Moving U.S. White-Collar Jobs Offshore
Economists have long argued that free trade produces gains for all countries that participate in a free trading system, but as the next wave of globalization sweeps through the U.S. economy, many people are wondering if this is true, particularly those who stand to lose their jobs as a result of this wave of globalization. In the popular imagination for much of the past quarter century, free trade was associated with the movement of low-skill, blue-collar manufacturing jobs out of richcountries such as the United States and toward low-wage countries - textiles to Costa Rica, athletic shoes to the Philippines, steel to Brazil, electronic products to Malaysia, and so on. While many observers bemoaned the "hollowing out" of U.S. manufacturing, economists stated that high-skilled and high-wage, white-collar jobs associated with the knowledge-based economy would stay in the United States. Computers might be assembled in Malaysia, so the argument went, but they would continue to be designed in Silicon Valley by high-skilled U.S. engineers.
Recent developments have some people questioning this assumption. As the global economy slowed after 2000 and corporate profits slumped, many American companies responded by moving white-collar, "knowledge-based" jobs to developing nations where they could be performed for a fraction of the cost. During the long economic boom of the 1990s, Bank of America had to compete with other organizations for the scarce talents of information technology specialists, driving annual salaries to more than $100,000. But with business under pressure, between 2002 and early 2003, the bank cut nearly 5,000 jobs from its 25,000-strong, U.S.-based information technology workforce. Some of these jobs were transferred to India, where work that costs $100 an hour in the United States can be done for $20 per hour.
One beneficiary of Bank of America's downsizing is Infosys Technologies Ltd., a...
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