So... don't expect massive layoffs just yet in the US software industry. (But equally, don't expect to be able to halt or even slow the internationalization of software production. Better to try to understand it and then work on a package of training, retraining and business/government strategy -- assuming the Lord High Gingrich allows you to have something as dangerouslysubversive as a government, let alone one with a strategy -- to place the US software labour force in its new position in a globalised industry.)

Spare a thought, too, for the Indians. The "grunt work" being done by Indian programmers remains susceptible to automation; when working onsite they often work and live in worse conditions than US counterparts; job and contract security is not high; and many are dissatisfied because they feel they are "punching below their weight" - doing simple coding tasks because they are not trusted, yet capable of doing more complex programming.

And spare a thought for India. Up to US$500m-worth of software contracts will go to Indian firms this year, but the Indian economy sees very little of the money since much of it remains tied up within multinational subsidiaries or leaves the country to pay for imports or travel costs. And there's been a tremendous opportunity cost associated with India's heavy emphasis on software exports - software for Indian domestic development (applications in health care, irrigation, agriculture, rural development, etc) has been neglected whilst the cream of India's software talent creates new systems for the American businesses which are Indian firms' competitors.

Richard Heeks
University of Manchester, UK

[ALSO...]

According to _Forbes ASAP_ (12/4/95, and reported in Edupage), the number of Indian software export companies has exploded in the past five years, from seven to more than 130, providing jobs for more than 100,000 programmers.

Typically the Indian software industry is raised as a formless bogeyman (a sort of high-tech orientalism). Well, the February, 1996 issue of _Wired_ had a long and generally interesting article on Bangalore, India ("Bangalore"), the heart of India's software industry. The article has the curious effect of giving the industry there a comprehensible face. The story is by-and-large told by the business owners, managers and entrepreneurs. One might take issue with the often-repeated contrasting (in this article and elsewhere) of "routine" programming with "cutting-edge" work; and the article generally ignores the impact of the India phenomena on the software labor market in the United States, but the article is a worthwhile read. You can find it online at:

http://www.hotwired.com/wired/4.02/features/bangalore.html

The article has some interesting bits about that modern-day version of indentured servitude called body-shopping. Programmers sent to the states face a variety of pressures to ensure that they complete their contracts, including substantial financial penalties, loss of green card (and with it, legal status), and even harassment of relatives back in India. Which would be an interesting story for a future CPU...

jd

[We had received a few letters from following correspondent in response to the past few issues of CPU. He generously agreed to consolidate them into one item. In the interest of open discussion on the critical issues, here are his comments on a regular theme in CPU's.]

Recent trends in the U.S. computer industry involve very painful job losses. We must cushion workers against such blows, and my hat is off to CPSR for its concern with these trends, and to CPU for providing a forum for discussing them. But CPSR is "Computer Professionals for Social Responsibility," implying far-sighted concern for the welfare of others. I am worried that CPU is adopting positions that are both short-sighted and (excessively) selfish.

Recent issues of CPU ( #013, #014, and #015) contained articles focusing on trends such as downsizing and outsourcing (especially offshore), and the wedge that the "information highway" may drive between the "knowledge workers" who will create it and the "just plain folks" who may lose jobs as the highway facilitates outsourcing.

SOME NON-SOLUTIONS

The problems are real, but as a professional economist I can't help feeling that many of the remedies suggested in CPU are either counterproductive, or simply involve shifting the burden to others. David Noble (#013, "The Truth About the Information Highway") wants to "pull the public plug on the Information Highway." James Davis ( #014, "/*COMMENTS*/") opposes the "export of jobs" to "offshore, high skill, low wage areas like Ireland, Eastern Europe, India or China." David Cherson (#014) asks, "Why can't American companies develop 'interchange networks' with suppliers and other smaller companies as corporations do in Japan?"

These remedies are shortsighted. Sure, it is possible to maintain a medieval level of lifestyle indefinitely with a static economy. The Indians and Africans are proving that. There is no example of a static economy with strong guarantees of employment and social security that maintains itself for more than a couple of decades. Not in Europe (average of 10% unemployment now, with unemployment rates for young adults approaching 25% in some major European countries), and not even Japan. The employment rate at graduation of female college graduates here in Japan went from 88% to 70% in three years of recession. Are these examples to emulate?

Directly protecting jobs is an attractive idea, but it doesn't work very well. It's mired in an internal contradiction: most advocate protecting jobs at the expense of profits and efficiency because it provides self-respect for the worker, yet how can one have true self-respect when the foundation for that is being given, and one does not give a return of equal value? Reasonable estimates put the _extra_ cost to American consumers (in more expensive cars, postponed purchases, and never made purchases) of the "voluntary export restraints" violently imposed on Japanese automakers in the 70s and 80s somewhere between $1.75 and $2.50 for every $1 in salary and benefits of the workers whose jobs were saved.

