No safety net for programmers

When manufacturing jobs go overseas, laid-off workers are eligible for a host of benefits. But if you're one of the tens of thousands of software producers whose jobs have been outsourced, you're out of luck.

Topics: Globalization,

No safety net for programmers

Jim Fusco worked at AT&T for 13 years as a mainframe programmer, before his job was outsourced to IBM in 1999.

“One Friday, we walked out as AT&T employees, and the following Monday we walked back in as IBM employees, doing the same work, at the same desks, with different-colored paychecks,” he says. Three years later, in May 2002, Fusco’s job was outsourced again, and this time he wasn’t so lucky. IBM’s Global Services Division moved his job to Canada, and he was laid off.

“In the beginning, employees did have the opportunity to transfer elsewhere within IBM to other projects. But as more and more projects went offshore, they started letting people go involuntarily,” he says.

While on unemployment, Fusco, now 50, who lives in East Brunswick, N.J., applied for additional government support for workers whose jobs have been casualties of free trade and globalization.

Under the Trade Adjustment Assistance Reform Act of 2002, workers whose jobs have moved overseas can be eligible for a battery of extra assistance, including income support, job training, tax credits for health insurance, and job search and relocation allowances. Some older workers can even receive a temporary income subsidy, a form of “wage insurance,” which helps cushion the financial blow when a new job pays much less than the old one. For instance, if you go from writing code for computers at $50 an hour to selling them retail at a computer superstore for $10 an hour.

But Fusco and his fellow IBM employees who petitioned for the benefits were repeatedly denied. The U.S. Department of Labor’s Employment and Training Administration determined that programmers like Fusco do not qualify, because of the nature of what they’d produced on their old jobs: software. The government cited commerce and trade rules that classify software as a “service” and “not a tangible commodity,” rather than an “article” as the trade act stipulates.

In other words, code doesn’t count.

Fusco’s lawyer doesn’t buy it. “When stuff is offshored, it’s done over there, and then it’s imported through the communication lines back to America,” says attorney Michael G. Smith, who is now bringing a class-action lawsuit against the Department of Labor and the Department of Justice, on behalf of Fusco and other tech workers like him. “When the work is offshored, we think that all programmers should be eligible for benefits.”

Since 1974, more than 4 million workers have been certified eligible to receive trade-related job-loss benefits. According to the Department of Labor, that number is just a fraction of those who could have applied.

Now, say some economists, it’s time for white-collar workers to get the same breaks. After all, Forrester Research predicts that 3.3 million jobs are likely to be lost to outsourcing in the U.S. by 2015 — and the total number of white-collar jobs that are potentially vulnerable may be much higher than that: 14 million by one estimate.

“In principle, there’s no reason for this program to be manufacturing only. There is no political or theoretical justification for excluding workers simply based on their occuption or their industry. These people bear costs of increasing foreign competition, just like manufacturing workers, so they should be eligible too,” says Lori G. Kletzer, an economics professor at the University of California at Santa Cruz.

Now that the jobs of American white-collar workers — like computer programmers, data-entry clerks and call-center operators — are increasingly becoming the casualties of globalization, do the old laws that covered manufacturing job losses overseas apply to them? The question of who will be deemed worthy of a federal helping hand is just beginning to be sorted out, and the programmers are suing the Department of Labor to force the issue. But some economists think that the way to ease the burden of job losses caused by outsourcing is to find new ways to insure the wages of all workers. It’s a point of view that may not find much support in a Republican-controlled White House and Congress at a time when the country is running up huge deficits, and trying to cut discretionary domestic spending, but as U.S. workers become increasingly alarmed by the impact of globalization, the idea of comprehensive wage insurance may gain a steadily higher profile.

Lisa Pineau, a 46-year-old unemployed mainframe programmer in Plano, Texas, is another plaintiff in the lawsuit. She would like to use the TAA benefits to retrain in another field, such as nursing. “Everyone I know has gone from making $30 or $40 an hour to making $10 an hour, and it’s impossible for our economy to survive that kind of loss,” she says. “In Plano, the foreclosure rate is one of the highest in the nation in the last year, because there are so many people who have been laid off.”

You Might Also Like

In the initial complaint, filed in the United States Court of International Trade on Friday, Jan. 2, 2004, plaintiff’s attorney Smith makes his case for why software is in fact legally a so-called article. But he also makes a larger point: “In the current economic environment of large ‘structural changes’ to the U.S. economy in which possibly millions of software workers will lose their work to foreign competition, providing determinations of eligibility to software workers for TRA [trade readjustment allowance] benefits will clearly satisfy Congress’s intent to ‘improve the economy, and assist workers.’”

Fusco, who is now reemployed as a systems analyst at a substantial pay cut, sees the case in those terms, too: “I believe that tech workers are entitled to the same protections of the trade act as any other workers,” he says. “If they’ve lost their jobs due to competition with foreign countries, then they should be entitled to the same benefits as anybody else.” A spokesperson for the Department of Justice had no comment.

When it comes to computer programmers, the Department of Labor has already proven itself inconsistent. Smith knows of more than 40 cases where programmers have been ruled ineligible to receive TAA assistance, and at least five where they have been deemed eligible. He says he’s received no explanation for the difference in status.

As the public debate about the costs and benefits of offshoring jobs heats up, some economists believe that domestic workers could benefit from insurance, so that their standard of living doesn’t immediately plummet if a job loss forces them to take new jobs that pay less.

