Outsourcing Jobs Equals Lower Wages and Higher Profits – are They a True Benefit to the American Consumer?
Have you recently spoken to an AT&T or Direct TV representative? How about a Choice Home Warranty or J.P. Morgan Chase representative? Didn’t sound local, did they?
Today’s Fortune 500 companies take advantage of the global community that we are a part of. This translates to finding foreign labor, which can do as much or more for less than the American workforce. The company can then offer that same good or service to Americans for less. It is called “free trading.”
A Practice Designed to Benefit the American Consumer
On paper, it sounds plausible. You cut product and service costs by employing foreign workers who are happy to perform the same service for less. Let us examine wages from the three countries that are landing spots for these jobs.
One of the most popular destinations for call center and customer support jobs is the Philippines. Call center representatives in Manilla are paid comparable to schoolteachers in Manilla: $262 per month. Currently, the exchange is 54.4 Philippine pesos to $1. It is even less in Delhi, India. In India, it takes 81.73 Rupees to equal one American dollar.
The average monthly wage for a banker in the U.S. is $3,539. In the Philippines, it is $506 per month, with the lowest-level bank employee averaging $288 per month.
Defenders of the practice say that if these call centers and banks were forced to pay the American wage scale, the cost of services would skyrocket for Americans.
Pandemic Placed Pharmaceutical Industry Under the Microscope
During the COVID scare, Americans learned that 95% of pharmaceuticals were manufactured in China. Many of the employers were American companies. These are not low-wage jobs. The average wage for a pharmaceutical and biotechnology position in Beijing is 39,400 Yuan per month. That’s $5,792 per month in U.S. dollars. The average American salary for the same position is $10,247 per month.
While the money saved is significant, so is the profit margin. When understanding the numbers and the implications of 95% of pharmaceuticals being manufactured in a hostile country, most Americans say, “Whoa! Let’s talk about this!” After all, a corporation’s profit margin isn’t the only thing in play.
“No American Wants These Jobs”
The typical paradigm expressed by these companies is “few Americans would be interested in low-paying call center jobs.” The real problem rests with being forced to pay employees the state minimum wage. It will obviously equate to more than $262 per month. The good news is these call centers can headquarter in communities where the jobs are most needed.
Take Colorado’s two poorest cities; Alamosa and Trinidad. While the average per capita income is low, so are the housing costs. The state minimum wage is $13.65 per hour. A 32-hour per week job tallies $436.80 per week or $22,713.60 per year. If the worker is taking early social security, it will barely make a dent. Better yet if the employee was with AT&T, the worker would be eligible for AT&T’s generous benefits package including medical and dental insurance.
AT&T would trade workers who spoke English as a second language for Americans who spoke English as their first language. International workers take longer to perform the service because they are thinking in their first language. Call center workers in Alamosa and Trinidad speak in Colorado’s near broadcast diction inflection without a discernable accent. Since Hispanics are the majority in these two communities, bi-lingual reps would come as a bonus. It amounts to a more efficient workforce.
Management Jobs Not Exempt from Offshore Outsourcing
Have you noticed the number of empty cubicles you see when you walk into a Fortune 500 bank? A universal banker earns about $42,000 per year in the United States. A universal banker in India or the Philippines earns approximately $10,000 per year. Never mind the fact that these offshore managers gain access to Americans’ personal information. Identify theft is the fastest-growing crime in the world, lest we forget.
Pharmaceutical and biotechnology jobs should be situated in the United States, for security reasons. If the company is concerned about personnel costs, it should have headquarters in low-cost areas of the U.S., including locations in the Southeast U.S. Ever been to Richmond, Kentucky, or Oxford, Alabama? They are actually very nice places.
Can Anything be done to Arrest this Practice?
Yes. An Offshore Personnel Tax (OPT) would force companies to either bring the job stateside or pay the difference in an OPT. For example, if the call center worker in Alamosa is paid $1,889 per month and the company opted to pay a Filipino counterpart $262, they would owe the federal government $1,627 in a monthly OPT. If the Indian banker was paid $915 per month versus $3,466, the difference would be $2,551 per month.
Predictably these corporations would howl. They would say the OPT was inflationary. They would contend they could not fill the jobs. But the OPT would generate revenue. It would also bring more people into the American workforce, ultimately generating more tax revenue.