Perhaps it was not that expensive, but it cannot be denied that Americans paid many billions of dollars *more* for *fewer* cars purchased during that period. We could have put all the workers whose jobs were saved on welfare at their original salaries and lost no production (world-wide; US production would have dropped of course)! I think that the VER for automobiles was a mistake; should we repeat it in the computer industry?

These remedies are also selfish. We can only guess what Mr. Noble would condemn our children to miss, but had our parents stopped progress before the development of the minicomputer, few CPU readers would have the same jobs, and there certainly would be no CPU. Mr. Davis seems to intend to exclude Irish, East Europeans, Indians, and Chinese from the society that the "Computer Professionals for Social Responsibility" are responsible for. It's not merely because my granduncle told me stories about facing signs reading "no Irish need apply" that this bothers me.

Mr. Cherson's admiration for the Japanese system is misplaced, as well. You cannot separate the misogyny and the "disinvestments and disregard of the company's human contributors" (his words about American corporations apply even more aptly to Japanese corporations) that is characteristic of Japanese companies from the "interchange networks" and so on. While salaried employees of the largest corporations are protected, with (these days, somewhat weakened) guarantees of lifetime employment, in return they give up job mobility (a typical fast-track 40-year-old takes a 20% pay cut for voluntarily changing employers for _any_ reason), any semblance of home life (a 2 year overseas assignment on a month's notice, leaving family behind, is considered reasonable, in return for "all the company has done for you"), and vacations (taking less than 1/4 of your vacation is a mandatory display of "team spirit" in many large companies; giving up the remainder year in and year out is not uncommon). In Japan, even the skills and connections gained in on-the-job training are designed to be nontransferable to another employer: yet another aspect of the unbreakable yoke a firm places on ambitious "salarymen."

WHAT, THEN, CAN WE DO?

I don't like the risks that most workers are exposed to. I'm looking for alternatives. That's part of my job. Realistically, I see either a dynamic risky economy facing strong competition from all sides, or a static secure -- and relatively poor -- economy. (Japan is not an exception: the economic security of the upper 1/3 of households is purchased at a high cost in personal freedom -- especially for women -- and lower living standards for the less fortunate.)

To me, the issue is income support. Workers are not passive; they enter intentionally into the employment relationship. A worker can terminate the relationship, just as the company can. The risk of a dynamic economy cuts both ways! The difference is that a single worker makes up a small percentage of the firm's work force, while the worker is 100% employed by one firm. Thus, workers are usually at greater risk. Justice and humanity require arranging to protect the worker who loses a "whole job" when terminated, a much more serious problem than that faced by the firm when a worker quits.

We can avoid crippling competitiveness, and protect both workers' incomes and their freedom by creating social institutions to

1. Educate workers to realize that only in growing industries with strong comparative advantages can lifetime employment at high wages be sustained, so that they make appropriate career choices

2. Cushion workers who lose jobs (inevitable in a dynamic economy) from drastic income reductions and to help them retrain, or, with luck, to find new jobs in the same field.

In the long run those social insurance institutions must be paid for out of people's incomes. Part can come from corporate profits -- but only if we maintain competitiveness. They also require that all workers take responsibility for their own futures, looking years ahead to decide if they should find a new job or even career in order to support themselves, their families, and their lifestyles. But isn't responsibility the way to true dignity?

The most easily realized comparative advantage in a world of mobile capital and mobile technology is ... low wages. The alternative, to maintain high growth in good jobs, is to keep moving, retraining, reinventing. Workers, too, must do this ... or accept much lower wages in order to get security in one occupation. The alternative is a no-growth economy -- ie, stealing from our children.

In Fred Brooks's famous phrase, "there is no silver bullet" that will simultaneously protect employment, income, growth, and dignity.

--

Stephen J. Turnbull
Institute of Socio-Economic Planning              Yaseppochi-Gumi
University of Tsukuba           http://turnbull.sk.tsukuba.ac.jp/
Tennodai 1-1-1, Tsukuba, 305 JAPAN      turnbull@sk.tsukuba.ac.jp

[Comments? -ed.]

THE SOCIETY AND THE FUTURE OF COMPUTING '96 conference features (June 16 - 19, 1996, in Snowbird, Utah) several panels on "working in the networked economy". See http://www.lanl.gov/SFC for more info.

