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OVERSEAS JOB-SHIFTS COULD HIT BAY AREA - BERKELEY ECONOMISTS SAY REGION AT RISK AS FIRM'S TURN TO OUTSOURCING ABROAD

October 30, 2003 | Contra Costa Times (Walnut Creek, CA)
Author: ELLEN LEE, TIMES STAFF WRITER | Page: c01 | Section: Business
610 Words | Readability: Lexile: 1480, grade level(s): >12


They range from computer programmers to clerks who input data, from medical transcriptionists to paralegals, and are not concentrated solely in the high-tech market, said Ashok Deo Bardhan and Cynthia Kroll, economists at UC Berkeley's Fisher Center for Real Estate and Urban Economics.

"The bottom line is, if there is a job that can be done equally well, equally efficiently, at a much lower cost in a different part of the world, then that job is at risk in today's globalizing world," Bardhan said.

The report also said that many of the jobs that were lost during the downturn will not return.

During the dot-com frenzy, businesses that had difficulty finding high-tech savvy workers turned to outsourcing, or contracting jobs to workers outside of the company. Many of the contracted workers were based outside the United States, in places such as Canada, Ireland, Russia, China and India, where the wages of educated workers are fractions of those of their U.S. counterparts.

When the economy went south, businesses continued to outsource, and more and more joined their ranks, saying that it allows them to cut costs and offer cheaper and better services to consumers.

That hasn't been good news for U.S. employees in telecommunications, accounting, telephone call centers, data processing and other sectors that are more easily outsourced than others. In the past two years, employment in those sectors fell 15.5 percent in the United States and 21 percent in California, totaling more than 1 million lost jobs in the United States and 200,000 in California, according to the report.

"About every day I get an e-mail from someone who expects to have their jobs outsourced," said Pete Bennett, a Danville resident and activist against overseas outsourcing.

Certainly not all the lost jobs were moved overseas. Some were simply lost to the distressed economy, Bardhan said. But if the trend continues _ with other countries churning out more and more low-wage, highly-educated workers, with the costs of setting up operations outside the United States staying low, with the costs of doing business in the United States staying high, especially in California _ more than 14 million jobs at an average annual salary of $39,600 could potentially be sent overseas, the report said.

This would especially hurt the San Francisco Bay Area because not only are many of the high-tech companies themselves based here, but also the technology-related positions in other industries such as retail and finance. It could also affect jobs in the suburbs, such as the East Bay, because many businesses have been housing back office and support services in places where commercial real estate is cheaper.

"San Francisco and San Jose are pretty clearly vulnerable," Bardhan said. "The wages are higher here. The proportion of those occupations (well-paid computer and math jobs such as programming) are higher than the national average."

Bardhan said that not all 14 million jobs will eventually be sent away and that the figure represents the maximum number of jobs impacted. Laid-off workers, including here in the East Bay, have been aggressively lobbying businesses and legislators to put a cap on overseas outsourcing. But some workers will ultimately have to settle for lower-paying positions. The Bay Area could also create a new set of jobs, keeping the "cream" of the new development here, the report suggested.

"Silicon Valley could continue being Silicon Valley, with more innovations and new technologies, with new firms and jobs," Barhan said. "That is the optimistic scenario."

Ellen Lee covers technology and telecommunications. She can be reached at 925-952-2614 or elee@cctimes.com.
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