Saturday, Aug 30, 2008
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.
Jan 12, 2004 | 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.
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