CURRENT ISSUE :: MARCH 2004:: YOUR MONEY

Global Lab

Even High-Skill Research Jobs Are Moving Abroad

By Peter Loftus

Dow Jones Newswires

One of the key economic arguments in favor of offshore outsourcing is that it allows U.S. companies to save money and create new opportunities at home for higher-wage, higher-skill jobs at home, such as in research and development.

But what if companies decided that they could outsource those jobs as well?

Actually, they're doing it already.

One of General Motors' newest research projects is to make a digital version of the human body, which would ride in virtual cars in computerized crash tests. But this crash-test dummy of the future isn't being developed by workers at GM's famed Warren Technical Center, the Michigan laboratory where the car maker's research has been conducted for decades. Instead, it is being developed by a new GM research lab in Bangalore, India. The lab is eventually expected to employ about 100 Indian researchers with expertise in software, electronics and materials.

GM's move to India illustrates the growing role that foreign labs are playing in research, particularly in software-related projects. Much of the high-technology industry has already embraced offshore R&D. In Bangalore, GM researchers can rub shoulders with their counterparts at Cisco Systems, Intel, Oracle and Sun Microsystems, among others.

More for the Money

Companies say they are taking advantage of world-wide scientific talent, and offshore R&D is a natural outgrowth of having large international sales. Cisco established an R&D center in India because it has strong talent, spokeswoman Elizabeth McNichols says. She also notes that India is a growing market, and that it was natural for Cisco to have a presence overseas because more than 50% of its sales are international.

But an obvious advantage is cost. In a time of shrinking corporate research budgets, companies that outsource overseas are able to cut costs without reducing the volume of research that they do. Indeed, many of the companies that have cut R&D spending in recent years are adding R&D jobs overseas. R&D spending at Unisys, for example, fell 18% in 2002. But the company has boosted the number of full-time-equivalent researchers by doing R&D in India, says Executive Vice President Joseph McGrath.

"You can get a very good quality of service on a much better price point than you can in the U.S.," said Frances Karamouzis, research director at Gartner Inc.

India has several advantages in attracting R&D investments, in addition to cheap labor. Its universities churn out English-speaking software engineers who are widely regarded as talented. The country's communications infrastructure has improved in recent years, making it relatively easy and inexpensive to transmit software code electronically to the U.S. And with India halfway around the globe-nighttime here is daytime there-companies are able to keep their R&D operations running round the clock.

Industry executives say the level of work being performed in India is becoming increasingly sophisticated. At Cisco's in-house R&D lab in Bangalore, which opened in 1999, engineers have developed some of the company's high-end routers, which help steer traffic on the Internet and corporate networks.

"We used to just do back-end testing in India," says Pallab Chatterjee, president of operations solutions at I2 Technologies, a Dallas software company with 1,000 workers in India. "Today we actually do core development both in India and in the U.S."

While some companies, like GM and Cisco, set up their own research labs in India, others outsource R&D work to foreign technology companies, including Wipro and Infosys Technologies, which are based in India. Wipro derives about one-third of its $637 million in annual revenue from R&D contracts with other companies. Its 5,400 R&D workers design microchips for consumer-electronics products, develop components for telecommunications equipment and write software that is embedded in computer printers and automotive parts.

In a sense, it is no surprise that American companies are opening foreign R&D labs. Many R&D labs in the U.S. are home to foreign-born researchers. I2's Indian development center was launched in 2001 by Indian employees who had been working in the U.S.

Minding Perception

Given the growing controversy over outsourcing-labor unions and some politicians have criticized what they see as an exodus of white-collar jobs to India and other developing countries-many companies try to avoid the perception that they are moving high-paying American jobs overseas, or doing R&D on the cheap.

Alan Taub, executive director of science labs for GM's R&D arm, plays down the importance of cost savings in GM's expansion into offshore R&D. He says GM chose to open a new lab in India to diversify its talent pool and tap into the technical universities in the region. "On research, if you make a decision solely by cost, you'll end up making some bad choices," he says.

And no one should expect that all R&D will be done overseas in the future, says Ashish Thadhani, an industry analyst. Even as R&D in India becomes more sophisticated, some R&D work will always be done in the U.S., including emerging technologies and R&D related to national security. What's more, Mr. Thadhani believes that any American jobs lost to offshore R&D will be more than offset by jobs created by new technology innovations. For instance, he says, the field of nanotechnology will create many new jobs for American researchers.

"History confirms that the U.S. is the most resilient and innovative economy in world," Mr. Thadhani says. "It exports routine jobs to low-wage countries and replaces them with new, high-skilled categories."

What effect will research outsourcing have on the U.S.

scientific community?.Write to letters.classroom@wsj.com.

My Greek Philosophy

Merits of Fraternities and Sororities Depend on the College, and You

By caitlin j.noris

Special to The Wall Street Journal Classroom Edition

According to my semi-unofficial College Dictionary, a "frat boy" is a brother prone to overindulging in cheap beer, laziness and general rowdiness. "Sorority girl" is similarly defined as a sister who enjoys meaningless girl chatter, dancing on top of bars and constantly grooming herself.

These stereotypes-like all stereotypes-are somewhat removed from reality. Greek organizations, as fraternities and sororities are known collectively, have long been fighting the perception that they are elitist, boorish, cruel and materialistic. They have cited their members' strong community service and academic records as proof that Greek life can be good.

But just as fraternities and sororities were starting to win the public image battle, "reality" television intervened. MTV's recent shows "Fraternity Life" and "Sorority Life," which promise viewers an inside peek into Greek life, only served to reinforce existing stereotypes. There was hazing, backstabbing and gossip. I can only imagine how many high school students were turned off to Greek life by what they saw on television.

So what is the reality? Is Greek life a blessing or a curse on college campuses?

I firmly believe it comes down not only to the person joining but also to the individual chapter. I can't tell you which groups will fulfill those stereotypes and which will defy them. I can, however, give you my honest appraisal of both sides of Greek life-the good and the bad.

The Good

There's no doubt about it. When freshmen arrive at college, many of them feel isolated and confused, especially if they don't know anyone. It's completely normal to feel this way. As I've written before, joining an on-campus organization can be the key to meeting new people and discovering new interests.

Many freshmen view Greek organizations as a sort of prepackaged deal-you get friends, a social life and prestige all in one swoop. Sororities and fraternities provide freshmen with a social structure that most people take months to assemble. Get into a frat, and you've made 50 new friends in a matter of weeks!

Randall Weinstein, a junior at Carnegie Mellon University, says joining a fraternity gave him "easy access to a social atmosphere, easy access to a lot of extracurricular activities, and the ability to take strong leadership roles."

In fact, including a Greek organization on your resume, especially if you hold a leadership position, can be very impressive to future employers. Like getting involved in any on-campus organization, it illustrates that you can make a serious commitment and work well with others.

Moreover, fraternities and sororities work hard to get members involved in community service. "We generally do one philanthropic activity a month, from distributing bike helmets to raise awareness about brain damage," says Randall. He adds that community-service events are even required for new pledges.

"I would suggest that every freshman seriously consider going Greek," concludes Randall. "I always say that it's the best decision I made since coming to college."

The Bad

With all of those advantages, it seems as if every college student would be dying to join a fraternity or sorority. But wait. Those ugly stereotypes we talked about exist for a reason.

Despite the fact that all Greek national organizations and colleges forbid hazing on paper, it does occur. Hazing often comes in the form of peer pressure, and fraternities in particular are often blamed for the proliferation of college binge drinking. Statistics show that Greeks tend to drink more often and in larger quantities than their non-Greek peers. For some chapters, alcohol and peer pressure are necessary ingredients of their rituals.

Lauren, a sophomore at a Pittsburgh college who joined a sorority her freshman year but later quit, says her sisters' behavior was too much to take. "They partied a lot, went to the fraternities all the time, got involved with the same boys, and drama always broke loose," she says.

