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I'll Take a Guess

Glenn Reynolds says, "At any rate, I think the politics of this stuff are likely to play out in interesting and unpredictable ways...I don't claim to really understand this phenomenon, though, and I don't think that anyone really does" of this article's topic: Down and Out in White-Collar America.

So what's keeping people like Hill and Thompson from finding jobs? The rudderless recovery and economic uncertainty deserve much of the blame. But it's bigger than that. Increasingly, supereducated and highly paid workers are finding themselves traveling the same road their blue-collar peers took in the late '80s. Then, hardhats in places like Flint, Mich., and Pittsburgh were suffering from the triple threat of computerization, tech-led productivity gains, and the relocation of their jobs to offshore sites. Machines--or low-wage foreigners--could just as easily do their work.

The white-collar crowd was concerned, but they knew that those three forces would also help get the American economy humming. And they did. Now that trust has come back to haunt them. Technology has allowed companies to handle rising sales without adding manpower. Gains in productivity mean one white-collar worker can do the work that would have taken two or three of his peers to do ten years ago. All that has led to slower wage growth. Back in 2000 wages for professional and technical workers were growing by nearly 5% annually--today they're rising by less than 2% a year.

The scariest blue-collar parallel, however, is only just beginning to be felt in the white-collar world: overseas competition. Like automakers that moved production from Michigan to Mexico or textile firms that abandoned the Southeast for the Far East, service firms are now shifting jobs to cheaper locales like India and the Philippines. It's not just call centers anymore. Indian radiologists now analyze CT scans and chest X-rays for American patients in an office park in Bangalore, not far from where Ernst & Young has 200 accountants processing U.S. tax returns. E&Y's tax prep center in India is only 18 months old, but the company already has plans to double its size. Corporate America is quickly learning that a cubicle can be replicated overseas as easily as a shop floor can.


I predict several things will happen.

  1. This trend won't reverse unless dramatic anti-capitalist forces turn back the reforms occuring in these "offshoring" countries. I don't see this happening because the work can only bring good benefits to the people and the country.
  2. The trend also won't reverse unless the considerable pressure for American businesses to cut labor costs is eased. Even in the best of economic times, I couldn't see this happening to any non-trivial degree. When the savings can approach 50% or more, it is a powerful economic incentive to move seats out of the country.
  3. This will politically energize the managerial and specialist classes and drive up voter participation rates if labor policy becomes a major political issue. Just as in the blue-collar labor disputes, the majority of the white-collar electorate will want trade controls to protect American jobs. Something like limits on the number or percentage of foreign-based workers (at first, only in certain fields) a company can employ.
  4. Given the wealth in this class of people, politicians will take notice as the voting power is added to the potential donation power. I strongly doubt it would be a partisan issue; no American wants to lose his or her job for a long time and that cuts across political lines. Republicans would stump for regulations under patriotic, nationalist, and (short-sighted) economic banners. Democrats would stump for regulations under labor equity reasons. Libertarians and capitalists will do whatever they can to remind everyone that this is how markets work and to fight them would be worse than doing nothing. The Left will laugh and waggle fingers about how this sudden concern was missing from this class during massive labor shifts in the blue-collar class in the past and of course the government is allowed or even supposed to intervene to save the day.
  5. Indian, Chinese, Bangladeshi, Indonesian, Russian, and Filipino culture will exchange with American at a much higher rate. Ties among these countries will tighten with the additional trade and market-sharing. With greater free market ties, liberty will also spread, likely pushing these nations towards more social, political, and economic freedoms.
  6. Once larger parts of the "Third World" (a term that will be met with ever-increasing cynicism in the future) are relieved of the number one pressure to move to American (economic reasons), immigration should slowly drop from those countries even though there will be much greater international travel among them. It may take a while, but a possible long-term outcome of this is an accelerated rate of black and hispanic population percentage as they slowly erode the majority caucasians have in raw numbers.
  7. It will place more upward pressure on demand for bi- or multilingual Americans.
  8. The efficiencies enjoyed by the businesses doing this will result in better short-term (say, 5-10 years) profitibility, but will inevitably result in even higher competition as more and more companies outsource their labor. Consumers benefit even though it's likely that by this time, the United States will have been taken down a few economic notches by the relative gains by these other nations. Our economic superiority cannot last forever and certainly not when our labor market is considerably more expensive than others.
Just some ideas off the top of my head. I welcome any others in the comments.
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