----

Also a call for papers and workshop proposals has gone out for the SOUTHERN CALIFORNIA CONFERENCE ON TECHNOLOGY, EMPLOYMENT AND COMMUNITY, to be held in Los Angeles in November, 1996:

"The new technology has already contributed to an uncontrolled restructuring of the global economy, the de-stabilization of entire nations, and the displacement of millions of working people. At the same time, this revolution offers the world great promise:

• To signal the end of meaningless toil;
• To satisfy the basic needs of all the world's citizens;
• To deliver the world's information, knowledge, and perhaps understanding, into every home;
• To offer human beings the time and energy they need to reinvent their lives, their communities, and the planet.

"The [conference] will be open to students, scholars, community activists, business leaders, trade unionists, and anyone concerned with their livelihood and the future of their families and communities. We plan to discuss the problems and possibilities of this controversial revolution and to discuss strategies for using it to raise everyone's standard of living.

In addition to attending the conference, all interested parties are encouraged to submit proposals to:

1. Organize and/or conduct a workshop;
2. Make a presentation at a plenary session or workshop; or,
3. Submit a paper for possible inclusion in the published conference proceedings.

----

Information on the bizarre case of Randal Schwartz, convicted of multiple felonies for actions taken as part of his work for Intel, can be found at http://www.lightlink.com/spacenka/fors/intro.html

Back issues of CPU have been html'ized and a search engine is available, so the resources listed in previous Toolboxes are now easier to get to:

http://www.cpsr.org/program/workplace/index.html

LIFE AS THE CENTURY TURNS: Doug Henwood, in a recent issue of his _Left Business Observer_ (3/4/96) takes us behind the curtain to show the workings of this Oz economy. This issue's lead article is on "Work and Its Future." In accord with his recent essay in the collection _Resisting the Virtual Life_ (see CPU.014), his thesis is neither a future economy composed of Robert Reich's "symbolic analysts" -- grease-rags are far and few between in this scenario -- nor Rifkin's _End of Work_ projection, but rather something with which we're already familiar. His study of the Labor Bureau of Statistics figures and forecasts shows "basic production employing ever fewer, with ever more in ill-paid service jobs. It's a much less dramatic vision than either decentralized Cybertopias or jobless futures, but that's life as the century turns." In particular, "Engineers, computer professionals, and associated technicians together now account for about 3% of total employment and under 7% of projected growth."

THE $93,000 RECEPTIONIST: T. J. Rodgers, head of CYPRESS SEMICONDUCTOR (and once featured on Business Week's cover as the "bad boy of Silicon Valley") advanced his opinions in a piece in the _Wall Street Journal_ ("Downsizing Crisis? Not In Silicon Valley", 3/12/96) The gist of his piece is that the other side of the downsizing story doesn't make the headlines: those laid off by giants such as AT&T are picked-up by smaller companies such as his. Rodgers was making a case against the Simpson immigration bill (just-passed by the Senate), arguing that immigrants are helpful to the American economy and are needed for job positions that are going unfilled. Then Rodgers says that Cypress's "average Silicon Valley employee, including line workers and receptionists, earns $93,000 a year including benefits."

Well, trust Alexander Cockburn writing in _The Nation_ (4/8/96) to spoil the fun. A colleague of his called Cypress and asked the receptionist how much he made. While not forthcoming on the particulars the receptionist did say that the $93,000 a year must be a "joke." Undeterred, Cockburn's colleague called a Cypress recruiter to apply for a job as receptionist at $93,000 a year. He was told that the company used temp agencies and labor contractors to fill receptionist positions. Calling one of the Cypress agencies revealed receptionist pay as $8-$20 an hour. Cockburn went on to regard line workers: "An industry table for Silicon Valley surveying some electrical and electronic assemblers shows that the entry-level wage is anywhere from $5 to $7 an hour. Three years or more on the line sees you up to anywhere from $7.75 to $18.50, with the median at $11.09. Without benefits this tots up to less than $25,000 a year, assuming a forty-one hour workweek, the average in the industry table."

JOBS JOBS JOBS: The big news early this year was the announced cut of 40,000 jobs at AT&T. That number has since been revised downward, but in the wake of the Telecommunications "Reform" Act, mergers among the Baby Bells are expected to lead to further job loss in the telecommunications industry, according to the _New York Times_ (1/8/96). Where in earlier rounds of cuts "the Bells have generally used buyouts and early retirement programs in place of layoffs ... [a]s the pace of competition accelerates, some analysts said the Bells would no longer be able to afford voluntary buyouts." Some companies have been pushing a two-tiered workforce: Bell Atlantic got the International Brotherhood of Electrical Workers to accept lower wages for new employees, who will maintain the fiber optic network, while existing workers at the higher wage scale will maintain the aging copper wiring. As the copper is replaced, fewer people will be needed to maintain the fiber.