Lauren also felt trapped in her sorority. "I would become angry and depressed," she recalls. "It was hard for me to leave the [sorority suite] for the day and know that I would have to return."

Other former Greek members who chose to drop out complain that pledging, while it does provide opportunities to meet new people, boxes them in socially. Moreover, many say that the pledging process-with interviews and rushing activities-simply takes too much time. A first-semester freshman is already trying to juggle living in a different location, studying more and missing home. Some freshmen will find it difficult to balance all the new things going on in their lives.

Wait and Watch

Obviously, Greek life isn't for everyone; but those who do decide to rush should keep a couple of things in mind.

First, consider waiting to pledge a fraternity or sorority until after your first semester. You're already going to have a lot on your plate. Putting off pledging will give you time to make other friends and establish good study habits. It will also give you a chance to get to know the Greek organizations at your school a little better.

"I would just like students to investigate the sorority or fraternity they decided to pledge and consider some of the rumors they hear," Lauren advises. "Because my logic is that [the rumors] had to originate from somewhere."

Second, a good fraternity or sorority will never pressure you to do something you're not comfortable with. I cannot stress this enough. As true "brothers" or "sisters," they should help you through your college career, not hinder you. Remind yourself that joining a Greek organization should not define you, but help you grow as a self-respecting person.

Do you have a question about college life?

Write to letters.classroom@wsj.com.

Hour History

Turn Back the Clock to the Dawn of Daylight Saving Time

By Cynthia Crossen

Staff Reporter of The Wall Street Journal

At first, it seemed like a crazy idea: change the deeply ingrained habits of millions of people merely by resetting their clocks. In 1918, when daylight saving time was adopted by the U.S., some Americans didn't even own clocks. On the nation's farms, the sun was the arbiter of time, and you could no more schedule sunrise than you could repeal the laws of gravity. If the idea of turning clocks ahead was to fool people about nature, an opponent of the new time scheme argued, why not reset the freezing point to 45 degrees so people would feel warmer in the winter?

Today, most people are resigned to the semiannual inconvenience of springing ahead and falling back. During the summer, they prefer to shift their extra sunlight to the evening, when they can spend time outdoors after a day's work. But in the early 20th century, the idea of fiddling with the national clock pitted industry against industry and technology against nature.

'Cheerfulness Reigns'

The father of daylight time was William Willett, an English builder who, in 1907, proposed advancing clocks 20 minutes each Sunday in April and reversing them similarly in September. "While daylight surrounds us," he wrote, "cheerfulness reigns and anxieties press less heavily."

American advocates of daylight saving time, led by Marcus M. Marks, then president of the borough of Manhattan, claimed that people would stay out later on summer evenings, playing games and spending money, which would make everyone healthier and the economy richer.

Federal legislation to initiate "summer time," as it was known in England, was supported by baseball teams, chambers of commerce, restaurants and bars, the American Medical Association, insurance companies and many labor unions.

But even this coalition might not have won the day if America hadn't been fighting a war at the time. Fewer lamps lit at night meant more fuel for the war effort; and people could use the extra hour of evening sun to cultivate their victory gardens. Furthermore, Germany had adopted daylight saving time in 1915. If the system worked for the enemy, it should work for Uncle Sam, too.

Dead set against the new time were farmers and their powerful lobbies-the Farmers' National Union, the National Dairy Union, the National Grange and State Farm Bureaus, among others. "If the people in the cities want to go to work an hour earlier in the morning and quit that much earlier in the evening, the farmer does not object," editorialized a Des Moines, Iowa, newspaper. "But he does not want them to fool with the hands of the clock."

A letter writer to Scientific American magazine asked, "Is the city man so far degenerated in moral fiber that he has to fool himself out of bed a little earlier by playing a trick on the clock?"

To farmers, clock time was irrelevant any time of year. When the sun was overhead, it was noon. Indeed, for most of the 19th century, America was a hodgepodge of local times-the state of Wisconsin alone had 38 time zones.

In 1883, the railroad industry standardized American time. But many farmers ignored railroad time, unless they had to catch a train, and many communities continued to set their town clocks to local time.

Increasingly, however, farmers depended on the railroad for their livelihood. If city folks were buying their milk, the milk had to make the morning train. "Before the clock was turned an hour ahead, we used to get up at 5 a.m.," complained a New York farmer. "This meant it was just about daylight. Now we still get up at 5 a.m., and do most of our chores by lantern-light."

War Won, Battle Lost

The farmers lost the battle, and on March 31, 1918, America turned its clocks ahead one hour. But the following year, when the war ended, the farmers resumed their campaign against the "idlers and pleasure-seekers." In the summer of 1919, some 28 bills to repeal daylight saving time were introduced in Congress, according to Michael O'Malley, author of "Keeping Watch." Congress passed two, Woodrow Wilson vetoed both, and Congress overrode his veto.

During World War II, daylight saving time returned as War Time. Clocks were set ahead year round. But from 1945 until 1966, states and cities could choose if and when to observe daylight saving time. As a result, on one 35-mile strip between West Virginia and Ohio, a traveler passed through seven time zones. The Uniform Time Act of 1966 standardized daylight saving time, although states could pass a law to exempt themselves.

A small but vocal minority has always suspected something sinister behind the clock tampering. "At the back of the daylight saving scheme," complained Samuel Marchbanks, the fictional alter-ego of Canadian writer Robertson Davies, "I detect the bony, blue-fingered hand of Puritanism, eager to push people into bed earlier and get them up earlier, to make them healthy, wealthy and wise in spite of themselves."

The Battle

Over Outsourcing

Does Exporting Jobs Really Help Create New Ones at Home?

By Bob Davis, Michael Schroeder and Timothy Aeppel

Staff Reporters of The Wall Street Journal

The debate over "offshore outsourcing"-when companies shift certain job functions to workers in other countries to save money-used to be fairly simple. On one side were labor unions and blue-collar workers who were displaced or idled when their employers moved their manufacturing work to foreign factories with lower-paid workers. They believed that this trend would depress wages and increase unemployment here in America.

On the other side were business and government leaders who advocated free trade and "globalization," the integration of markets around the world. They believed that when a rich country sends blue-collar jobs overseas, it creates new opportunities back home for workers to move up the skill ladder and make more money. The more recent corollary was that sending service jobs overseas would do the same for white-collar workers back home.

Now, however, some of those free-trade advocates aren't so sure. The rising number of skilled, white-collar jobs migrating from rich nations to developing countries is raising fears that well-paid workers in developed countries will have trouble finding equally well-paid computer, design and medical jobs at home. Many of the true believers in globalization worry that outsourcing also could erode political support for free trade internationally.

"When auto-manufacturing jobs went to Mexico, we said we'd push the bar up and create better jobs," says William Daley, who guided the North American Free Trade Agreement through Congress for former President Clinton and is president of SBC Communications. "Can you keep going up the job chain?"

Other skeptics note that there are substantial differences between how trade affects workers in manufacturing and services. In the manufacturing sector, developed countries can try to protect domestic jobs and industries by imposing tariffs on imported goods. High import tariffs eliminate some of the economic argument for using lower-cost labor abroad to make goods that will be more costly to import into the U.S. But the service trade isn't affected much by tariffs, and can move as rapidly as the improvements in computers and communications allow. Therefore, the job loss in the service sector can be more sudden.

So long as it was just manufacturing jobs at stake, opinion leaders didn't take much note, says Dani Rodrik, a Harvard University economist. The alarm is being sounded now, he says, because "the opinion leaders are seeing their neighbors being displaced."

Software programming has been outsourced for years to India. Low-paying jobs in call centers also have been shifted to English-speaking countries around the globe. Now high-end computer-systems integration is leaving the U.S., too, as is architectural and design work. An estimated 200,000 service jobs, a large percentage in information technology, have been shipped abroad to foreign affiliates of U.S. companies during the past three years.

'Mad in the U.S.A.'

