tax forms will be prepared there this year.
An estimated 400,000 American jobs have gone to India and China and even to Russia in the last three years, and these jobs are no longer just low-end manufacturing - Nike running shoes, DVD players.
But call centres employ the lower middle class if not the working poor; they're the McDonald's of the knowledge industry.
Move up a few information technology notches and an enormous shock is coming down the pipe. In 2004, IBM is going to move 3,000 jobs offshore, none of them, as The Wall Street Journal discovered this week, anywhere near as menial as telling you your credit card will be unblocked as soon as you make a payment. In the coming years it will shift many thousand more.
IBM can hire a programmer in Beijing for (these are U.S. dollars) $12.50 an hour, compared to $56 in Poughkeepsie, N.Y. That's a $116,000-a-year job that's going bye-bye U.S.A. A senior analyst or an applications-development manager - with five years' experience, to boot - bills $18 an hour in China, $66 in the States. Americans in those jobs pulled down $137,000 a year. Income doesn't get much more sincerely middle class than that.
Anticipated annual savings by IBM, which might be leading the white-collar stampede offshore, but not by much: $168 million by 2006.
It was spooky enough when the shirt you bought at Sears had a label that said "Made in Malaysia." Now if you want to scare yourself to death, think how many of the things your neighbours - and maybe even you - do that couldn't be done in Rio or Shanghai for a third of what you need, as far as you're concerned, to survive.
>> From: Michael Pollak <mpollak at panix.com>
> Date: 2004/01/19 Mon PM 01:27:43 EST
> To: lbo-talk at lbo-talk.org
> Subject: Re: [lbo-talk] WSJ: IBM Memos On Outsourcing Strategy
On Mon, 19 Jan 2004, Dwayne Monroe wrote:
>
> > The non-manufacturing offshore outsourcing story has gone from relative obscurity to media prominence. Is it too early yet for firm numbers on what effect (if any) this is having upon *jobless recovery*?
>
> It doesn't seem like much based on the figures in this article:
>
> > At IBM headquarters in Armonk, N.Y., a spokesman said that the company expects to shift 3,000 U.S. jobs overseas this year.
3,000 in a year. That's 250 jobs each month. It'll take an awful lot of that to account for 300,000 jobs that are conservatively estimated to have gone missing each month to make this recovery jobless.
>
> > He declined to comment on plans for next year. He said IBM expects to add 15,000 jobs world-wide this year, with a net total of 5,000 of them in the U.S.
>
> In other words, they expect to add more jobs in the US (5,000) than they > take away, which makes the whole idea of losing jobs seem a little shaky. The 10,000 that are added overseas might be counted as jobs that would have gone here, but maybe not -- they could be counted as part of IBM's global expansion into expanding markets overseas. But even if you counted them all as shifted jobs, you're still only be talking 800 a month. It > still seems like spit in the ocean compared to 300,000. And the IBM story seems to be portrayed as a relatively huge occurrence of offshoring.
>
> Michael
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>