“There are many reasons why jobs are becoming less secure,” says Robert Reich, former U.S. secretary of labor under the Clinton administration. “If we don’t want to simply protect the old jobs through legislation that bans outsourcing or erect tariffs and quotas that prevents technology from advancing, we’ve got to get serious about some ways to cushion people from the difficulty that they face because of job insecurity. Wage insurance is one way.”

The TAA already has limited wage insurance built into it to benefit workers over 50 who qualify. Kletzer, the California economics professor, explains the concept this way: “Think of it as the mirror image of unemployment insurance. Wage insurance doesn’t start until you’ve found the new job. If the new job pays less than your old job, wage insurance will partially close the gap.”

While the data isn’t in yet for technology workers, Kletzer says when manufacturing workers lose their jobs, about half take a pay cut with their new position. “It’s not that hard for workers to find a new job. It’s the wages of the new job that are the cost,” says Kletzer. “The cost is really not the time it takes to find a new job. It’s not really that new jobs are difficult to find. It’s that workers tend to find jobs that pay less.”

As it is currently conceived under TAA, wage insurance only applies to workers over the age of 50, since they’re most likely to take the greatest hit if they are forced to go into a new field so close to retirement.

The idea is that even though the government cannot afford to permanently subsidize the wages of a worker whose earnings have plunged from $40 an hour to $10 an hour, it can afford to ease the blow, temporarily.

The key question is how to pay for extended benefits. Reich suggests that changes in the current payroll tax structure could cover the costs of such a program, not just for workers who lose their jobs to foreign competition, but for all workers. But he concedes no such program is likely to be enacted under the current Congress.

Labor activists are far from united on the issue of wage insurance, however. Marcus Courtney, an organizer for the Washington Alliance of Technology Workers, thinks focusing too much on ameliorating the fallout from outsourcing is not the answer: “We have got to start changing the policies in place that let companies export the jobs we have, instead of saying we’re going to provide wage insurance and retraining for everyone.”

Still, Pineau, the programmer in Plano, sounds like someone who might benefit from such wage insurance, were she in fact eligible for it. She says that since her $32-an-hour job was offshored to Canada for half that wage, she and many other former tech workers she knows in Plano are now applying for “McJobs” that pay $10 an hour.

“Maybe we should be happy to make $10 an hour, but when you have a mortgage and kids, and your expenses are already at $40, it’s hard to immediately go from $40 to $10.”

More Related Stories

Featured Slide Shows

  • Share on Twitter
  • Share on Facebook
  • 1 of 13
  • Close
  • Fullscreen
  • Thumbnails

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    Young Daya has yet to become entirely jaded, but she has the character's trademark skeptical pout down pat. And with a piece-of-work mother like Aleida -- who oscillates between jealousy and scorn for her creatively gifted daughter, chucking out the artwork she brings home from summer camp -- who can blame her?

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    With her marriage to prison penpal Vince Muccio, Lorna finally got to wear the white veil she has fantasized about since childhood (even if it was made of toilet paper).

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    Cindy's embrace of Judaism makes sense when we see her childhood, lived under the fist of a terrifying father who preached a fire-and-brimstone version of Christianity. As she put it: "I was raised in a church where I was told to believe and pray. And if I was bad, I’d go to hell."

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    Joey Caputo has always tried to be a good guy, whether it's offering to fight a disabled wrestler at a high school wrestling event or giving up his musical ambitions to raise another man's child. But trying to be a nice guy never exactly worked out for him -- which might explain why he decides to take the selfish route in the Season 3 finale.

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    In one of the season's more moving flashbacks, we see a young Boo -- who rejected the traditional trappings of femininity from a young age -- clashing with her mother over what to wear. Later, she makes the decision not to visit her mother on her deathbed if it means pretending to be something she's not. As she puts it, "I refuse to be invisible, Daddy. Not for you, not for Mom, not for anybody.”

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    We still don't know what landed Brooke Soso in the slammer, but a late-season flashback suggests that some seriously overbearing parenting may have been the impetus for her downward spiral.

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    We already know a little about Poussey's relationship with her military father, but this season we saw a softer side of the spunky fan-favorite, who still pines for the loving mom that she lost too young.

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    Pennsatucky had something of a redemption arc this season, and glimpses of her childhood only serve to increase viewer sympathy for the character, whose mother forced her to chug Mountain Dew outside the Social Security Administration office and stripped her of her sexual agency before she was even old enough to comprehend it.

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    This season, we got an intense look at the teenage life of one of Litchfield's most isolated and underexplored inmates. Rebuffed and scorned by her suitor at an arranged marriage, the young Chinese immigrant stored up a grudge, and ultimately exacted a merciless revenge.

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    It's difficult to sympathize with the racist, misogynist CO Sam Healy, but the snippets we get of his childhood -- raised by a mentally ill mother, vomited on by a homeless man he mistakes for Jesus when he runs to the church for help -- certainly help us understand him better.

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    This season, we learned a lot about one of Litchfield's biggest enigmas, as we saw the roots of Norma's silence (a childhood stutter) and the reason for her incarceration (killing the oppressive cult leader she followed for decades).

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    While Nicki's mother certainly isn't entirely to blame for her daughter's struggles with addiction, an early childhood flashback -- of an adorable young Nicki being rebuffed on Mother's Day -- certainly helps us understand the roots of Nicki's scarred psyche.

  • Recent Slide Shows



Comment Preview

Your name will appear as username ( settings | log out )

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>