As a result, a new and vocal anti-free-trade movement is emerging in the U.S., made up of highly skilled workers who once figured they would be big winners in the globalized economy. They include design engineers, skilled machinists, information-technology experts and chief executives of specialized manufacturing companies, among others. They once believed that they were largely protected from foreign competition because of their advanced degrees, English-language skills and the supposed necessity of dealing face-to-face with customers. But now they worry that their jobs are at risk.

These white-collar free-trade opponents are linking up with organized labor and old-line manufacturers, deepening the opposition in the U.S. to liberalized trade and making congressional passage of any trade pact more problematic. "We're not a bunch of whining businessmen, but we needed to focus our anger," says Fred Tedesco, founder of a group called Mad in the U.S.A., which brings together highly skilled manufacturers.

Mr. Tedesco, owner of Pa-Ted Spring Co. in Bristol, Conn., says his company followed a strategy that he thought would preserve its market share. Pa-Ted invested heavily in the latest equipment and has moved into producing ever-more sophisticated products. Among these are tiny clamps made of an exotic alloy used to pinch off arteries in the human body. Still, his business is down 30% in the last two years as big customers relocate abroad and competition grows from ever-more-sophisticated Chinese manufacturers.

The outsourcing opponents got a boost recently when Intel Chairman Andy Grove, a pioneer in the American high-tech industry, warned that the U.S. could lose the bulk of its information technology jobs to overseas competitors in the next decade, largely to India and China. Mr. Grove called on government and industry to create public policy to help reverse the trend. He advocates taking 1% to 2% of U.S. agriculture and other subsidies to increase university research and development funding; tightening patent application and litigation requirements; and expanding the number of U.S. households with access to the latest Internet technology.

But Mr. Grove acknowledges that Intel has been part of the trend he describes. Given cost and productivity pressures, the microchip company "has no choice" but to continue sending work abroad, he says.

Overblown Fears?

For the past few decades, U.S. presidents have promoted free trade and global integration as an economic-development strategy. Although the U.S. would lose some manufacturing jobs to developing nations where labor costs are lower, the argument went, the U.S. would gain higher-paying, higher-skilled jobs that poor nations were unable to master. The more recent trend of outsourcing service jobs makes that argument less compelling.

Still, some economists and globalization advocates think the fears of outsourcing are overblown. A recent McKinsey study concluded that at least two-thirds of the economic impact from sending jobs offshore flows back to the U.S. economy in the form of lower prices, expanded overseas markets, and fatter profits that U.S. companies can plow back into even more innovative businesses.

If Indian programmers, for instance, produce software at lower prices than Americans can, that would reduce costs for the many users of information technology. As that lower-price software spreads through U.S. and European companies, those companies become more efficient, more productive and more able to hire new workers. At the same time, as India and China develop economically, they would become more-lucrative markets for U.S. exports.

Catherine Mann, an analyst at the Institute of International Economics, estimates that U.S. companies were able to reduce the cost of computers and communications equipment by about 10% to 30% by making the equipment in factories around the world. That lifted U.S. economic growth by about 0.3 percentage point a year between 1995 and 2002, as more companies made use of less expensive information technology. She expects similar economic gains if computer software is produced in an internationally efficient fashion.

Alan Greenspan, chairman of the Federal Reserve, says the real problem for U.S. workers isn't trade, but the fact that in the past 20 years, highly educated, high-skilled workers have seen their wages rise briskly while those of low-skilled workers have stagnated. The solution, he says, is more education for those with few skills to close the gap.

At the same time, he says, as demand for high-tech workers in India and China surges, the low-wage advantage in those countries would disappear. He says Americans were worried in the 1950s and 1960s about the loss of jobs to highly educated, lower-paid Japanese, but as demand for those Japanese workers climbed, "Japanese wage rates just took off. So it's not as though Chinese and Indian software engineers are always going to be at a very significant differential. Eventually the gap will close."

Moreover, supporters note, free trade works both ways. Just as U.S. companies see advantages in moving jobs abroad, foreign companies are increasingly seeing benefits in setting up operations and creating jobs in the U.S. (See article on Page 11.)

Presidential Politics

For now, though, outsourcing is becoming an increasingly hot political issue, especially with the presidential campaign accelerating. Since Mr. Bush has taken office, the U.S. has lost more than two million jobs-a statistic that has become a major point of attack for Democrats, who cite outsourcing as one cause.

But on this issue, the lines between the two parties are not so clearly drawn. The White House's chief economist, Gregory Mankiw, set off a political firestorm recently when he said that outsourcing U.S. jobs "is probably a plus for the economy in the long run." Mr. Mankiw may have been trying to put the outsourcing issue in perspective, and speaking more as an economist than a politician. But to some critics he sounded cavalier-for instance, in suggesting that high-paying jobs in radiology might be better done abroad than in the U.S.

His remarks brought sharp rebukes from lawmakers, including some Republicans. House Speaker Dennis Hastert of Illinois said Mr. Mankiw's "theory fails a basic test of real economics."

The president, too, has tried to distance himself somewhat from Mr. Mankiw's comments. "There are still some people looking for work because jobs have gone overseas, and we need to act in this country," he says. Mr. Bush has touted his budget proposals to increase spending on job-training programs at community colleges.

But even some prominent Democratic economists echo Mr. Mankiw, and see outsourcing as a net positive. "Basically I agree with Greg's thrust," says Janet Yellen, who was President Clinton's chief economist. "In the long run, outsourcing is another form of trade that benefits the U.S. economy by giving us cheaper ways to do things."

That won't stop the Democrats from using it as a campaign issue, though. "On efficiency grounds, he [Mr. Mankiw] is right," says Robert Reich, President Clinton's labor secretary. But Mr. Reich, now an adviser to Democratic candidate John Kerry, says the Bush administration hasn't made "a serious attempt to deal with the profound structural problems of an economy in transition as it affects middle-class jobs."

Sen. Kerry is looking at tax-law changes to discourage companies from shifting jobs abroad and requiring workers in call centers to identify the nation in which they are located. He also argues that reforming the health-care system to make it more affordable would save companies money and give them one less reason to move jobs abroad.

Congress is charging into the debate, too, taking up a number of anti-outsourcing bills ahead of the fall campaign. (See article at wsjclassroom.com/related.) Meanwhile, about a dozen states are considering putting curbs on the use of outsourcing in government contracts. Last year, a bill in the New Jersey Legislature to limit state computer work to U.S.-based employees stalled because of lobbying by multinational companies. Still, New Jersey forced a computer-services contractor to relocate an 11-employee help-center to Camden, N.J., from Bombay, India-at an additional cost to taxpayers of nearly $1 million a year.

Do you think outsourcing is good for the economy in the long run? Write to letters.classroom@wsj.com.

Creative Job Destruction

Answer to Outsourcing Is to Help Americans

Be More Competitive

The "outsourcing" phenomenon you've been reading about is real enough. IBM recently said it will transfer almost 5,000 programming jobs overseas, mostly to India. The consulting firm Accenture, which handles outsourcing for other companies, plans to double its staff in India to 10,000 in the next year. Meanwhile, such Indian software companies as Wipro and Infosys Technologies are approaching $1 billion in annual revenue and growing staff by about 25% a year.

So at first glance this looks like a win-lose proposition, with India gaining jobs and the U.S. shedding them. Unemployment among U.S. software programmers is now above 7%, compared with 1.6% two years ago. Part of that is due to the aftermath of the dot-com bubble. But let's not shrink from the truth: Jobs are migrating to India.

Jobs We Can't Yet Imagine

What's important to understand, however, is that the labor market for programmers and software engineers is highly complex. You can't simply substitute one worker for another. At the bottom end, some coding has become comparable to semi-skilled labor; some training is required but not a lot of brain power. These are the jobs moving to India.

Western companies are still keeping their most crucial work close to home. Just as in manufacturing, U.S. companies will use the cost savings from job transfers to pursue the cutting-edge advances that produce the highest profit margins. A study by the McKinsey Global Institute found that U.S. companies save 58 cents for every dollar transferred in jobs offshore. That money is available for new investment, or to pay top dollar for Americans with world-leading skills.

