Call centers a global business in a competitive market

by Lewis Loflin

Sewing factories once dotted Southwest Virginia. The jobs were "tedious but steady" according to the press. It was also unskilled and low-paying and often supplemented the much higher pay from the coal mines. The passage of the North American Free Trade Agreement (NAFTA) under the Clinton regime finished a process that began in the 1950s. Companies such as Eastern Isles, Buster Brown, Donnkenny, etc. ran to Mexico leaving scores of empty buildings that the taxpayers ended up owning. They thought they could fill the void with call centers.

These so-called "high-tech customer service centers" that provide support for computer owners, Internet users, vacation-seekers, directory assistance and wireless telephone service employed 2,000 in 11 call centers in 2003, according to the press. (Several have closed since then, others have opened.)

The press claims the salaries are good, but never bothered to confirm the claim from various government economic development agencies. One in Saltville, Virginia pays $8 an hour, others as little a minimum wage. Now the agencies fear even lower-wage third-world countries will undermine their efforts. Most of these call centers located here for both low wages and massive subsidies.

The Labor Department estimates that 500,000 information technology jobs were lost in 2001 to offshore locations. The figure could rise to 1 million by the end of next year. (2004) According to the Communications Workers of America, the union that represents many call-center workers, the number of offshore high-tech jobs could reach 3.5 million by 2015. In this region, few or none of the call center workers are union, and local governments and state agencies are hostile to labor.

Ron Flanary of is a member of the VCEDA board and director of Lenowisco Planning District Commission. VCEDA (or Coalfield Authority) was invented by the Virginia General Assembly and funded by coal severance tax. This pseudo-governmental agency is supposed to lure in new industry to replace the declining coal industry. In most cases they lured in other declining industries such as car parts manufacturers, wood flooring companies, etc. Most have shut down and moved on. They claim to have "created" according to the press 9000 new jobs. The press didn't check their facts, I did.

When I contacted VCEDA over these job claims, I received this response April 18, 2005:

Thank you for your inquiry regarding job creation by the Virginia Coalfield Economic Development Authority (VCEDA). The article you referenced mentioned 10,000 jobs created by the Virginia Tobacco Commission, so I do not have any data related to those positions. However, I have included the job creation and expansion numbers announced by VCEDA since its creation in 1988. Not all of these projects are still located in the region, but this will give you an idea of what has located here and the projected employment associated with the projects.

We do not track job descriptions and pay scales, but VCEDA statute dictates that we can only assist companies that meet certain criteria for job creation, with one of those criteria being that the company must pay at least 1.5 times the current minimum wage.

I got that list and quickly pointed out that many on that list were out of business and many never employed anywhere near they numbers VCEDA claims. They made it clear it was "projected." In one case they are still claiming over 1200 jobs at a single building that has seen three companies leave and only have 100 employed today, by a state contractor!

The claim of 2000 is very questionable. To quote the news article, (VCEDA) "has used millions of dollars worth of incentives to lure wood, automotive and high-tech support jobs to the region." They claim "an investment of more than $186 million. The claims of jobs from by the Virginia Tobacco Commission is false.

Flanary laments, "Anytime something can be made offshore cheaper, companies will go there. We can't sustain ourselves as a nation of consumers only." But the press strikes a happy note, Salaries -- averaging $7 to $8 per hour for starting workers -- are competitive when compared to those in other parts of the country." But what about India??? The only problem that's not enough to live on. Then this really gets strange. To quote,

"An abundant work force and training programs provided at community colleges and skill centers also are attractive to employers. The region also has 23,000 people registered at the Virginia Employment Commission for available jobs." But the same Bristol Herald Courier reported in 2006 that 15,000 college graduates fled this very area because they couldn't find a job. I'll bet $7 an hour had a lot to do with it. Flanary says, "Shell buildings, loans, grants and tax credits are good incentives, but the work force has been the big draw..."

I'll bet the 150% of minimum wage is a big draw too. This is from VCEDA in 2002:

The Coalfield Authority wants everyone ready for "hi tech" by being trained in computer programming and engineering. We've had it for years already, where's the jobs? In 2006 they reported the relocation of state jobs to a private contractor in Lebanon Virginia, claiming about 1000 new jobs again. Nobody will confirm the claim or allow outside verification. (In 2013 there's no proof of those jobs.)

As of 2008 we still have call center jobs, they managed to hold onto Sykes in Wise Virginia. To quote,

Sykes Enterprises now operates several facilities overseas, said Todd McReynolds, operations manager for the company's customer care center in Wise. "It's part of our business," he said. "We're a global business in a competitive market. I'm not going to say I'm opposed to it because you've got to have it."

They go on to state the region's workforce is great, others claim they need more tax dollars to train our poorly educated workforce. In Dickenson County for example, 50% of the population has no high school diploma. Sandy Ratliff, the Coalfield Authority's marketing director, says, "They can't do these jobs effectively outside the United States." She operates a monthly meeting of the region's call center managers to discuss issues. Ref. BHC September 28, 2003

A look at 12 years of cable ready socialism in our region:
How CGI-AMS and Northrop Grumman Failed Russell County
How Cable Ready Socialism Failed Southwest Virginia
Sprint Jumps State Line Collects Millions
U.S. Solutions Dumps Bristol Virginia for Bristol Tennessee
Travelocity Fails Dickenson County