Slippery slope

Communications News, April, 2004 by Ken Anderberg

Motorola is one of a number of U.S. companies that is "offshoring" technology jobs, but the company's latest job movement is a bit different from what most of us are reading in the trade publications and daily newspapers. Motorola's job movement is from Singapore, Hong Kong and Taiwan to China and India. Such is the conundrum of offshoring.

Originally, those Motorola jobs in Singapore, Hong Kong and Taiwan were low-paying positions, but that was 20 years ago. Today, those locations have much higher standards of living and correspondingly higher wages. Factory workers in Singapore, for example, earn more than $7 an hour vs. just more than 50 cents an hour in China. Other costs of doing business have also risen sharply in Singapore. So, Motorola is moving the jobs.

In short, the United States is not alone in this challenge brought about by the global economy. As Third World countries improve their economic status (often through the investment of companies from the United States, Europe and Asia), many of the very jobs that helped them rise will become casualties, as businesses continually look for a more profitable deal. India, China and the Philippines are just the latest offshoring hotspots, to be replaced 10 years from now by other countries that still offer inexpensive business environments.

Such transference of jobs, however, should not be a call for Hong Kong, Singapore and Taiwan to pull in their welcome mats, discard their far-flung trade agreements and return to the days of Asian feudal protectionism. Nor should similar job offshoring of American jobs because to erect trade barriers around the United States.

We are in a global economy with competitive pressures unlike any seen before. Offshoring is driven by economic reality. In order to compete, companies look for advantages, whether they be lower-cost production (re: lower wages and real estate), higher productivity or inventory control. When labor costs in U.S. southern states were low in the early 20th century, for example, many northern companies began moving jobs south.

The main argument against offshoring has been that Third World countries are not playing on a level playing field, that they do not adhere to the same environmental, health and employee restrictions that U.S. companies face. To level that playing field, our answer is to somehow legislate competitively similar situations in those countries so that U.S. corporate operations would be at less of a disadvantage.

The United States, however, is not that far removed from when companies paid ridiculously low wages, used child labor and dumped all their industrial wastes into our waterways and our air. Now, somewhat hypocritically, we expect less-developed countries not to grow their economies the same way. That is a slippery slope not easily defended.

The United States has had a history of job losses in particular industries (e.g., we've gone from an agrarian economy to industrialized and now to services). The current exodus overseas is just the latest manifestation.

kanderherg@comnews.com