In economic principle, all of this is hardly different from the loss of factory jobs in the '80s. Now it's happening in services. The result is another inevitable round of creative destruction that will see some current jobs vanish while increasing productivity in ways that will help companies create new jobs we often can't yet imagine.

Federal Reserve Chairman Alan Greenspan recently addressed the feeling of insecurity this causes: "We can usually identify somewhat in advance which tasks are most vulnerable to being displaced by foreign or domestic competition. But in economies on the forefront of technology, most new jobs are the consequence of innovation, which by its nature is not easily predictable." Still, he argued that trying to shut out foreign competition would hurt the U.S. economy.

How to Respond

The challenge for America's business and political classes is how to respond. The wrong way is with anti-foreign bid-rigging that limits outsourcing. Indiana Gov. Joe Kernan recently barred an Indian software company from a $15.2 million project it was awarded only two weeks earlier. The company had the lowest bid by some $8 million, according to the Indianapolis Star, so Hoosier taxpayers now will pay more for this protectionism.

Such political gestures are futile in any case. The trade here isn't in goods that can be blocked but in the ones and zeroes of digital information. Private companies will simply drop some services or relocate even more jobs if they are blocked by government from doing what it takes to stay competitive.

The alternative is to do what it takes for Americans to remain innovative and create the next wave of wealth-creating ideas. Improve K-12 education, especially in the inner city, maintain an open immigration policy so the world's brains can live in the U.S., reform the tax code and fix the legal system. The goal isn't to steal jobs from another country but to help both the U.S. and the world get richer.

Brain Drain

'No Child Left Behind' Law Leaves Out Gifted Students

By Daniel Golden

Staff Reporter of The Wall Street Journal

To make sure even the most disadvantaged students learn the three R's, Congress two years ago passed a law known as No Child Left Behind. National test scores suggest that the law is indeed helping the weakest students.

There's just one problem: It may be leaving behind some of the strongest.

The 2001 law, championed by the Bush administration, calls for all public-school students to be proficient in reading and math by 2014. Schools must make steady progress toward these goals. They face penalties if they don't continually raise their proportion of proficient students, both overall and within various racial and other categories. Schools that miss milestones can be required to pay for outside tutors and let parents transfer children elsewhere. But a school faces no penalty if top students start losing ground, as long as they remain proficient.

To abide by the law, schools are shifting resources away from programs that help their most gifted students. Because "all the incentives in No Child Left Behind are to focus on the bottom or the middle," says Stanford University education professor Michael Kirst, "reallocating resources there makes sense if you want to stay out of trouble."

Illinois eliminated its $19 million in state funding for gifted-student programs this year, spurring Springfield and some other school districts to trim their offerings for top students. California reduced funding for such initiatives by $10 million, or 18%, a deeper cut than the cash-strapped state imposed in most other education programs. In Connecticut, which doesn't provide state funding for gifted-student education, 22% of school districts last year reduced or abolished programs they had been funding on their own. And East Providence, R.I., where several schools fall short of goals set by the No Child Left Behind law, plans to drop a program for the most promising elementary and middle schoolers, while increasing funds for reading initiatives.

Devion Daydreams

This shift in the balance between the pursuit of excellence and the pursuit of equality may result in a more knowledgeable U.S. citizenry overall. That goal is important to economic competitiveness and a flourishing democracy. But reducing programs for the best students also could make it harder to replenish-and diversify-the country's ranks of top intellectuals and scientists.

The effects may be felt most by gifted low-income minority pupils whose parents don't have the option of shifting them to private schools or providing outside enrichment to compensate for cutbacks. Moreover, the priority changes wrought by the law are coming just as districts had been making progress in identifying and nurturing brainy minority students, who have long been under-represented in such programs.

Seven-year-old Devion Ross lives in a ramshackle house opposite a pawnshop in Springfield, Ill. He and an older brother recently slept several nights on bare mattresses in a front room because a raccoon had gnawed through their bedroom ceiling. In kindergarten, Devion scored in the 99th percentile on an intelligence test, making him the only African-American at his elementary school to qualify for services for gifted children. In first grade, during weekly sessions with a specialist, he arranged cubes in intricate patterns and solved logic puzzles designed for older students.

But last fall, Springfield dropped that program after state funding for it vanished. Devion now daydreams in the back of his second-grade class, rarely raising his hand. His report card brims with "unsatisfactory" grades, he often fails to hand in homework, and he has been suspended four times. His mother says he is bored and needs "that one-on-one attention."

"I believe we could do away with affirmative action [in college admissions] if the needs of these young, bright minority children are met at an early age," says Susan Rhodes, gifted-education coordinator in Springfield. "But No Child Left Behind leaves them behind, because it doesn't let us spend money on children already meeting the standards."

Test scores seem to reflect the shift in priorities. In the National Assessment of Educational Progress, low-achieving public-school fourth- and eighth-graders have posted larger gains since 2000 than top students. In fourth-grade reading, for example, the bottom 10% of students jumped 10 points on a 500-point scale. The top 10% of students showed only a two-point gain. In eighth-grade math, the bottom 10% of students rose seven points, compared with just one point for the top 10%.

Eugene Hickok, acting U.S. deputy education secretary, says top students made smaller gains because "it's easier to bring a student up from an F to a C than it is from a B-plus to an A." The Bush administration's highest education priority is to narrow the achievement gap between minority and white students, he says. Mr. Hickok says school districts shouldn't use the law as an excuse for shortchanging the brightest of any race, he says: "It's a false dichotomy. If they get rid of the achievement gap, the entire school should improve."

No Federal Mandate

One reason gifted-child education is vulnerable to cutbacks is that the U.S. government doesn't mandate programs for the three million or so students considered to be in that category. The federal contribution is limited to $11.2 million a year for research and state grants. More than half of states require districts to offer gifted-student programs, but few provide enough state aid to cover the cost. Even so, many school districts set up such programs over the years, including "magnet" schools, regular sessions of independent study and museum tours.

Now, they're making hard choices. The Plymouth, Mass., district last year began dismantling a program for gifted students. It reassigned the program's three teachers to regular classrooms. One Plymouth school principal, Lyman Goding, says resources needed to be shifted because some schools barely meet No Child Left Behind targets in math. Plymouth also is paying teachers $100 a day to tutor struggling students during summers and school vacations.

Before Plymouth's program for the gifted was discontinued, eighth-grader Marina Ramsay says she studied everything from robotics to the stock market. She won first prize in the state science fair for a project on the effects of magnetic fields on plants. Now her classes rarely excite her. In science this year, she was assigned to "memorize the order of the planets in the solar system," Marina says. "I learned that in kindergarten." Her parents are considering teaching her at home next year.

Do you think the No Child Left Behind law will improve schools overall? Write to letters.classroom@wsj.com.

Mall Makeover

Shopworn Shopping Centers Get Help From Rehab Experts

By Dean Starkman

Staff Reporter of The Wall Street Journal

Even in this nation of shoppers, there are far too many shopping malls, and many of them just aren't going to make it.

Experts estimate that up to a third of the nation's 1,200 malls are obsolete or nearly so. After a decade of consolidation, the 10 largest mall owners now control 47% of all malls-nearly all of the 200 high-performing "A" quality properties and most of the B's. In addition, 10 or so shiny new malls are built a year. These top malls increasingly dominate shoppers' dollars.

That leaves a large list of downscale malls owned by families and other smaller operators, many of which don't have the resources or the know-how to compete. These second-tier malls are especially hurt by faltering lower-price department stores, such as J.C. Penney and the now-defunct Bradlees, and competition from Wal-Mart Stores and other nonmall discounters. "About 20% are 'D' malls, which need to be de-malled," quips Lee Schalop, a retail analyst.