Here's some history of the turmoil in telecom industry:

ANNOUNCED JOB LOSSES IN TELECOMMUNICATIONS (SINCE 1992):

                              Latest date of          Jobs to be
                              Announcement            Eliminated
-----------------------------------------------------------------

AT&T                          yesterday               40,000
AT&T                          through February 1994   19,500


                                                      Cumulative
                                                      Totals
-----------------------------------------------------------------

NYNEX                         January 1994            38,800
Bell South                    May 1995                21,500
GTE                           January 1994            19,600
Pacific Telesis               June 1995               10,500
Pacific Bell                  January 1994            10,000
US West                       September 1993           9,000
Ameritech                     March 1994               7,500
Southern New England Tel.     August 1995              4,160
MCI                           August 1995              3,000
Southwest Bell                September 1993           1,500

(_NYT_, 1/8/96 )

OTHER JOB CUTS: QUANTUM CORPORATION will quit making its own high-end disk drives, a decision that will result in the layoff of 2,250 permanent and temporary workers, mostly in Malaysia and Milpitas, California. (_San Francisco Chronicle_, 1/31/96) FTP SOFTWARE has cut 10% of its workforce (_WSJ_, 5/2/96). AST RESEARCH, facing further losses in its PC business, is "restructuring", and will dump 300 workers. This brings the job cuts there to 1,000, or about one quarter of its 1994 workforce. (_NYT_, 5/3/96) APPLE warned at the beginning of the year that several thousand jobs might be cut, then new company president Gil Amelio (with his "insanely great paycheck" as _Business Week_ described it (2/26/96) of $2.5 million annual salary plus potential bonuses that make the compensation package worth $10 to $13 million) said that large layoffs would not be necessary (_NYT_, 2/17/96); then, following the announcement of a record $740 million second quarter loss, the company said it was widening its cuts to 2,800 workers, or 20% of its workforce, and planning on doing more outsourcing of its operations and manufacturing. (_WSJ_, 4/18/96) Here's a new addition to the Lexicon of Layoffs: "unassigned" ... as in AT&T's "force management program" aimed at reducing an "imbalance of forces or skills" -- en anglais, axing 40,000 -- finds you "unassigned" (_NYT_, 2/13/96).

THE SHIN BONE IS CONNECTED TO THE KNEE BONE: As an indication of the extent of "the computer industry" the Aluminum Co. of America said that its ALCOA ELECTRONIC PACKAGING unit laid off its entire 1,200-member work force; some 600 of those workers were expected to lose their jobs permanently. The company said the move was necessary because INTEL Corporation, a principal customer, was stopping orders to the unit, which is based in San Diego. The Alcoa unit makes the ceramic packaging used to house microprocessors. About half of the Alcoa workers are contract, or temporary, employees. (_WSJ_, 12/22/95).

BUT DID THEY GET STOCK OPTIONS?: This item from a story by Dan Pens ("Microsoft 'outcells' competion") in the current _Z Magazine_ (5/96): "According to one prisoner who works for EXMARK, a company specializing in product packaging, approximately 90 prisoners at Washington's Twin Rivers Corrections Center packaged 50,000 units of [MICROSOFT's] Windows '95 demo disks and direct mail promotional packets ... Exmark is a subsidiary of PAC SERVICES, a Washington company which also employs non-prisoner, or 'free world' workers. Steve Curly, a 'free world' supervisor at Exmark, denied the company had packed any Windows '95. But he said that Exmark's TRCC operations had packed tens of thousands of units of Microsoft Office and had wrapped and shipped 40,000 Microsoft mice in one week."

Also: Christian Parenti writes ("Making Prison Pay", _The Nation_, 1/96) of prisoners taking hotel reservations, running blood tests for medical firms and raising hogs, and ...

"In Lockhart, Texas, inmates held in a private prison owned by the WACKENHUT CORPORATION build and fix circuit boards for L.T.I., a subcontractor that pays $1 a year in rent and supplies companies such as DELL, IBM and TEXAS INSTRUMENTS ... In Colorado, AT&T paid fifty inmate telemarketers $2 an hour... "We have a captive labor force, a group of men who are dedicated, who want to work. That makes the whole business profitable," says Bob Tessler, owner of DPAS, a company based in San Francisco that three years ago sold a maquiladora in Tecate, Mexico, and opened up a data processing operation in San Quentin State Prison."

