1,300 Earthlink Employees to be Fired → Highest worker's comp rates and you're surprised

How can anyone be surprised by this move. Call centers in California? I would have closed them too. As an owner of a small business here I can attest to the NIGHTMARE the state gov't is and how difficult they make it to conduct business here. California has brought this upon itself and when you make a business move like this state is doing across the board, a business has a lot of options of where to move to including out of the country.

If it weren't so expensive to do business here we wouldn't be having this massive problem, but when you have some businesses paying $100 in worker's comp insurance for every $100 in payroll it's no wonder that businesses where labor is the highest cost like a call center won't leave this dreaded state.

So before we all start the flag waving and blaming Earthlink, let's take a step back and look at the REAL cause, burdensome regulation. So we have a choice...outsourced jobs, or reign in gov't corruption that results in disasterous job killing messes like the California worker's comp system.

don't blame the common worker for the outsourcing of America. Blame the overpaid managment, the stockholders and Unions for making money off workers backs with little or no regard for them...

blame the folks who created the system...not the workers in it.

Ben

It's not the stockholder, and management driving up labor costs in California...I'm not sure if the ELN workers were unionized...I'm guess they aren't.

I put the blame for this, not the ELN, not on the workers, but squarely on Sacramento and the anti-business climate they have created here where the worker's comp system is just the tip of the job killing iceburg.

I'm not going to disagree with the costs, however if your argument in this case was valid they wouldn't close the Harrisburg call center.

I realize people go into business to make money. The whole problem with this is it takes money to make money. You have to pay employees, interest, and other overhead to get ahead. Where we have, and are headed, is many employers feel they shouldn't have to pay employees. This is what this is all about. You may argue, squeal, squirm, about this all you want. It doesn't change the fact that they want it all for nothing. It the end everyone loses. Oh, you don't think you lose? Tax revenue is a necessity. It feeds our public services, builds our roads, and accomplishes many other things. Well, it looks like I don't have a job, so add me to the list of people that will not be contributing to the tax base for some time.

Now, those of you that support outsourcing, who is going to pick up the share of taxes paid by people that have lost their jobs due to outsourcing?

The costs of business aren't limited to California. A lot of business have these problems in anti-business states. It's just that California is the worst.

No employer feels they shouldn't have to pay employees. That's just nonsense. There's a difference in paying an employee a fair wage, and then paying a fair wage + 200% because of overregulation or failed gov't programs like California's worker's comp system.

The problem is, employees never see the nightmare of business management and how much it costs. They just want their free healthcare, 4 weeks a year of vacations, paid personal days, sick pay, paid family leave, 401Ks, free childcare, paid everything, call the employer evil and greedy if they don't get it...all the while the gov't is on the other side with their hands out demanding even more money and customers freak over price increases. Employees have zero clue what the real cost of labor is to employ them. The amount on their check is but only a small fraction of the labor cost paid by their employer and you can thank daddy gov't for that.

It's no wonder businesses are fleeing. Wouldn't you? If you're out of a job, that sucks, but I don't blame ELN for it...I blame the gov't of the states those call centers are in for driving ELN to this drastic step.

Well...

You are making another assumption, that employees don't have a clue.

In the case of Earthlink the wages were not excessive. Nowhere near it.

The cost of health insurance, if we don't get it from the employers where do we get it from? At the wages a company like Earthlink pays buying insurance is not an affordable option. This applies to many workers in this country. What option is left? Socialized healthcare, which will be paid through taxes. Either way we are stuck with that cost.

Vacations....For sanity many of us need time off. Earthlink has paid vacations. Earthlink does not allow for time off otherwise and fires people if they call in sick after three occurrances in six months I think. I rarely call in sick, so I don't think about the policy much. The whole point is people need time off and many employers don't want to give their employees time off, paid or unpaid, then wonder why they have an employee file a job stress claim.

....oh, but the boss always has to take time off for important personal things...

As for regulation, most of it is there for a reason, though it shouldn't be expensive, many regulations do serve a purpose and in most cases it comes as a result of someone abusing something...and it is not limited to employers. I'll add that the people that abuse something are the ones that squeal about it the most.

There is certainly government corruption. There is certainly as much corporate corruption, and we can start with CEOs that get huge bonuses while their companies are losing money.

Oh yeah? Who is going to pick up the gap in taxes that were once paid by Americans that are now unemployed due to having their jobs go overseas?

Well, as you make excuses for the costs of business, jobs will continue to be exported. Labor is subject to market forces just like anything else. I don't expect an employer to have to suffer higher labor and regulatory costs when there is an alternative any more than I expect any consumer to endure higher prices when there are alternatives. You don't blame the consumer for their choice.

