As phones go silent, more telemarketers are jobless

The growing revolt against dinner-time solicitations may bring widespread layoffs.

The federal do-not-call registry still faces possible legal tests, but already its effects are rippling through an industry that employs thousands of low-wage workers, often in rural communities.

At the beginning of the month, Gannett Co., a news media conglomerate, closed its telemarketing division, which employed 19 full-time and nearly 400 part-time workers in five cities, from Louisville, Ky., to Columbia, Mo. Until this week, its employees sold a variety of products for other companies.

Now, its headsets are silent.

A similar pattern may play out nationwide following the enforcement of a new "do not call" system.

For ordinary Americans weary of solicitations, it's a dream come true. But the move carries an economic cost. The American Teleservices Association (ATA) claims that, if the list is completely phased in, 2 million out of the 6.5 million people employed by the industry will be laid off.

The new regulations may be too onerous for some companies, warns Lisa DeFalco, Chairwomen of the ATA. "Really it's any small business, because they are the ones without the resources to make a 6- to 7-figure dollar investment" to comply with the list, she says.

The decision to close Gannett's teleservices division, for example, was a direct result of the do-not-call list. "They looked at the cost of upgrading their equipment to comply with the do-not-call list, and the cost of upgrading made the company believe it wasn't cost effective," says Tara Connell, vice president of corporate communications for the news company.

For now, the Federal Trade Commission will press ahead with its do-not-call list. Last week, the US Court of Appeals for the 10th Circuit ruled the FTC could enforce its list of 50 million telephone numbers.

The impact on telemarketers will be felt nationwide. Geographically speaking, telemarketing companies can be found in almost every state, with the highest concentration in Iowa, Florida, Arizona, Texas, and Nebraska. It's an industry where 64 percent of employees are minorities, 26 percent are single mothers, and five percent are disabled. There are high numbers of part-time and temporary workers. "The biggest concern is that the average telemarketer who loses their job doesn't have as many opportunities to find a new job because of their education, background, or geographic location," says Ms. DeFalco.

Shifting some employees to new jobs - as Gannett did - is one alternative to lay-offs. Do-not-call list exemptions include solicitations made on behalf of charities, and politicians, and direct marketers will still be able to call consumers with whom they have an existing business relationship.

But some think clients will now turn to other methods of direct marketing - and new companies. Just in the past month, the direct-mailing division of Affinitas - a company based in Omaha, Neb., that deals in cable subscriptions and other products - has grown significantly, says Dave Steier, the company's chief financial officer.

Those who support the list say that it will actually help the direct-marketing industry by narrowing the field of potential consumers to those who really are interested in buying.

"Why waste resources calling up the people who have no interest in purchasing what you're selling? This will likely streamline the use of resources," says June Taylor, chief of staff for the consumer and governmental affairs bureau at the Federal Communications Commission (FCC).

But at the Affinitas call center here in Lawrence, working a night shift, 25-year-old Sam Elder says he's frustrated by the US government's new policy. "With America trying to recover economically from 9/11, if these millions of people lose these jobs that would be detrimental to our growth," he says. "And telemarketing is sales, which stimulates the economy. So by enforcing this, we're shooting ourselves in the foot twice."

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