Faded Property

But malls are expensive to demolish, and nearly impossible to convert to another use. Dead malls are often crime scenes and a drain on local tax rolls. America's suburban landscape is already pocked with dead or dying eyesores, such as Dixie Square in Harvey, Ill.; River Roads in Jennings, Mo.; and Beloit Plaza, in Beloit, Wis. Dozens more are on the margins.

That's where people like Rene F. Daniel come in. A 30-year real-estate veteran, Mr. Daniel is one of a growing cadre of professionals who specialize in resuscitating dying shopping malls. Mr. Daniel has leased space on behalf of mall landlords since the 1970s. In the past decade, however, as giant mall-owning companies like General Growth Properties and Westfield America bought up or built the most productive malls in the best locations, Mr. Daniel began to advise small landlords that need help with faded property, such as the Coventry Mall in Pottstown, Pa. Last fall, Mr. Daniel formed a partnership with another real-estate brokerage firm to focus on mall rehab full time.

When Mr. Daniel took over management of Coventry five years ago, the 1960s-era mall was undersize, tired-looking and, at 36% vacant, bleeding tenants. Its Bradlees anchor store had gone dark, while its Foot Locker and Gap stores were cramped and dingy. It also had too many local stores, like Westies Shoes, drawing too little traffic. And only 22 miles away was the sprawling King of Prussia Mall, the nation's biggest shopping complex. (The famed Mall of America, in Bloomington, Minn., has more total space but less shop space.)

To save Coventry, Mr. Daniel needed to cut the number of trips Pottstown residents took to King of Prussia to two or three a year, from five or six, and get shoppers to linger longer.

Step one: Fix the food. Coventry had a six-stall food court with mostly local operators, like Hot Dogs & More, Egg Roll Hut-but no burgers. McDonald's agreed to open a small 1,000-square-foot operation in 1999 and was followed by a Subway Restaurants outlet (replacing a local operator, Daniel's Deli), Saladworks (into a vacant spot) and other chains.

Next, the Gap. Sales at the Gap store were dragged down by its 1980s-era exterior-red neon sign and blue Formica facade. It was often confused with a discount outlet-a "dump store," Mr. Daniel says.

To persuade it to spiff up, he showed Gap executives the company's own sales receipts from King of Prussia to show many Pottstown residents were shopping there. To find extra room, he refused to renew the lease of its neighbor, Everything 99 Cent, doubled the Gap's size and installed a new look: blond wood, sleek glass and a new navy-blue sign.

Mr. Daniel then used Gap's subsequent success to sell Coventry to other tenants, including Aeropostale, Pacific Sunwear of California and Limited.

'I Helped Them'

While physical renovations can help faltering malls, getting undesirable tenants out is more important. Sometimes Mr. Daniel has to get tough. To force out Musselman's Jewelers, which generated only $467,000 in sales in 2001, he rented a spot across the hall to a Zale store, which generated about $900,000 in 2002. The Musselman's closed about two years ago. "They didn't want to go, so I helped them," Mr. Daniel says.

Mr. Daniel now has his eye on an Arby's that's generating weak sales, despite its prime location near a mall entrance. He says he has plans for its space when its lease is up, in 2008: Knock out a wall, build a new entrance from the parking lot and lease the space to a sit-down restaurant that would pay higher rent.

Bob Cross, vice president for business development for Arby's, says the Coventry outlet's sales are above average, despite having been hurt by another Arby's that opened less than a mile away. Mr. Cross says the Coventry store's franchisee has no intention of leaving the mall, but might agree to move to a different location, for instance, in the food court.

Mr. Daniel also has plans to shave 100 feet off from the old Bradlees space to make room for a new "pad"-a parcel in the middle of the parking lot suitable for a restaurant-without losing parking spaces.

While the mall doesn't look much different from a few years ago, the numbers are quite a bit better. Vacancies are down to just 6%, while sales per square foot are $330, above the national average, and up from $240 before the rehabilitation began.

Two-Way Street

Free Trade Sends Jobs Abroad, but It Also Brings New Ones Here

By Joel Millman and Norihiko Shirouzu

Staff Reporters of The Wall Street Journal

Free trade has hammered a lot of U.S. towns, making it easier for companies to send manufacturing jobs south of the border or overseas, and idling hundreds of American factories and tens of thousands of workers.

But free trade works both ways, and just as U.S. companies look overseas for workers, a lot of foreign companies have been expanding their operations in the U.S. and creating new jobs for Americans. The attractions for them are better business conditions, proximity to the ever-expanding U.S. consumer market, and the promise of incentives that many U.S. communities offer to attract new investment.

Second Wave

In 1999, for example, Gruma, Mexico's largest producer of corn flour and tortillas, wanted to extend its sales territory in the eastern U.S. The manufacturer found that the quickest way was to buy a rival, Barnes Foods, vendor of the regional Pepito brand in Goldsboro, N.C.. After closing the $12 million transaction, Gruma found something else: a community eager to offer incentives to persuade the Mexican company to invest millions more.

Within a year, Gruma delighted Goldsboro by agreeing to buy an empty warehouse the city owned outside town. The building had sat for four years, after officials spent more than $1 million trying to market it as part of an industrial park. By promising to invest $13 million locally, and add 100 jobs to Barnes's payroll, Gruma got $200,000 chopped off the building's sale price and another $200,000 in grants to defray infrastructure costs. Gruma also received job-creation tax credits to offset almost $200,000 annually from its state corporate income tax. Ultimately, the Mexican company well exceeded the number of new hires it promised, tripling its Goldsboro work force to nearly 200.

"This is the second wave of Nafta kicking in," says Todd Malan, director of the Organization for International Investment, which represents foreign companies with U.S. subsidiaries. The North American Free Trade Agreement "enabled Mexico to invest abroad, and that investment is creating thousands of jobs for U.S. workers."

Among some other recent deals: San Luis/Rassini, a Mexican maker of automotive springs, negotiated incentives from Ohio officials to open a plant near Toledo, a city that has been hit hard by cutbacks in the U.S. auto industry. Mexican brewer Grupo Modelo received an incentive package that brought an $84 million barley-malting plant to Idaho Falls, Idaho. Mexican steelmaker Imsa partnered with the city of Moscow, Tenn. (population 422) to purchase land in a local industrial park. The move brought 113 jobs and made Imsa the biggest employer in Moscow.

Eugenio Clariond, chairman of Imsa, says that aside from community incentives, Mexican businesses are attracted to the U.S. because business conditions are better here-chiefly because of more abundant energy and less corruption.

Through 2001, the most recent year for which figures are available, Mexican companies created 145,000 jobs in the U.S. While that doesn't begin to offset the number of jobs that have left the U.S., it is a small part of a bigger group: foreign businesses all over the world creating jobs in America. According to Mr. Malan's organization, U.S. subsidiaries of foreign companies employed 6.4 million people in 2001, up from 5.1 million in 1996 and 4.9 million in 1991.

The investments from Mexico are a fairly recent outgrowth of Nafta, which took effect in the early 1990s. But other foreign companies have been moving jobs to the U.S. for more than two decades, many into the nation's manufacturing heartland.

The most notable are Asian and European auto makers and parts producers. Japan's Honda Motor began producing motorcycles near Columbus, Ohio, 25 years ago, and then cars in 1982. Today, in Ohio alone, Honda employs 13,000 factory workers and another 1,000 people in higher-skill positions devoted to developing vehicles like the Honda Pilot sport-utility vehicle and the Honda Element for the U.S. market. Nationwide, Honda's U.S. work force, including sales and marketing staff in Torrance, Calif., and workers at another car plant in Alabama, has swelled to 24,000.

A number of other auto companies, including Germany's BMW and Mercedes-Benz, soon followed suit. Most of them initially shifted production to the U.S. to soothe trade tensions with the U.S. and the Detroit auto makers, which had complained about widening trade imbalances in autos. But over time, those foreign auto makers realized it also made good business sense to be closer to consumers in the world's wealthiest nation and biggest auto market. They have since been beefing up their market-research and product-development centers in the U.S., creating hundreds of thousands of white-collar jobs in the process.

