Less than three years after receiving $10 billion in bailout money from American taxpayers, Goldman Sachs informed its employees recently that it will fire 1,000 workers in the United States and elsewhere, shifting their jobs to the cheaper Singaporean labor market.
[snip]
Goldman Sachs has also worked to protect itself by hiring former Republican Sen. Judd Gregg (NH) as an “international advisor.” It is not unreasonable to assume that Gregg’s 26 years in Washington will help the investment firm’s attempts to placate critics.
The move to shift 1,000 jobs to Singapore is part of an overall effort by Goldman Sachs to cut $1 billion in operating costs over the next year. However, Goldman is firing American workers at a time of record profits for the company, which raked in $2.7 billion in profits in the first three months of 2011 alone.
Goldman’s plan is helped by conservatives in Washington who have prevented Congress from discouraging corporations from outsourcing. Last fall, Senate Republicans voted unanimously against a bill that would have ended tax breaks for companies that shift American jobs overseas.
Many conservatives justify outsourcing by arguing that not only would companies be more profitable by shifting low-skilled work to developing countries, but laid-off American workers would be forced to re-educate themselves for new, high-paying industries. However, this move by Goldman Sachs is particularly troubling for that theory because, according to a source with knowledge of the matter, the 1,000 Singaporean jobs are likely to be “high-paying, skilled positions in sales and investment banking.” Whereas highly educated workers may once have imagined themselves immune from the specter of outsourcing, Goldman Sachs has shown that is not the case.
Outsourcing is all fun and games until somebody loses an eye. Or until somebody important loses a job.
it is always astonishing to me that the middle class can never seem to see this coming for them.
ReplyDeleteAs driftglass often says, "there is a Club, and you're not in it."
Yes, that's exactly right. The Club is getting smaller and richer and that money has to come from somewhere.
ReplyDeleteThe elite have been pointing blame downwards, not upwards, for a long time as we all know, and it works.
Less than three years after receiving $10 billion in bailout money from American taxpayers, Goldman Sachs informed its employees recently that it will fire 1,000 workers in the United States and elsewhere, shifting their jobs to the cheaper Singaporean labor market.
ReplyDeleteThose aren't the upper class. That's your info-tech people and other support staff.
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I tend to think of upper class as those making 250k plus. Would that be too low?
ReplyDeleteDo you think the upper class will not be targeted for their wealth by the ultra-rich?
ifthethunderdontgetya -
ReplyDeleteNope. Goldman, like most of the big banks, have already outsourced all of the info-tech and support staff that they're going to be able to outsource. You need some folks on-site, but the late 90s/early aughts were all about sending decent IT jobs offshore.
Now they're outsourcing analysts and brokers and accountants. Anyone who doesn't need to be physically in the building. The stories are saying we're talking investment jobs, not support staff here.
I hope it ends up biting them in the ass HARD. Also in a just world this kind of blatant unpatriotic act after we taxpayers just bailed their asses out of an inevitable bankruptcy would be met by brutal sanctions. We don't live in that kind of world, but damn they should be raked across the coals for this.
I last worked for an investment bank in 1997 (CSFB), so I guess I'm behind the Times.
ReplyDeleteAnd my job was trading foreign exchange forwards, go figure!
/seems like irony but isn't really department
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India, China, and other Asian countries are investing a LOT of money in education for their kids. Meanwhile the USA is gutting our already shitty Education System. Soon all programming and banking and engineering stuff will be done by Chinese or Indians, etc.
ReplyDeleteI hate to even try and imagine what the U.S. will become. Perhaps a whole country of Mercenaries fighting other country's wars all over the world? Obviously our Leaders (MOTU's) think we'll still be "in charge" of things. I doubt that very much.
I hate to even try and imagine what the U.S. will become.
ReplyDeleteeventually manufacturing will return because we will be the low-wage country of choice.
It's actually not possible for Goldman to outsource as much as you think, because the bulk of finance has to take place in the country with a fairly well-developed and reliable common-law legal architecture, and while Singapore is not exactly America, it's still a first-world country.
ReplyDeleteMost of the outsourcing should be back-office or mid-office work. The productivity of front-office staff is too high for the outsourcing to be even worth the bother. (Do the math: a junior front-office banker gets about what, 200,000? Plus benefits and stipends and allowances and everything, let's say 400,000-500,000. The marginal labour product of a junior is at least ten times that, if not more.) It's just not worth it, especially when you won't be able to get the people with other options to take banking jobs in Singapore.
(Traditionally, it's been so difficult to fill LA advisory investment banking offices, for example, that a lot of Canadians and people from fuzzier targets are brought in to do LA banking. Which partially was responsible for LA becoming notorious for having more horrible hours and stress for junior bankers than even NYC. American banks in Hong Kong have the same pathology.)
"I last worked for an investment bank in 1997 (CSFB), so I guess I'm behind the Times."
ReplyDeleteAhhh, back in the era of Kidder Peabody. What happened to the First Boston in CSFB?
(And for banking and international finance purposes, Singapore might actually have a more advantageous legal system, because it's modeled more closely on England & Wales law, which is typically the mutually agreed standard when international transactions are completed.)
ReplyDelete"Do the math: a junior front-office banker gets about what, 200,000?"
ReplyDeleteTry half that (and less). Does your computer even get the Google?
Myles, we're not guessing how much Goldman plans to outsource: they announced it.
ReplyDeleteMyles= ignorant gibberish. Just like ArgleBargle.
ReplyDeleteOne thing you can bank on is that--like McArdle--pretty much everything Myles writes is incorrect. 1997 was the "era of Kidder Peabody"? Um, no. Kidder Peabody didn't even exist in 1997. What happened to the FB in CSFB? Seriously, man...it's called Google. If you're going to pose as a know-it-all, you could at least do us the courtesy of not asking incredibly stupid questions that would take you 30 seconds to answer yourself.
ReplyDeleteThe proletarianization of the white collar class can't come too soon.
ReplyDeleteWell, to rip off the name of a pop group, "Capitalism will eat itself."
ReplyDelete"I tend to think of upper class as those making 250k plus. Would that be too low?"
ReplyDeleteHard to say. I think wealth (net worth) is a better measure than annual income when determining whether someone is 'upper class'.
"Upper class" is more a functional of grandparental net worth, I'd say. Joe Kennedy was rich; Jack & his siblings were privileged; their kids are upper class.
ReplyDeleteIn Britain they used to have a way of codifying it, as the third generation or so got a peerage, but standards have slipped badly and now the heir apparent's boy has married the daughter of self-made millionaires. I ask you: party favors on the Internet! Never would have happened in the good old days.