As for the lost revenue...it can be made up by cuts in spending.

Again, you can't seem to answer the question: Who is going to pick up the gap in taxes that were once paid by Americans that are now unemployed due to having their jobs go overseas?

Where's the gap if spending is cut? And with a net gain of 3 million jobs since Bush took office, those "displaced" can get another job.

1300 lost jobs wil make little difference in the amount of money collected in taxes.

puritan

If you figure that they average $40K/yr with an effective total tax rate (including Fed, state, sales, property...everything) of 55%, it's about $26M/yr. Considering Bush's latest budget ($2.23T), the Federal gov't is spending over $70,000 per second $26M isn't going to make but 6 minutes difference...and that's if not a single one finds a job.

I'm sure people that have had jobs outsourced contributed much more than $26M a year in taxes. Add to this the people that will lose jobs to offshoring in the future. The latest estimate is 26% of ALL American workers by 2016.

The impact will not affect the Federal Government. They will continue printing money without anything to back it up. It is the individual states and local governments that will suffer from the impact.

Anyway, you aren't able to answer the question, and it is obvious you are one of those employers that think paying anyone more than $1.00 an hour is excessive, so I'm finished with this thread.

Puritan...

The whole problem with this is people say, "it is only 1300."

Tomorrow another company will lay 500 people off and everyone will say, "it is only 500."

It goes on and on, to the point where there are more people that have been employed overseas since 2001 than people employed during the big dotcom boom.

Think...the future, the future, the future.

No they don't, and no they won't. Meanwhile, we aren't hearing any solutions from you. But, that's typical.

And I've already answered your question about the tax gap twice now. But I'll answer it YET AGAIN. Our economic growth (including the 3 million newly employed) pays the difference and cuts in spending pays the difference. It's not that hard to understand but since you can't, there is no point in continuing.

said by Fomhoire7:

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They will continue printing money without anything to back it up.

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If this is true, then where's the inflation at?

IT's all because of California works comp rates, damn people want to have a working wage. How dear anyone in this day and age want to feed there family. To top if off they want to send there kids to school. THey don't need an education, all a man needs it two hands and a strong back. Then those bastards in california what to have safety net in works comp and they want to get paid when they are sick. What a bunch of slackers to hell with them. The problem with the american work force is they want to be treated like humans and they aren't. Only those with wealth are human, the real movers, the boss hog, the supermen!

P.s. I am not going back to 1930's and out sourcing any american job is an attack on our economy and that was what 9 11 was all about so what does this make Earthlink.

said by MrHalloween:

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Then those bastards in california what to have safety net in works comp and they want to get paid when they are sick.

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Why are Californian worker's comp costs twice that of the US average?

Option 1) The rest of the country shafts sick and injured workers.

Option 2) Those bastards in California are on a taxpayer gravy train.

First of all I was being sarcastic. lol that point did not make it through your head! lol second I think the large part of workers comp is the simple fact that everything in California cost twice as much to live here! lol

i would also like to add national average mean nothing, give me the median value then we will talk

for example during the last tax cut: warren buffet and I had an average tax cut of 175,000,000! lol so when you give average you need to include the median and the mode, because an average by it's self can be made to give a false look! GAME OVER! LOL!

Sometimes it is difficult to sense sarcasm on the net.

Part of the high worker's comp rates in California is due to higher expenses here, but I have also seen a lot of people milking the system.

Milking the system has nothing to do with it. The high rates are do to the high cost of living in this state. No one is going to say that california is cheap, so it is only natural to see higher work comps rates. Look at all insurance issued in the state. The milking is only a small part! I would also like to point out that california has one of if not the largest work force in the country. So if all things are average then we should have one of the highest if not highest work comp claims. Which mean higher rates!

GNXPower is correct in stating that the cost of doing business is a big consideration when doing business. He is also correct in stating that the salary of an individual does not represent the total cost of employing a person. Those "fringe benefits" costs adds up rapidly. One of the most rapidly increasing costs across the board (all states) is that of health insurance. Double-digit increases in costs anticipated for the next several years. Other costs can be affected by the history of a company - unemployment compensation costs, for example. Most states charge a company a rate for this "insurance" based on the history of claims. More unemployment claims = MUCH! higher unemployment insurance costs. And those come straight out of the company pocket. They must be made up somewhere. If you work for a company with a good benefits package (good paid vacation/sick time, health insurance, 401K, cafeteria plan, etc) you can figure that your salary is roughly 2/3 the cost of employing you. Take a high cost of living state such as California or New York and that can be a hell of a lot of extra money that has to be gotten elsewhere. And for most the "HELP DESK" is a 100% G&A cost. Overhead, if you will - same as leasing a building or the salaries for HQ management and support: there is nothing directly billable to offset the costs, it all has to be calculated in and added to the cost of the product and passed on to the customer.

