Surge In Outsourcing Wipes Out Middle-Class Jobs

By Don Lee
Los Angeles Times

WWR Article Summary (tl;dr) While there has been plenty of talk regarding the globalization of the economy and the offshoring of U.S. jobs, there is another less-known factor behind the shrinking middle class: domestic outsourcing.

WASHINGTON

For nearly 20 years Alfredo Molena made a middle-class living repairing bank ATMs in Los Angeles, despite being a high school dropout and immigrant from El Salvador.

By 2000 he was earning about $45,000 a year, enough to support his wife and two children in a spacious apartment and take periodic vacations to El Salvador and Hawaii. He had health insurance, a matching 401(k) plan, and a company-supplied cellphone and vehicle. But it all unraveled in 2005 after his employer, Bank of America, subcontracted the work to Diebold Inc., a firm specializing in servicing ATMs.

Today Molena drives a truck long-haul for about $30,000 a year, putting him in the bottom third of household incomes. He has no medical insurance. “I cannot afford it,” he snapped.

Globalization and the offshoring of U.S. manufacturing jobs to China and other cheap-labor countries are commonly blamed for driving down the wages and living standards of ordinary American workers, but there is another, less-known factor behind the shrinking middle class: domestic outsourcing.

Many jobs have been farmed out by employers over the years. No one knows their total numbers, but rough estimates based on the growth of temporary-help and other business and professional service payrolls suggest that one in six jobs today are subcontracted, or almost 20 million positions, said Lynn Reaser, economist at Point Loma Nazarene University in San Diego.

Separate Labor Department data show that some of these occupations have seen a significant decline in inflation-adjusted, or real, wages over the last decade.

In 2005, there were 138,210 workers nationwide who repaired ATMs, computers and other office machines, earning a mean annual salary of $37,640.

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