Yet More Outsourcing Fuel

Here’s one more recent piece of data and analysis about offshore outsourcing, to add to the analysis discussed in the post below.

Jason Kirkegaard of the Institute for International Economics (a nonpartisan think tank devoted to careful research on current issues in international economics) made an extremely detailed examination of the BLS’s labor statistics by industry, occupation, and state to try to identify an impact of offshore outsourcing on those occupations said to be most vulnerable. One could spend hours poring over the detailed cross-tabulations showing exactly which types of jobs have been lost in recent years. In general, the report does not turn up any evidence the offshore outsourcing is responsible for significant job losses in any particular industry or occupation.

Some of the most interesting results can be summarized as follows:

  • “The vast majority of the jobs lost in the post-bubble US economy from 2000 to 2002 in occupational categories threatened by offshore outsourcing has occurred in the manufacturing sector. This indicates that discussions of white-collar job losses cannot be separated from economic problems in the manufacturing sector.” In other words, the problems of the manufacturing sector affect not just blue collar workers in those firms, but white collar workers as well.
  • “Most jobs lost have been in high-paying management positions, a different occupational category from the projections most frequently cited.” Since there seems to be little evidence that management jobs are being moved offshore, the cause of these job losses is likely something other than offshore outsourcing.
  • “Jobs have been lost non-uniformly across different states, with some gaining and others losing jobs, suggesting that no singular nationwide trend other than the regular business cycle is occurring.” For example, in administrative support occupations New York has lost more than 30,000 jobs while California has gained over 30,000 jobs. Thus there seems to be significant relocation and movement of jobs even within the US.
  • “The US economy every quarter generates many more jobs than are projected to be lost to offshore outsourcing over the next decades.”
  • “The majority of US jobs projected… to be lost in occupational categories threatened by offshore outsourcing pay less than the US average, suggesting that many of these jobs may face medium-term elimination through technological change, regardless of whether they are outsourced to offshore locations or not.”
  • “Some IT occupations have declined, but the declines are concentrated in low-skilled IT occupations, and in occupations where economy-wide trends dominate (managers and manufacturing).”
  • “More than 70,000 computer programmers have lost their jobs since 1999. But more than 115,000 higher paid computer software engineers have gotten jobs since 1999.”

As I’ve said many times before, I’m convinced that the lousy state of the job market in the US is due to the slow economy, plain and simple. Slow economies have always caused sluggish job markets, and this time is no different. In fact, offshore outsourcing was happening in the 1990s, but the job market still did fine because lots of good new jobs were being generated by the strong economy. And despite outsourcing, the job market will improve when the economy finally regains strength and substantial numbers of good new jobs are created once again.

Put another way, even if we imposed a moratorium on offshore outsourcing, the job market would still remain weak because of the weak economy. We won’t stop losing jobs, or gain new ones, until demand picks up in the economy, no matter how much or how little international trade the US engages in. So if you’re worried about the job market (which I am), then focus your attention on the pitiful economic management that the Bush administration has shown, and the weak economy that has persisted as a result.