I personally hate to see jobs like this move out of country. It adds to the unemployment problem, it adds to many problems. But in a way our affluence is doing it to ourselves. Anyone got the actual salaries for the help desk types with Earthlink in CA? I don't, so I'll make up some numbers. Someone mentioned $40K earlier, I'll use that. That would be roughly $20/hour. Add that 33.3% overhead cost that I mentioned and it costs a company about $26.66/hour. Presuming 24/7 help available, it means 1/3 of the force is at work at all times, so that's about $11,553/hour to provide help desk service. Now move that somewhere that the base salary is (again, just pulling numbers from a dark place) $5/hour and perhaps NO fringe benefits - the $5/hour is it. The per hour cost drops to $2167. So, for 24/7/365 help desk in the U.S. it costs the company about $101,204,280/Year, but at the $5/hour location it costs them only $18,982,920/year. Presuming the corporate income stays the same, that's some $82,221,360 per year to spend on something else!

said by 2kmaro:

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But in a way our affluence is doing it to ourselves.

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Hey don't worry about it. As long as this keeps happening, affluence will no longer be a problem in this country.

The bottom line is that Corporate America is too stupid to realize that they're slowly killing off their best market.

future, its not future its now. there has been approx 1million jobs offshored in the last 3 or 4 years and another million will go by 2010. Its not just call centers, help desks and other lower tech jobs. Its also software design, software programming, Reading of Xrays by a radiologist, architectural plans – basically anything that can be done At a computer with the appropriate bandwidth. The age of Broadband connections worldwide has brought this upon us (so there is both good and bad that comes from the higher & cheaper bandwidth everyone wants).

What troubles me most is the software creation that is being shipped overseas. When you have 400,000 to 1 million “foreigners” creating the operating level code (IBM, Microsoft, etc) as well as all the application level code (banks, utilites, air traffic control, etc) we are placing the future of our nation in their hands. These folks will be creating 20 to 30 million line of code a day (1million coders putting out 30 lines of code each per day). After a few years of putting out all of that code – who is to say what backdoors, Trojan horses, viruses is not imbedded in it? Not that all million of them would be involved in some plot, but just think what a few 1000’s strategically placed programmers could do.

Software runs everything folks. Lots of smart people have been preaching about the forthcoming “digital perl harbor” that may come when someone in these “foreign national coding sweat shops” turns a key and shuts down everything in the US ran by these systems..

It doesn't matter, it's unamerican to move these job off shore regardless of the price to higher workers. Every company enjoy the use of our AMERICA laws, road, police, etc. There are no ends to the help that a company get from our government. Also Earthlink, main business is here in America! So they still want the American costumer, The American laws, the American roads, but not the American worker. This isn't right and should not be allowed! NO WONDER WE ARE IN A JOBLESS RECOVERY!

Businesses operate on a very simple formula. It's not earthlink's responsibility to keep jobs in california, its the government's.

No it's Earthlink responsibility to pay back their debt to society, which is to keep work here. Our government which we pay for helps Earthlink to have a business. So without us or rather our government no Earthlink. THe fault isn't with the workers or the Government it's Earthlink and the people who run her.

2k,

My uncle was in from India and he was telling me about his wife's nephew.

The guy is fresh out of college, has only done a BA (which by educated Indian standards,isn't much), can speak fluent English and he earns Indian Rupees 15,000 per month. 15,000 rupees/month is very good for someone's fresh job and a young guy can get by very comfortably on that amount.

15,000 rupees is $329 at the exchange rate of 1 Indian Rupee = 45 USD.

Keep in mind that there are no overheads in India: no 401k, no insurance, no benefits. The employer just pays the employee his salary of $326/month and that's it.

How much do call center people make here per month?

And then when you compare the higher end jobs (web design, coding, QA testing), the profit margin for companies gets higher when they can outsource those jobs to India.

said by zabes63:

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said by 2kmaro:

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But in a way our affluence is doing it to ourselves.

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Hey don't worry about it. As long as this keeps happening, affluence will no longer be a problem in this country.

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Except for a very small minority who will have all the wealth. This country is going back in time to the early 1900's, labor-wise. When people finally get their canful of this crap they will take matters into their own hands...