Sure Bet

Hiroshi Okuda, chairman of Toyota Motor, likes to say that America, with the sophistication of its consumers and its population expected to continue expanding through 2030, is a much surer bet than any market in the world, including China.

Indeed, Toyota has fast become one of the biggest foreign employers in the U.S. auto sector. In the beginning, it tiptoed into the U.S., setting up a jointly operated assembly plant in Fremont, Calif. with General Motors in 1984. But two decades later, the No. 1 Japanese auto maker has two more plants, in Kentucky and Indiana, which it operates on its own, and is building a pickup-truck plant in San Antonio, Texas. Altogether it employs 31,000 U.S. workers, 8,700 of whom work for the company's sales and financial services units in California. Meanwhile, the company's technical center in Ann Arbor, Mich., which currently employs 500 to 600 engineers, is planning to increase that number to as many as 1,000 over the next few years to beef up its product development-capabilities.

For companies moving to the U.S., election-year rhetoric about jobs leaving ignores a broader truth: Top manufacturers all over the world are getting good at slicing up the value chain, placing each task where it offers the greatest return. And sometimes, that's right here in the U.S.

What evidence do you see in your community that foreign companies are adding jobs in the U.S.? Write to letters.classroom@wsj.com.

Blockbust?

Video-Rental Market Shows Signs of Fading

By Martin Peers

Staff Reporter of The Wall Street Journal

For at least a decade, experts have been predicting the demise of video-rental chains, and usually they've been proven wrong. Now, however, amid gathering competition from mass merchants selling low-price DVDs, executives in the video-rental industry concede that the video market has changed permanently, and that video rental may become a shrinking business.

Last year, industry executives and experts say, the rental market shrank by at least 1% or 2%, and will likely do so again this year.

And across the industry, the realization is dawning that a turnaround might never come. "After two down years in a row and a very weak start to the year, it's got to be assumed that the rental market is not going to see significant growth years again in its current form," says Tom Adams, president of Adams Media Research.

End of an Era

Video-rental executives agree. "The market dynamics of home video have been significantly and permanently altered," says John Antioco, chairman of market leader Blockbuster. He estimates that the rental market is 7% to 8% smaller today than it would have been if the major film studios hadn't decided in the past couple of years to price DVDs low enough to encourage purchasing, and to make them available in retail stores at the same time as in rental chains. Mr. Antioco predicts that the rental market will decline slightly in 2004 and stabilize in 2005. "I'm not willing to predict it will start to grow" again, he adds.

It is in this climate that Viacom, the media and entertainment company that owns most of Blockbuster, decided to get out of the video-rental business entirely by splitting off the chain into a separate company.

The decline of the market ends an era that started 20 years ago, when thousands of small entrepreneurs cashed in on the novelty of VCRs. By the late 1980s, it was a multibillion-dollar market. Many of those smaller players have been driven out of business over the past few years, as entertainment choices widened and VCRs lost their novelty.

While the industry began declining in the mid-1990s, it got a temporary reprieve after the introduction of DVDs in the late 1990s sparked new interest from consumers. But the DVD turned out to be a double-edged sword: The film-studio strategy of slashing DVD prices to encourage buying rather than renting proved hugely successful.

"People prefer to buy" DVDs, says Janette DiLascio, who has operated two Town Video outlets in Maplewood and Montclair, N.J., since the early 1990s. She says "business is down tremendously" over the past decade. While the stores are still making a little money, she is now working in a funeral home to help make ends meet. "We can't compete with the bigger stores ... digital cable and Netflix," the DVD mail-order subscription service that has proved popular.

Not everyone in the industry is convinced that the rental business is in trouble. "Despite the phenomenal growth of purchases of videos, rental has remained amazingly resilient," says Sean Bersell, a vice president of the Video Software Dealers Association, a trade group for video stores. "While rental has experienced a slight erosion in recent years, it remains incredibly popular. More people view movies through rental than do through purchased videos or in theaters. We expect that will continue to be the case for the foreseeable future."

Happy Ending?

Many video-rental operators have broadened their business to include sales of new and used movies and videogames. Some chains have stumbled in their diversification efforts, however. Hollywood Entertainment, which has opened several hundred separate videogame outlets within some of its existing video stores, said recently that its new Game Crazy outlets were "costing us more" to open than it planned, so their "gross margin is less than planned." And rental stores that try to emphasize sales of videos can't compete on price with chains such as Wal-Mart Stores and Best Buy.

Mr. Antioco insists the changes in the industry are good for Blockbuster. With the low wholesale price of DVDs, Blockbuster is making more money from DVD rentals, which remains its biggest business. And not only is Blockbuster expanded into selling new DVDs, it is also trying to build a business in movie and game trading, where it buys back used movies and videogames from customers and resells them at a big profit.

Do you prefer to buy or rent videos?

Do your spending patterns reflect the trend in the video-rental market? Write to letters.classroom@wsj.com.

Step on the Gas

'Accelerator' Services Can Make Dial-Up Connections Ride Like Broadband

By Walter S. Mossberg

Staff Reporter of The Wall Street Journal

From the looks of television ads and media hype, you might assume that every Internet user surfs the Web via high-speed, costly, broadband connections, such as DSL or cable lines. In fact, most U.S. Internet users still rely on slow, but cheaper, dial-up services.

Dial-up services are advertised as being capable of speeds as high as 56 kilobits a second-just a tenth the speed of even a middling broadband link. But the truth is much worse. Most dial-up modems in most places on most services achieve speeds of between 30 and 45 kilobits most of the time. And many Web sites now cater to broadband users with flashy features the dial-up gear can't handle.

But there's hope for dial-up users who don't want to lay out the big bucks for broadband. Some big Internet service providers and software companies are offering special "accelerator" technology to speed up the dial-up online experience. Not only is this concept confusing, but it sounds like an exaggerated marketing gimmick. Recently, my assistant Katie Boehret and I tested a few of these products to see if they really worked.

Compressed Data

With the accelerated services, the dial-up modem isn't sending or retrieving data any faster than normal, but smart technology that compresses and "caches" data is designed to make it seem that way. The compression works by squeezing down the size of the files that produce graphics and photos on Web pages. This makes them load faster over a dial-up line, but it also makes them grainier and fuzzier.

Caching, or retrieving and retaining data from Web pages in the computer's memory, also plays a big role in the acceleration of dial-up accounts. With caching, your PC stores some of the basic Web-site elements the first time you visit a site, and reuses them to speed up load time on each subsequent visit. Browsers do some caching, but accelerator technology does more.

Katie and I tested three of these products: EarthLink Accelerator, NetZero HiSpeed and Propel Accelerator. The first two are dial-up services with accelerator technology built in. Propel is a stand-alone accelerator service that you can add, for an extra monthly fee, to any basic dial-up service. For comparison, we also tested NetZero's plain, unaccelerated service.

The basic, slow NetZero account we tested costs $9.95 a month. NetZero HiSpeed was $14.95 a month. EarthLink Accelerator costs $21.95 a month. And Propel costs $7.95 a month, or $59.95 a year-but that's an additional fee on top of whatever you pay for your basic dial-up service. All are cheaper than true high-speed service, which typically costs around $40 to $50 per month.

With each setup, we visited a variety of Web pages to see how fast they loaded, and we also measured the speed of each by running a performance test from a Web site called Toast.net, which times how long it takes to load graphics and text.

We focused on repeatedly visiting two Web sites in particular, CNN.com and ESPN.com, which both have plenty of text, photographs and moving advertisements. In between each visit to these Web sites, and before switching to a new service, we cleared the browser's cache. NetZero HiSpeed loaded CNN with ease, while EarthLink and the Propel-enhanced basic NetZero were considerably more sluggish. Each of the three services had trouble loading ESPN's site quickly. The graphics on each page were noticeably grainier than usual. But each accelerated service gives you the option of reloading the graphics at their original quality, if you need to see them that way and are willing to wait.

