WORK
IN PROGRESS
Battle of the Boomer
Bulge
THE WALL STREET JOURNAL
Wednesday, June 9, 2004
The U.S. economy is chugging along, but jobs still seem scarce. Also, workers in many industries are nervous that that they may be out of work soon, thanks to cheaper labor overseas. But some economists argue that offshoring is part of free trade, and the money saved will be reinvested in new job-creating businesses at home. Here's a look at what's new in the jobs debate from around the Web. (Some links may require registration or subscriptions.)
BUY AMERICAN: A new Associated Press poll1 finds that 54% of Americans say that they would buy a higher-priced U.S.-made product over a cheaper, foreign-made one. But nearly two-thirds of the people polled under 30 say they seldom check to see where a product is made. Count Serena Evans, a 24-year-old from Hurt, Va., typical for her age group. She tells the AP's Will Lester, "That's not a big deal to me, where it was made. I look for the cheapest product, because I barely have the money to buy it."
BATTLE OF THE BULGE: "Like an egg passing through a snake, the baby boom bulge is migrating across the workplace," Kansas City Star columnist Diane Stafford writes2. Futurists have long warned of the labor shortage that will hit the American work force once the baby boomers retire. But now, it seems, they've changed their tune a little. It's not a lack of bodies that will hurt the economy -- it's a lack of talent. Experts keep repeating the same mantra: American workers must be more creative in order to combat job-loss statistics.
OFFICE SPACE: Will the outsourcing of U.S. jobs throw a monkey wrench into a U.S. commercial real-estate recovery? The Wall Street Journal's Ray A. Smith and Alex Frangos report3 that outsourcing is likely to slow the demand for commercial office space, meaning the industry won't rebound as quickly as many hoped.
MAKING THE ROUNDS: The New York Times' Thomas Friedman visited Matt Lauer on NBC's Today Show to promote the Discovery Channel documentary we told you about last week4. Mr. Friedman told Mr. Lauer that outsourcing creates a "win-win situation."
"You see Indians working on H-P computers, running Microsoft software, using Carrier Air Conditioning, drinking water bottled by Coca-Cola, wearing Levi jeans. Indians can't possibly buy our products unless they have salaries that give them income to do it," he said.
Meanwhile, on PBS's Charlie Rose Show, Mr. Friedman told Mr. Rose why he decided to make the documentary. "I thought, you know, wouldn't it be fun to go to call centers around the world and interview young people, who spend their day imitating Americans, on what they think of America. And I just thought it would be kind of an interesting mirror looking in a mirror."
LET'S GET POLITICAL: Hewlett Packard CEO Carly Fiorina created a stir earlier this year when she said that "There is no job that is America's God-given right anymore." Addressing the outsourcing issue5 at The Wall Street Journal's D: All Things Digital conference, Ms. Fiorina argued that with nations, as with companies, "to keep the lead, you must continue to innovate."
GROWING AND GROWING: India's revenues from exports of software and back-office services grew by more than 30% during the fiscal year that ended in March despite a backlash in the U.S. against outsourcing, the country's software trade body said Thursday. And next year, the outlook is even better. For the year ending March 31, 2005, National Association of Software and Service Companies forecasts6 Indian exports of software and back-office services will grow 32% to $16.3 billion.
REVENGE OF THE OUTSOURCED EMPLOYEES: Bank of Ireland President Michael Soden was "caught with his browser down," reports7 the Register, a British newsletter serving the information-technology industry, by the very same tech staff he had outsourced to Hewlett Packard a year earlier. Staff informed the bank that they discovered pornography on Mr. Soden's computer while performing routine maintenance.
WATCHING THE BUCKEYE STATE: When Timken Co. announced in mid-May that it would close three factories unless workers agreed to unspecified concessions, it hit the residents of Canton, Ohio hard. The Washington Post's Paul Farhi writes8, "Timken sits in the heart of a city that sits in the heart of Stark County, one of three critical 'swing' counties in a state that President Bush must win to defeat his Democratic rival, Sen. John F. Kerry." Bush's reelection officials have to hope Timken's announcement doesn't translate into broad voter disaffection. No Republican has ever made it to the White House without winning Ohio.
MAKING CENTS: Sidney Harman, executive chairman of Harman International Industries, a maker of audio and electronic-control systems for auto makers, sat down with the New York Times' William J. Holstein for a conversation9 on why outsourcing doesn't make sense -- or cents -- for him. "A handful of years ago, 15% of our total cost was represented by direct labor," Mr. Harman says. "Today, it is less than 5%, and it is headed lower. I ask you: Does it take a genius to conclude that if it gets down to 1% or less, it doesn't matter very much whether we build the product in Indonesia or Indiana?"
COFFEE TALK: The Michigan Democratic Party is running a radio ad in three districts where they hope to beat Republican incumbents. The ad (a conversation in a café between a waitress and a customer) accuses Michigan GOP Chairwoman Betsy DeVos of saying Michigan workers are paid too much and are at fault for the state's heavy job losses. See a transcript11 and listen to the ad12.
Meanwhile, the Detroit Free Press reports13 that the birthplace of Motown has reason to sing the blues. Michigan stands to lost more than 46,000 manufacturing jobs to outsourcing in the next eight years, a new study shows.
TENSION AT WAL-MART: Is low pay at Wal-Mart Stores driving down wages and benefits nationwide? The world's largest retailer has announced a new wage structure that will increase the pay of some workers, but may restrict the annual raises for more highly paid hourly employees. Business Week's Wendy Zellner explains14 how the compensation plan is likely to generate a big firestorm.
TAX TANGLE: Allen G. Breed of the Associated Press knows15 the average American citizen wants to have his cake and eat it too. In the outsourcing debate, this translates to keeping jobs at home and keeping prices and taxes low -- a tough equation for lawmakers to solve. "Governors and legislators in two-thirds of the states have ordered or proposed antioutsourcing actions," Mr. Breed reports. "But many of those efforts at 'economic patriotism' have run headlong into another time-honored American tradition -- taxpayers demanding government give them the most bang for their buck."
A SITE TO SEE: Seems even celebrities have little job security in these times of downsizing and outsourcing. Cholntz E. McGee, columnist for the online magazine Hatch16, wonders whether pop star Justin Timberlake left boy band NSync voluntarily or if he was laid off.
--Compiled by Megan Ballinger and Jim Chairusmi
Copyright 2004 Dow Jones & Company, Inc. All Rights Reserved