Economist Daniel Drezner has an op-ed in The New York Times that'll be of interest to those readers who are concerned about job losses due to outsourcing. He looks at the numbers and concludes that it's a non-issue. Here are some excerpts:
The Government Accountability Office has issued its first review of the data, and one undeniable conclusion to be drawn from it is that outsourcing is not quite the job-destroying tsunami it's been made out to be. Of the 1.5 million jobs lost last year in "mass layoffs'' - that is, when 50 or more workers are let go at once - less than 1 percent were attributed to overseas relocation; that was a decline from the previous year. In 2002, only about 4 percent of the money directly invested by American companies overseas went to the developing countries that are most likely to account for outsourced jobs - and most of that money was concentrated in manufacturing.
The data did show that from 1997 to 2002, annual imports of business, technical and professional services increased by $16.3 billion. However, during that same half-decade, exports of those services increased by $20.5 billion a year. In 2002 alone, the United States ran a $27 billion trade surplus in business services, the sector in which jobs are most likely to be outsourced. The G.A.O. correctly stressed that it is impossible to compute exactly how many jobs are lost because of outsourcing, but unless its figures are off by several orders of magnitude, there's no crisis here.
Technological innovation is responsible for a far greater number of lost jobs than outsourcing. The Bureau of Labor Statistics estimated that in the first quarter of this year 4,633 workers were laid off because of offshoring. In the same period Kodak, for example, announced layoffs of 15,000 workers because the growth of digital photography reduced demand for film. Few Americans suggest technological innovation be stifled for the sake of preserving old jobs.
Go here to read the whole column.
