2010 August 18 Wednesday
US Call Centers Cheaper Than India?
From the Financial Times: Genpact CEO Pramod Bhasin says American wages have dropped so far and Indian wages have risen so far that US call centers can compete.
Call centre workers are becoming as cheap to hire in the US as they are in India, according to the head of the country’s largest business process outsourcing company.
The Open Borders advocates will find something to crow about here. We've got so many really low paid Hispanics that Hispanics in America can compete with poor people in India. Is that progress or what?
High unemployment levels have driven down wages for some low-skilled outsourcing services in some parts of the US, particularly among the Hispanic population.
I can remember when rising US wages were a seen as good thing and were a common occurrence. I realize Americans in their 20s (who are still living with mom and dad and going nowhere fast) will find this hard to believe. But really, wages went up every year even for low skilled factory workers. America used to be the land of opportunity even for the lower middle class. Honestly, I'm not making this up. Oh, and college was really cheap. Stop laughing. I am not making this up.
Wages are booming in India. That used to happen in America. I realize this makes me sound really old but I'm old enough to remember when that happened here. How else do you think wages for factory workers could decline from where they used to be?
At the same time, wages in India’s outsourcing sector have risen by 10 per cent this year and senior outsourcing managers based in the country command salaries above global averages.
So the good news here: The Open Borders crowd has managed to so transform America's labor force that it can compete with call center workers in India. This story tempts me to think optimistic thoughts about America's future. I know, I write a lot of posts predicting decay. But amid that decay we can still find ways to compete. I bet we could lower our wages far enough to compete in textiles. Think of that. America once more a textile center.
We just need the time it just takes for the death of generations who knew and were accustomed t higher living standards. The historical amnesia of the younger generations will allow them to placidly go to work at jobs that pay below the current minimum wage. We can hold the current minimum wage, import another hundred million low-skilled immigrants, and then run an expansionary monetary policy to cause a good bout of inflation. After that inflationary bout in inflation-adjusted terms our workers will be prepared to bring back lots of lost jobs.
I bet you are as excited by this as I am. But wait, it gets better. You might feel sad that even in New York City the educational system is turning out the kinds of workers who can only do low-paid jobs. But if those workers can compete with low wage workers in other countries then that keeps American residents in some international competitions. We are starting to look a lot more competitive to Vietnam, Pakistan, and other lower wage countries. I think we have a long time to go before we'll be able to go head-to-head with Bangladesh or Burma. But Rome wasn't collapsed in a day.
Oh the joys the globalization. We get the double whammy of outsourcing and mass unskilled immmigration. My fiance just had an experience with this the other night. When she called to activate her new credit card, I asked her if the person on the phone was from India. She said no and that she sounded Hispanic. I was actually very surprised but I guess I shouldn't be.
By the way, you should see the stratification here in New York City. By importing massive amounts of unskilled labor (as well as some "skilled" immigrants who drive down wages in back office worker bee type jobs) and driving out manufacturing and assembly type business, people like Bloomberg have created a two-tiered society that is impossible to grow out of. Seriously, you wouldn't belive how dependent New York City is on low wage labor. The entire economy is essentially built around the FIRE, advertising, retail, restaurant and fashion industries as well as government. These are all consumption based industries with no contribution to the real economy. Also, the employees who work in the lower wage retail industries (Jamba Juice, Starbucks, etc.) do those jobs as their full time job even in middle age. My friends and I worked in those industries as well growing up in the suburbs. But we did those jobs in high school and soon went off to college for higher paying careers. That's not what is happening today. And I was only in high school 10 years ago!
Oh and by the way, the road system in New York is starting to resemble a third world country and the subway system is completely bankrupt. Boy and I glad I am moving back out to the suburbs soon.
We just need the time it just takes for the death of generations who knew and were accustomed t higher living standards. The historical amnesia of the younger generations will allow them to placidly go to work at jobs that pay below the current minimum wage.
Yup, but already helped along by active propaganda. It's already started, on any number of "quality of life" fronts: "It's always been like this. Things were never any better, that's just old people nostalgia. Look at how cheap this laptop is! You've never had it so good! Oceania has always been at war with..."
We've got so many really low paid Hispanics that Hispanics in America can compete with poor people in India. Is that progress or what?
The real beauty of it is, we can now be extremely frustrated by incomprehensible locals when calling customer "service", instead of having to be frustrated into apoplexy by incomprehensible foreigners! USA! USA! USA!
If you can remember when real wages of American workers were rising, you'll have to go back to the 1960's. Look at this (wages are weekly):
The Fallout from Falling US Wages
by Rick Wolff
Real wages in the US rose during every decade from 1830 to 1970. Then this central feature of US capitalism stopped as the figures below show:
Source: Labor Research Associates of New York based on data from the US Department of Labor, Bureau of Labor Statistics; wages expressed in constant 1982 dollars.
Real wages for American workers have not been rising since about 1970. Increases have been eaten up by inflation and higher taxes. No wonder we're in such trouble.
It's curious that 1965 is the year that the tidal wave of immigration started with the Kennedy Act.Of course, any number of 'smart' economists will deny any link.
Mr. Prole -
Interesting comment. I hadn't thought of that, but it's a very good observation. Hard to believe that there's no connection. PC-types will deny any connection, of course.
"The Open Borders advocates will find something to crow about here. We've got so many really low paid Hispanics that Hispanics in America can compete with poor people in India. Is that progress or what?"
The connection to Hispanic immigration is most likely spurious. The areas of the U.S. which can most effectively compete with offshore outsourcing are areas with low cost of living, e.g. rural states. Such areas are unattractive to immigrants because most immigrants seek high-wage areas in order to save/remit as much money as possible to their home country.