Offshoring stole many U.S. programming jobs

Over and over, Americans are told that education is the key to their job future. The more education you have, the better your shot at getting a job that pays middle-income wages to take care of your family. If we as a nation are better educated, the theory goes, we'll be able to compete more effectively in the global economy, which in turn will generate more good jobs for everyone.

But some major flaws in this theory are playing out today in a field that was once thought to have the brightest future - information technology.

In the late 1980s - when we began work on what would become "America: What Went Wrong?" - massive job losses were roiling the economy. As plants closed and companies restructured, millions of Americans lost their jobs. But economists, business leaders, and politicians told them not to worry. Jobs in new industries, they said, were on the way, and information technology (IT) was near the top of everybody's list.

Computer-programming jobs were seen as a big growth area. The advent of large mainframe computers in the 1960s had kicked off the first increase in jobs. Employment rose in the 1980s with the introduction of personal computers and the ongoing extension of data processing into more and more businesses. Everyone thought that the big growth years were still ahead.

In its 1990 Occupational Outlook Handbook, the U.S. Department of Labor was especially bullish: "The need for programmers will increase as businesses, government, schools, and scientific organizations seek new applications for computers and improvements to the software already in use [and] further automation . . . will drive the growth of programmer employment." The report predicted that the greatest demand would be for programmers with four years of college who would earn above-average salaries.

When Labor made these projections in 1990, there were 565,000 computer programmers. With computer usage expanding, the department predicted that "employment of programmers is expected to grow much faster than the average for all occupations through the year 2005 . . ."

It didn't. Employment fluctuated in the years after the report, then settled into a slow downward pattern after 2000. By 2002, the number of programmers had slipped to 499,000. That was down 12 percent - not up - from 1990. Nonetheless, the Labor Department was still optimistic that the field would create jobs - not at the robust rate the agency had predicted, but at least at the same rate as the economy as a whole.

Wrong again. By 2006, with the actual number of programming jobs continuing to decline, even that illusion couldn't be maintained. With the number of jobs falling to 435,000, or 130,000 fewer than in 1990, Labor finally acknowledged that jobs in computer programming were "expected to decline slowly."

From 1990, when Labor made its rosy prediction that programming jobs over the next 15 years would increase at a faster rate than other jobs, the U.S. workforce grew 24 percent. If the number of programmers had increased at that pace - let alone at the optimistic rate Labor had once projected - there would have been at least 700,000 programmers by 2006. Instead, there were only 435,000. Programmer jobs have continued to decline and were at 427,000 in 2008, the last year for which figures are available. Even that masked the magnitude of the domestic job losses. For among those 427,000 programmers were thousands of H-1B guest workers - foreign nationals brought in by American companies under immigration law to do programming, usually at much lower pay and benefits.

Washington attributed the unexpected U-turn on programmer jobs to numerous factors, but the most telling one had not even been on its radar screen in 1990, even though it was etched into the DNA of corporate America - offshoring.

"Because they can transmit their programs digitally," the Labor Department belatedly discovered in 2006 that "computer programmers can perform their job function from anywhere in the world, allowing companies to employ workers in countries that have lower prevailing wages." Instead of good-paying programming jobs, the growth fields in the two decades after 1990 were for home health aides, retail clerks, customer-service agents, truck drivers, security guards, and child-care workers - low-paying jobs with few opportunities for advancement or better pay.

Domestic programmers, like millions of workers in other fields, are casualties of a Congress long indifferent to the plight of American workers. Instead of seeking to create a level economic playing field, lawmakers and presidents, Democrats and Republicans, have permitted foreign governments to set American job policies by eroding the country's basic industries. While free traders in the United States decry any form of government intervention in the market, many foreign governments ignore such theories and subsidize industries that they believe will help their people. In the 1980s, for example, the government of India began supporting its nascent software industry and established sophisticated Software Technology Parks throughout the country to encourage companies to produce software for export. India's software exports totaled a modest $10 million in 1985; by 2010, they had reached an estimated $55 billion.

The Chinese are rapidly catching up, in a way that spells even more trouble for America's remaining programmers. And the Chinese are taking the competition to a new level. As in India, the Chinese government is providing incentives to foster a software-development industry and has selected numerous cities to pursue the export market. But in a sign of how aggressively the Chinese are marketing this industry, they have dispensed with the term software park. They call these new entities outsourcing hubs. According to a study by Duke University's Offshoring Research Network, China has "mounted a vigorous challenge to India's software development outsourcing industry. More and more U.S. and European companies are outsourcing software and IT services directly to Chinese service providers."

The U.S. government is still very interested in creating programmer jobs - just not in this country. In 2010, the State Department's Agency for International Development (USAID) put up $10 million to help Sri Lanka develop an outsourcing industry. The U.S. taxpayer dollars are aimed at training Sri Lankans in advanced IT skills such as Enterprise Java, as well as in business-process outsourcing and call-center support. The goal is to create 3,000 jobs. According to InformationWeek, a similar program is being funded by USAID in Armenia to train Armenians. Perhaps even more countries are scheduled to get U.S. taxpayer money to develop their software industries. By then there may be no need to help U.S. programmers. There won't be any.