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What Outsourcing Problem?
washingtonpost.com Staff Writer Friday, June 11, 2004; 10:00 AM
At the same time, the findings are expected to buttress the arguments of various industry groups and economists who say sending technology, manufacturing and other jobs to India and China and other cheaper labor markets is in the long-term best interests of the economy at large. As the Knight Ridder news service put it, "While certain industries, manufacturing and software among them, were found to have been hit harder than others, the report implies that public anxiety about jobs moving overseas, called offshoring, may be overblown."
Here's what the Labor Dept. found, as detailed in The Wall Street Journal's write-up: "[O]nly 4,633 jobs were moved overseas in the first three months of this year. The number represents less than 2% of the total 239,361 layoffs for the quarter, the report said. The industrial Midwest and South bore the brunt of the jobs lost overseas, particularly in manufacturing, the survey found. The small number of jobs lost through layoffs likely will be used to bolster the argument that the overall loss of U.S. jobs to foreign countries isn't a threat to the economy. That argument has gained strength with the addition of almost one million new U.S. jobs since the first of the year."
Reuters said the new report suggests "concerns over American workers losing jobs to cheaper foreign labor may be exaggerated. Nine percent of non-seasonal U.S. layoffs in the first quarter were due to outsourcing, but less than a third of the work was sent overseas, the U.S. Labor Department said in releasing new figures on mass layoffs and outsourcing. 'In more than seven out of 10 cases, the work activities were reassigned to places elsewhere in the U.S.,' the Bureau of Labor Statistics said in its report on mass layoffs for the January-to-March period."
Missing Data?
Likewise, The Washington Post pointed out that "the figures were based on a survey of a limited sample of companies, and because of other statistical flaws it is unlikely to quell the concern that erupted last year over widely publicized cases of Americans losing their jobs to people in India and China earning a fraction of typical U.S. wages." AFL-CIO economist Thea M. Lee "called the report 'pretty lame,' arguing that the main problem with it was the way the companies were queried. 'This is a company checking a box on a survey, and having little incentive to be completely forthcoming' about why it laid off a large number of employees, Lee said."
But to be fair, the Times also said that the "new data ... does seem to fortify those experts who have long argued that outsourcing plays a relatively small role compared with other more important factors affecting American job gains and losses." The newspaper quoted former Labor Secretary Robert Reich as saying, "Offshoring is not at the heart of the matter. I don't think it is a major part of the job picture." The Times continued: "Instead, many experts say, the job market is driven more by rapid productivity growth, allowing companies to accomplish more work with fewer workers; the introduction of new technologies, which destroy many jobs while creating many others; and the overall level of demand in the domestic economy. Indeed, while nearly three million jobs were lost from March 2001 through August 2003, the recent recovery of the economy has added 1.4 million jobs since then. And despite the job losses the Labor Department found during the first quarter, over all the economy added an estimated 595,000 jobs during that period."
The San Francisco Chronicle offered an assessment from UCLA economist Ruth Milkman, who "said that even if the figure in the government report is relatively small, it is not trivial when repeated quarter after quarter. Secondly, she said, 'When a company is expanding and creating jobs in Singapore rather than San Jose, that's also outsourcing.'"
Two Views Inside the Tech Sector
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