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Meet the New Loss, Same as the Old Loss

High-tech jobs were supposed to save us. Now we're losing them too.

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Back in the 1980s, we blamed the Japanese for everything. Confronted with Japan's lower-paid steelworkers and advanced mills, we cursed "rice burners" and vandalized the occasional Honda. The truth is, Pittsburgh steel was probably hurt more by non-union competition from the South than it was from Japan, but picking on the Japanese was easier. They look different, for starters, and they're less likely carry a .30-06 in the cab of their pickup trucks.

 

These days, though, Pittsburghers might be a bit puzzled over the fact that free trade has become an issue in this election year. "Didn't we already lose our jobs to foreigners?" a bemused Pittsburgher might ask after watching Democratic presidential hopefuls beat each other up for their votes on trade agreements. When George W. Bush rescinded tariffs on foreign steel last fall -- just hours after making a fund-raising appearance in Pittsburgh -- there was little local outcry. And a grim report by the Harrisburg-based Keystone Research Center, which claims the national foreign trade deficit has cost 150,000 Pennsylvania manufacturing jobs in the past decade, might be a pleasant surprise to some locals. Who knew we had that many manufacturing jobs to lose?

 

These days, we don't seem to fear foreign competition much because we don't feel we've got as much to lose. But for people elsewhere in Pennsylvania, India is today what Japan was in the 1980s: the place where different-looking people take high-paying jobs we once held. Except today's exported jobs were supposed to rescue us when the mills shut down.

 

At a Feb. 24 press conference, for example, state Rep. Mike McGeehan (D-Philadelphia) noted that a Harrisburg-based Internet service provider was farming out 400 call-center jobs to India. Time was when we'd lament having to take call-center jobs; now it seems we can't even hold onto them. And the call center was just part of a much broader national problem: "[T]he number of jobs sent overseas...every 10 weeks is approximately equal [to] the entire enrollment at Penn State University's State College campus -- 41,000," McGeehan said.

 

Strangely, no one has proposed simply sending the entire enrollment at Penn State University's State College campus overseas. Given their propensity for drunken rioting, sending Nittany Lions fans abroad could do more to disrupt foreign economies than any tariff. Instead, McGeehan and other House Democrats have proposed a series of bills "to stand up for workers who are in danger of losing their jobs," as House Democrat leaders William DeWeese and Mike Veon put it in a joint statement.

 

One of these bills, the "Keep Jobs in PA Act," would prohibit companies from outsourcing any state-contracted work. The second, the "Pennsylvania Jobs Preservation Act," would prohibit any company that sent 100 or more jobs overseas from winning state contracts or tax subsidies. A third bill would require contractors to maintain files proving that every worker on the payroll is eligible to work in the U.S.

 

The only jobs these bills are likely to protect, though, are those of their authors. The last of these three bills is redundant; federal law already requires employers to document the legal status of workers. As for the others, it's hard to imagine even the most labor-friendly legislator prohibiting, say, U.S. Steel from bidding on a state job just because it shifts a couple hundred production jobs to Eastern Europe. Where will they buy the steel from instead? A non-union firm in Alabama? 

 

There's little chance any of these measures would pass anyway. Free-trade advocates will argue that tariffs and other protective measures merely increase the cost that consumers pay for products. (When business leaders want to screw over American workers, they claim to be acting in the interests of American consumers...even though both groups are really the same people.)

 

Still, the House Democrats point to a very real problem. If free trade is making the world smaller and smaller, as advocates claim, Pennsylvania is becoming an ever-more-insignificant part of it. The Census Bureau estimates a 16 percent drop in the value of Pennsylvania's international exports since 2000. Part of that drop is the result of a larger economic downturn, but Pennsylvania's decline in exports is nearly twice the national average.

 

More importantly, it's not just jobs that are disappearing: An entire social contract may be evaporating along with it. When the steel mills shut down, Pittsburghers -- along with everybody else -- were told that the future lay in the service sector and high-tech jobs for which we should invest in education and training. And we did: Cities frittered away ever-greater shares of their tax base as universities expanded, and students frittered away ever-greater shares of their future earnings on student loans needed to attend them. 

 

But the bargain is proving to be dubious. During the industrial age, we enjoyed nearly a century of dominance. In the post-industrial age, it's taken less than two decades to see our high-tech economy being threatened by foreign competition.

 

Imagine the results for a college graduate who racks up $60,000 in student debt to earn a degree in computer sciences at Carnegie Mellon University. She enters the workplace only to discover that the salary she's seeking -- the salary she needs to pay off those student loans -- costs much more than employers want to pay. An engineer from India, educated at state expense, will work for much cheaper.

 

Of course, just as the Japanese made a convenient scapegoat for the U.S. steel industry's problems in the 1980s, so do the Indians and Chinese today. Corporate corruption at companies like Enron and Adelphia have cost thousands of jobs as well, and we Americans inflicted those losses upon ourselves. Much of the high-tech downturn is the result of over-investment in the 1990s, and no tariff can protect people from their own bad business decisions.

 

Still, perhaps the biggest difference between the 1980s and today's economy is that the latter requires you to play for much bigger stakes. In the old days, if your mill shut down, at least you hadn't put a lot of time and money paying to learn your now-obsolete job skills. Today, by contrast, a CMU student will sink $40,000 a year just to fill out a job application.

 

As McGeehan put it, "The situation gives a whole new spin to the old jab about taking ‘basket weaving in college'" in that "basket weaving could have more future potential for American students than information technology."

 

If anything, McGeehan might be too optimistic: As a trip to Pier 1 confirms, cultures throughout the developing world are far ahead of us in basket-weaving prowess.

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