Katie and I performed the Toast performance test with each option, clearing the Web browser's cache each time to ensure fresh results. The test consists of downloading a very long text document and a very large graphic. Plain NetZero was very slow, at 32 kbps, and took over three minutes to download the text and picture. NetZero HiSpeed was consistently blazing, clocking in at over 350 kilobits per second, and downloading the text and picture in just 17 seconds.

EarthLink Accelerator (which uses Propel technology) and Propel turned in wildly varying results on the Toast test. In one test run, they each took about 2.5 minutes to do the download and appeared like regular slow dial-up connections. In another, each performed like a broadband connection, outpacing NetZero HiSpeed.

NetZero Has the Edge

On balance, considering both the Toast test and our general surfing experience, we believe NetZero HiSpeed offers the most consistent acceleration, and comes close to the feeling you get with a midrange broadband system.

With NetZero HiSpeed, a tiny toolbar is displayed at the lower right-hand corner of the screen. This toolbar includes a speedometer that supposedly measures how much faster your page is loading than a normal dial-up service would load the page. There's also a slider that sets HiSpeed to load pages faster or slower, according to the image quality that you prefer viewing on each Web page.

Not only did repeatedly visited Web pages load much faster, but Web pages that we visited for the first time also loaded in no time.

We found the Propel Accelerator to be noticeably better than dial-up, but not as dramatically fast as NetZero HiSpeed. It seemed most effective on previously visited pages, whereas NetZero was just faster from the start.

EarthLink's Accelerator comes built into the latest EarthLink software, TotalAccess 2004. It wasn't as reliably fast as NetZero HiSpeed, but it was faster than the regular dial-up, and it, too, gradually improved with more and more repeated Web-site visits.

If your family isn't ready to pay for broadband, these accelerated dial-up services are a good alternative. We suggest NetZero HiSpeed, but after repeatedly using Propel or EarthLink, you'd still notice an improvement.

Do you have a question about personal technology?

Write to letters.classroom@wsj.com.

Playing Hooked

For a Growing Number of Adults, Videogames Are an Addiction

By Noah Rothbaum

SmartMoney

Kids spending too many hours playing video games is a common parental complaint. But a lesser-known, and in many ways more serious, problem has gone largely unnoticed: Adults are playing, abusing and getting addicted to these games. And when these older players cannot or will not pull the plug, the costs are higher: Jobs are lost, kids are neglected and marriages fail.

No one really knows how many adults are problem players, or how their ranks compare with the number of young people who get lost in these games. But those who study the adult problem give scary, eye-popping estimates. For one thing, the pool of potential addicts is staggeringly big. The Entertainment Software Association estimates that 145 million Americans-that's 60% of the country's population age six or older-played computer or video games in 2002. That year, the game industry, which is dominated by Sony, Electronic Arts and Microsoft, sold some 9 million consoles and took in over $6.9 billion on games.

Experts estimate that 5% to 10% of adult gamers will develop a problem or dependency-which means 5 to 10 million people. And as the industry evolves, game makers are now producing more sophisticated, engaging, violent and sexually explicit games aimed at older players.

"I think the general public is not aware," says Jay Parker, a chemical-dependency counselor and a cofounder of the Internet/Computer Addiction Services therapy center. "But there should be a tremendous outcry-people are losing their lives over this."

Game makers say they know of no hard evidence concerning people abusing the games and that they cannot be expected to control how their products are used. Douglas Lowenstein, president of the Entertainment Software Association, says: "It is the responsibility of those who play computer or video games, and parents who supervise their children's play, to ensure they use games in a sensible and appropriate way."

Reasonable enough. But it's still clear that this form of entertainment can become the focal point of distorted lives.

Who Gets Addicted?

EverQuest, the most popular online role-playing game, seems to be the most prone to abuse. Currently, there are 430,000 people all over the world who log on and play at all hours. Each player creates his or her own character or characters, choosing what they look like down to hair style and color, and what class of character they will be, which determines the character's powers and role in the game. Asked about the game's potential for abuse and/or addictive qualities, Sony echoed the sentiments of the Entertainment Software Association: "As with any form of entertainment, it is the responsibility of each individual player to monitor his or her own playing habits. ... It is not our place to monitor or limit how individuals spend their free time."

Other games that some people get overly devoted to, according to Mr. Parker, include The Sims Online, Counter-Strike, Halo and Grand Theft Auto: Vice City.

Who gets addicted to these games? The more adept you are at using computer and game technology, experts say, the more susceptible you will be. For that reason, those in the tech industry seem particularly prone. The majority of adult videogame players-including those who develop problems-are male.

But the gender gap hasn't kept 28-year-old photographer Jenni James from getting completely wrapped up in EverQuest and The Sims Online. The Sims centers on creating a character whom you shepherd through a virtual life, including building a home and furnishing it with downloaded (virtual) objects. Some zealous players go outside the game and buy more Sims stuff-paying real money for digital files created by online entrepreneurs and sold on eBay or other sites. Ms. James says she has gotten "just obsessed with downloading objects, even spending money we don't really have just to download better and better objects."

In general, experts say, the people who are most vulnerable tend to have other emotional and/or mental problems in real life. Players who lack confidence and self-esteem can experience them through their role-playing and their mastery of the games. "When I was playing a character, it was almost the sense that I was that character," says Don Keller, an Oklahoma electrician who spent a year and a half immersed in EverQuest before seeking therapy to quit. "I portrayed my character on EverQuest to be flamboyant and arrogant, and he was able to do and say the stuff I really couldn't do in real life," he says. (See sidebar)

Many players enter the game world looking for the interaction and community that are sorely missing from their real lives. In EverQuest, for example, the players split into "guilds," working as a team to defeat the monsters and advance. This system fosters strong ties among players. Often peer pressure is exerted to keep players in the game since their character is "needed" to continue. Other online games like The Sims have similar social dynamics. That's one of the reasons Jenni James logs on. "With EverQuest I have a lot of friends I chat with and have gotten to know, without ever meeting in real life, which I like, since as much as I want to be social, I do have tremendous antisocial tendencies."

With the offline games, the dynamic is usually quite different. There's no community, little cooperation. Instead, players are chasing a fleeting high, and perhaps for that reason, Mr. Parker says, the gamer's infatuation with these individual games typically doesn't last as long. "They finish one game, then go on to another."

Whether online or off, players find just enough success and satisfaction to keep them coming back. Like casino gambling, these games rely on the principle of intermittent rewards: "People will stand in front of a slot machine for six or eight hours because they know at some point they are going to get a reward-but they don't know when," says David Greenfield, author of the book "Virtual Addiction." "That kind of reinforcement is very compelling."

But no matter how many hours you play, you will never finish EverQuest. As the name promises, it never ends. Developers continue to upgrade and expand the game, and as they do, the highest rating a player can obtain is raised. "The hardest part of giving it up is not achieving the highest level I could have gotten," says Mr. Keller. "I still think about it."

Experts see an "addiction spiral," in which players begin to feel more comfortable in the game world and more alienated from their real lives. Then, as their real lives become increasingly troubled, their online lives seem that much more manageable. That's what happened to Shannon Ogden, a 34-year-old anchor for the New England Cable News channel. Mr. Ogden says he "didn't consider myself a videogame person at all." That all changed last winter. He was putting in extra-long hours at the station, which, combined with the bleak New England weather, had him quickly heading for a burnout. In hopes of helping him relax, his girlfriend bought him a PlayStation 2 and a few games for Christmas.

Right off the bat, Mr. Ogden gravitated to Agent Under Fire, a game based on the James Bond movie series. A few moments of relaxation before bed quickly grew into an hour on average, sometimes a couple of hours. Then, on a free morning last winter, he was supposed to get a new driver's license and "had a to-do list as long as my arm," he remembers. "I told myself, 'I am just going to sit for 15 minutes and pluck away at this thing.' Two hours later, I start marking off things on the list that I don't really have to do today. ... It's terrible," he says. "It's like I'm a junkie."