OTHER CHANGES IN THE INDUSTRY: Outsourcing of data processing is on the rise at state governments, according to Information Week (1/22/96). As many as 17 states are looking at ways to cut their costs by consolidating operations and/or turning them over to companies like EDS or IBM's INTEGRATED SYSTEMS SOLUTIONS CORP.

Typically, mergers are opportunities to consolidate operations, meaning layoffs. _Computing Canada_ (4/11/96) reported on the now complete acquisition of ZENITH DATA SYSTEMS by PACKARD BELL. The article says that Zenith's product line will now be manufactured out of Packard Bell's new Sacramento, California facilities. The United Steelworkers union, which represents the Zenith workers at its St. Joseph, Michigan factory, has been told nothing about this, though rumors have been flying. The article neglected to mention that the Sacramento Packard Bell facility where the production will be moved is a non-union shop. (Thanks to Brandon Weber for this item.)

WHERE THE JOBS ARE: You probably could have guessed this, but in terms of payrolls for computer industry employment, California leads the U.S. by a wide margin (like the Chicago Bulls) with $13.7 billion. Texas is a distant second with $4 billion, followed by Massachusetts ($3.3 billion), New York ($3 billion), Virginia ($2.4 billion), Illinois ($2.2), Pennsylvania ($2 billion), and Minnesota ($1.7 billion). (_NYT_, 1/1/96)

AND TO GET THOSE JOBS...: According to Information Week (1/1/96), employers of information systems experts in 1996 will be looking for people who know the Internet, client-server computing or networking. Security know-how is popular. In the client-server area, expertise in C++, Visual Basic and Forte programming is in demand, as well as front-end graphical user interfaces, relational databases and help-desk support. Such skills might add $10,000 to $20,000 to the salary of programmers who otherwise would be in the $50,000 to $60,000 range, according to recruiting experts.

HOWEVER: Hey, what about that software that "reads resumes." Neat, huh? And it sends rejection letters automatically too! (_NYT_, 3/24/96)

REGULAR PAY VS. CONSULTING: This item appeared on the JOB-TECH list: "I did a spreadsheet a few years ago to figure out how much I would have to make as a consultant on my own, to match the salary I was drawing as an employee. I considered the cost of office space,office equipment, telephone, secretarial support, the various insurances I would have to subscribe to as an individual instead of as a group member, contribution to a personal pension plan, my current employer's matching contribution to 401K, etc. The bottom line indicated that I would have to gross nearly twice my employee salary. So my guess is that a $100 contracting job would net about the same as a $55-60K salary job - unless you find ways to save (or scrimp) on some of the above." (Ralph.Chapman @ ATT.Com)

WHAT KIND OF RAISE DID YOU GET?: The _Computer Industry Daily_ (4/15/96) reports that "executive compensation at the largest U.S. firms averaged an increase of 30% last year, according to _BW_. This rise compares with a 2.8% inflation rate, a 4.2% gain in white collar worker salaries, and a 1% increase for factory employees. The survey is based on the compensation for the two top-paid executives at 362 companies. CEOs averaged $3,746,392 in salary, bonus, and long-term compensation. CEOs at the 20 companies with the largest layoffs last year saw their salaries and bonuses jump by 25%." Some of the leaders: US Robotics' Casey Cowell (in sixth place) with $18.5 million, Oracle's Larry Ellison (fourteenth) with $14.1 million, and IBM's Louis Gerstner (fifteenth) with $13.2 million. And, of course, Robert E. Allen, at AT&T, the man who ordered 40,000 workers cut from the payrolls, received stock options last year that boosted his pay to $16 million from $6.7 million. (_NYT_, 2/28/96) All in a good day's work.

WHAT KIND OF SEVERANCE PAY DID YOU GET?: Outgoing Apple head Michael Spindler's severance package could be worth three times his $1.4 million combined salary and bonus package for 1995, according to a report in the _San Jose Mercury News_. Apple will probably provide health care benefits for the next two years, buy Spindler's $3 million home, and move him and his wife to France. (This item via _The People_, 2/24/96)

[Thanks to Sid Shniad, Jeff Johnson, Brandon Weber, et al. for forwarding articles, and to Edupage. See something relevant to CPU? Please send it to cpu-owner@cpsr.org]

Someone passed along to us a color xerox of what appears to be the proposed cover for an upcoming issue of _Wired_.

The cover features _Wired_'s man of the year, the once and future presidential hopeful Dan Quayle, with VR goggles propped above his eyebrows. Quote from the man of the year: "in cyberspace everyone will look like me."

Other planned stories:

"Cool telco CEO: 'Why poor people suck.'"

"Global corporations fight for your right to life, liberty and offshore child labor."

"On the info superhighway: Maserati? or Porsche?"

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