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The Ultimate Twist of the Screw

U.S. consumers are getting themselves into debt for a variety of reasons - a college education, medical bills, housing costs, taxes, rising gasoline prices, high interest rates, and discretionary consumer spending. Many are unable to make the required payments on their credit cards and loans. That’s where the bill collector comes in.

One of the hottest trends in bill collecting is to outsource this work to low-wage countries. A San Diego- based collection firm, Encore, pays its collection agents in Gurgaon, India, an average of $425 per month in base salary plus performance bonuses which can be in the range of $1,000 or so. Bill collectors in the United States make $6,500 per month. So it is a win-win situation for the company and for its bill-collecting employees. The average monthly income in India is a mere $63 per month.

Of course, there is a culture difference but the company tries to overcome that. Its bill collectors (who have access to people’s Social Security numbers) have been told, for instance, that the U.S. government plans to mail out special rebate checks this year of $600 or $1,200 per couple. Some of that money could be used to repay the bills. Encore holds daily pep rallies to inspire its bill-collecting employees to work harder. Most are polite and effective.

Encore also has employees in Romania, Mexico, and the Philippines although India is the premier growth area. Outsourcing of debt collection is still in its infancy. Only 5 percent of the business is done that way.

The “screwing”, so to speak, lies in the fact that many Americans are impoverished because they lost their jobs, or accepted lower-paying jobs, because traditional jobs have moved off shore. And now the enforcement of debt collection is also moving off shore. One can hardly blame the Indian bill collectors for this situation - they jumped at an opportunity. But what of American businesses and government? Who’s looking out for the interests of the American people? No one apparently.

My concept of the “employer-specific tariff” applies to manufactured goods shipped from abroad into the United States. This tax can be paid as a condition of allowing entry into our country. However, I am at a loss what to do about products sent through the telephone lines such as bill collecting. I am at a loss what to do about product development and technical work outsourced to low-wage countries where five employees can be hired for the price of one U.S. employee. Any ideas out there?

Maybe a place to start would be to make our high-priced colleges and universities guarantee that students at their institutions will at least recoup the cost of their tuition in higher lifetime earnings - just kidding, of course. It’s a tradition to screw middle Americans.

(See Star Tribune, April 24, 2008, p. D1.)

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