Getting this monkey off your back is a very tough proposition. As in Alcoholics Anonymous, the abuser first has to acknowledge his or her addiction. The first question Mr. Parker asks his potential clients is: "Can you accurately predict how long you're going to spend playing games?"

Often it's the addict's spouse or loved ones who recognize the problem. A 37-year-old wife and mother in Ohio joined the Yahoo EverQuest Widows Group because, she says, her husband plays almost nightly in their dining room. He simultaneously plays two characters using a laptop and a desktop. "The other day he played for 15 hours straight," she says. "It's really hard because it's like any addiction-he can't see it."

Ironically perhaps, the Web offers many of the resources for addicted players. The Yahoo widows group is a virtual support community and information clearinghouse, as is On-Line Gamers Anonymous (www.olganon.org), which offers a 12-step program based on the Alcoholics Anonymous recovery program.

'Where Did Those Years Go?'

Though few mental health professionals are experienced in dealing with these issues, in-person talk therapy may be the best option. In that process, players can hopefully come to understand what rewards they get from the games and then learn how to get some of those positive experiences from real life.

Through therapy, Ron Jaffe was able to beat a three-year EverQuest addiction. The 39-year-old computer consultant began playing in 1999 while his father was losing a tough battle with emphysema. "There was a lot of stress around that," he says. "The game was just a perfect place to go." But marathon sessions and countless hours doing Internet EverQuest research were taking their toll. He wasn't returning clients' calls and, ultimately, lost some of them. He wasn't paying attention to his wife of nine years, even choosing to eat his meals in front of the computer. "To this day I just look back and go, 'My God, where did those years go?'"

When counseling his closest EverQuest friend on some unrelated personal problems, Mr. Jaffe says, he heard himself say: "'You need to address all of those things in your life that you're not happy about,' and I realized I was talking to myself."

He was hurting physically from all the hours of inaction, had gained a lot of weight (a common side effect of excessive videogame playing) and was feeling fatigued. He was diagnosed and treated for mild depression and attention deficit disorder, both of which may have contributed to his game addiction. He lost 65 pounds. And in therapy he has been able to retrain himself so that when something upsetting happens in his real life, he doesn't turn to the unreality of the game for escape.

After a year and a half of not playing EverQuest at all, Mr. Jaffe says, he now limits his play to one hour a night. "I am playing again, but it's now on an even keel with the rest of my life. I can't bring myself to do these long days like I used to. It just makes me physically sick."

Are you or a friend at risk of becoming addicted to videogames?

Visit wsjclassroom.com/related to see a list of potential danger signs.

'You're on Your Own, Kid'

What to Do When Your Parents Can't-or Won't-Pay for College

By Teri Cullen

WSJ.com

When Greg Chalker's dad broke the news that he couldn't afford to pay the total cost of sending him to his first-choice college, he was crushed. Then he was galvanized.

"I wanted to attend the Georgia Institute of Technology but I was afraid it would be too expensive. So I started researching everything I could to find a way to pay for it," says Mr. Chalker.

After applying for financial aid and scholarships, he was surprised to learn about an undergraduate co-operative education program at the Atlanta school that allowed students to alternate a semester of school with a semester of full-time work at an affiliated employer. "The co-op program paid for more than 75% of my total college costs and, combined with a few scholarships, by my junior year I actually had some discretionary income," says Mr. Chalker, now 31.

There are ways to help pay for college other than financial aid or saddling yourself, and your future, with student loans. Here's a look at alternative sources of funding students can tap to close the gap when parents can't, or won't, pay for all college costs.

Is it a Firm 'No'? Sometimes parents balk at paying for school because of family conflicts. Before you break your back trying to pay for school on your own, try mending fences with your parents.

If divorce is the reason one or both of your parents won't pay for college, see what you can do to ease any bad feelings, says Mark Kantrowitz, publisher of Finaid.org, a financial-aid Web site.

"Often, the noncustodial parent will balk at paying if he or she hasn't had any kind of relationship with the child over time," he says. "Then, when you come looking for college money, it gives a parent a very bad feeling." Keeping in touch with both parents and involving them in your life may make a noncustodial parent more amenable to paying college costs.

Conversely, if your relationship with your parents has hit the skids because of your own convictions or behavior, you may want to reconsider your actions. If, for example, your parent is threatening to refuse to pay for college because of drug use or other irresponsible behavior, now's the time to start cleaning up your act.

The Basics If your parents' "no" means "no," you've got work to do. First, make sure your parents have filed the Free Application for Federal Student Aid-whether they're going to pay or not. The earlier they submit the form, the better your chances of receiving aid.

Scholarships are your next step. If you don't get at least one, you haven't looked hard enough. There is a staggering amount of "free money" available.

One of the best ways to get scholarship money is by finding the right employer during your high school years, says Carl Buck, vice president of financial aid at Peterson's, the education publisher. "You'll not only get a paycheck, which you can save for school, but you'll have the chance to apply for scholarship money as well."

For a fee, Peterson's Best College Deals online software will target your aid search. There are also plenty of free online search engines that will let you look for aid opportunities based on your field of study, your community, military, religious or social affiliations, or your personal interests, talents or hobbies.

Finally, be wary of scams. The Federal Trade Commission warns that many scholarship-search services engage in fraudulent, deceptive or unfair business practices.

On-the-Job Training Like Mr. Chalker, thousands of college students have enrolled in co-op programs or paid internships that have helped to reduce, or in some cases completely pay off, their total college costs.

With co-op learning, a student typically attends the entire freshman year in school, then begins to work for an employer during the summer recess. For the remaining school years, the student works full time, every other semester, at the same employer until graduation. Students are paid by paycheck, like a regular job. It's up to them to save and budget to pay college costs.

Thomas Akins, who heads the office that oversees Georgia Tech's co-op and internship programs, says that while co-op education was initially designed to help students gain experience in their chosen field of study, a growing number are turning to these programs out of financial need. He adds that out-of-state students, who don't qualify for scholarships or grants available to state residents, gain the most financial benefit from these programs.

Do a Little Research While work-study programs are often set aside for students with the greatest financial need, the same restrictions aren't imposed on other university jobs or undergraduate research-assistant positions.

Regina Abayev, a law student at the University of Michigan, helped pay for her undergraduate studies this way. "Research assistants typically work with faculty and are sometimes eligible for grants through the organization they are working with," she says. They're also great places to work, she says, because you can get experience in your particular field of study and they offer flexible schedules.

"A student working 10 hours a week, at $7 an hour can earn $280 a month," she says. "And though it doesn't seem like a lot, the alternative may be to borrow the money and pay interest."

Serve Your Country With U.S. service men and women coming under fire overseas, now may be a discomforting time to think about military service as a way to pay for college. But speaking from experience, I can say the military is one of the most personally rewarding routes to a college education. The advantages of not having to rely on parents or student loans to pay for school is just the most visible benefit. Throughout my career I have felt employers have considered me more seriously as a job candidate because of my military record.

From college cash incentives to tuition-assistance programs and ROTC scholarships, there are a number of ways for the armed services to help you pay for college. If you choose to join the Army National Guard, rather than full-time active military service, you may also be eligible for its student-loan repayment program, which reimburses up to $10,000 in college costs.

Have Your Loan Forgiven If you do take out student loans, you may be able to work that loan off rather than repay it. To encourage students to consider working at lower-paying federal and state jobs, the government may forgive most or all of your debt depending on the type of work you choose to do.

Participants in the forgiveness program get a maximum of $10,000 a year forgiven and $60,000 over their career. Different jobs offer varying amounts of "forgiveness." Visit www.finaid.org/loans/forgiveness.phtml for a rundown of state and federal programs that offer to forgive or repay some or all of your student loans.

How do you and your family plan to cover the cost

of college? Write to letters.classroom@wsj.com.