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Outsourcing As A Source Of U.S. Jobs
An anonymous reader writes "The Economic Times, India's leading financial newspaper, reports that Diana Farrell, Director, McKinsey Global Institute during her speech at Nasscom 2004 said that Bureau of Labour Statistics is predicting a job gain of 22m in the US by 2010, against a job loss of 2m, due to offshoring. You can read the full article here."
US unemployment right now is 5.6%, the lowest it had been in 2 years.
Silicon Valley will ad 17,000 jobs this year and 33,000 next year.
An Indian journal reporting that Indian outsourcing is good!
HOW'S MY POSTING? CALL 1-800-POSTING
or in dividends to stock holders.
The argument that India will need to import American goods for the growing tech sector and that this will result in even more jobs seems a little specious.
Is the global economy being turned on it's ear? Will the U.S. now be making cheap consumables to send to the IP producing countries in Asia? And why would India not simply start manufacturing the products it needs itself?
lysergically yours
in the long term, a foreign country succeeding will make the entire world better...
of course in the long term, we'll all be dead.
"People don't understand what a great opportunity offshoring is for US companies. Apart from huge savings, it allows US companies to concentrate on their core competencies and the people (in the US) can move on to higher paying, more creative, more value generating jobs."
...
You see, that doesn't quite work when it's the high-paying jobs going overseas. The only jobs that can't are those that require physical presence, and I can only see so many ways to creatively remove a clog from a toilet.
Microsoft delenda est!
22 million more jobs, but how much will the population increase by then? this reduces the increase in employment, so the number 22 million looks a lot more impressive than it actually is.
we lose 2 million engineering jobs, and gain 22 million pizza delivery jobs. Sounds like a great trade-off to me!
Seriously, we can't sacrifice professional jobs for low-level service jobs, even if there are more of them. If we do that, we'll have a rich and poor caste system. Wait a minute...
Even though I am a fan of free trade and offshoring, I found this economist's choice of words disturbing: "People in the US are looking at it as a job issue. They are not economists and therefore, they don't necessarily see the whole picture." Funny, I thought that every human being (even economists) had only a part of the picture. People working in the dismal science should be more humble about what they know versus what they think they know.
I see no examples of these new jobs that they keep talking about. Just about corporations saving money.
:P
Corporations saving money is no guarentee of employment at all -- they could just increase their dividends to attract more investment. They could just increase their CEO's salary.
Even if they do make new jobs, there's no distingishing between wage-slaving jobs against salaried professionals.
New jobs added WHERE, wise guy.
From the article;
She pointed out that the Bureau of Labour Statistics was predicting a job gain of 22m in the US by '10, against a job loss of 2m due to offshoring.
All of these jobs are going to be in the "service sector". It does not say what the quality of those jobs are. Also, even "service sector" type jobs are being exported to india now (programming, call centers).
My prediction - in 2010 we will all be selling hamburgers to each other.
"Would you like to supersize that for just $.39
more??"
Take the cheese to sickbay, the doctor should see it as soon as possible - B'Elanna Torres, "Learning Curve"
"She pointed out that the Bureau of Labour Statistics was predicting a job gain of 22m in the US by '10, against a job loss of 2m due to offshoring."
:-/
When have 5+ year estimates ever been accurate in economic matters?
Secondly -
Tomorrow's Jobs (from bls.gov)
http://www.bls.gov/oco/oco2003.htm
"Services. This is the largest and fastest growing major industry group and is expected to add 13.7 million new jobs by 2010, accounting for 3 out of every 5 new jobs created in the U.S. economy. Over two-thirds of this projected job growth is concentrated in three sectors of services industries-business, health, and social services."
Social services? Wheeee.... big money here I come.....
There have always beens some jobs that cannot be outsourced. Even if a telecoms help desk is all foreign they can't outsource service crew off shore. It make sense that with a slow recovery of the US economy (no thanks to bush) that there will be more jobs.
Jobs like DB admin need to be close to the DB and to where the info is coming from to properly administer it. System Analysts and Network analysts must be on site to do their job. Service technicians can't do it from over seas. Web developers can be outsorced but it's almost artistic and cutural gulfs make workign with foreign firms difficult. (Our Firm tried, the indian firm kept trying to use Lime green in their color schemes, no matter hwo often we told them we don't like lime green that).
The outsourcing only spells the end to abundant positions as low level code monkeys. We'll just have to move on and try to adapt like workers did durign the 80's when many manufacturign firms went over seas. There are still a large amount of blue colalr workers despite this, and We'll still have jobs even though an indian firm might be competign with us.
PS: I don't like bush but I'm not a democrat, in fact I'm Canadian. We have more than a vested interest in your prosperity, because it spills oevr here. It does seem liek he's responsible for you current economic slump, by spending so much on defence and offering Tax cuts that the budget won't support. Think more debt. Real soon.
"There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy."
For one thing India is still at a trade deficit with US. For every job that indians get from US, there is are range of stuff US companies are dumping here and killing local business.
Opening the market works both ways. Deal with it.
My worry is that the economists say "Oh don't worry, we'll replace those jobs." But not with anything I've remotely studied to do. A job at my current level may not be available or even practical. Most places won't let you get a second bachelors degree. And somehow I don't think a university will accept me for a chemistry masters program when I have a degree in Computer Science. Sometimes I get the feeling that to these economists going from being a skilled worker to a Deliverator is acceptable as long as I'm employed.
I used to think the reality portrayed in Snow Crash was just current trends taken to some unreal extreme. Now as I watch the destruction of the middle class I'm not so sure.
"Where quality is like a dead stinking rat - you just can't miss it."
First of all I'm Chinese American so don't mistake this as a racist rant... anyways being that the US's physical goods are being made in China and the US's abstract products are now being made in India - who profits in the US? I only see high ranking execs (CEO's, etc...) and people who own a ton of stock - making any money. What happens to the middle class? Will the US keep having a middle class?
The largest percentage of the outsourced jobs are high-paying; perhaps we'll eliminate a single 80k job and replace it with 4 20k jobs? Or does somebody think that American business is going to hire local techies to architect products and the humble outsource labor forces will selflessly implement the design?
I have nothing against India or the programmers that are taking advantage of the avarice of American companies in order to better themselves. I would do the same thing in their shoes.
I do, however, blame an American business culture where todays stock prices have become more important than the ultimate survivability or long-term health of the company. After all, on a long enough timeline, everyone's surviveability is zero, eh?
Thinking outside my Head
Just lowered the taxes of the most filthy rich 5% of the population, got us a $500 billion deficit and compensated for that by dismantling the useless social programs for the poor and old.
Maybe the rich will use that tax-break to create more job and not simply line their own pockets. And maybe those poor slackers on welfare/medicare will die away and stop siphooning money from the well-off, respectable, white protestant heterosexual married people like the rest of us.
Also, to satisfy the cynic in me, remember that these are merely predictions, which are possibly skewed to make the current market look like it'll be stronger, which will in turn (hopefully) make investors and consumers more confident, (hopefully) making the economy stronger.
Lastly, could this also be like George Bush's predictions that there would be approx. 1.7 million new jobs last year, as opposed to the 53,000 jobs lost last year (as reported by CBS news tonight).
Silicon Valley will ad 17,000 jobs this year and 33,000 next year.
"Make it so" by putting it on a website.
Hey, maybe we should announce some other things on websites for a better tomorrow:
* The US Unemployment rate will be under 1% by 2006
* The US budget deficit will be 0 in 2005
* Martians will teach us how to harness zero point energy thus ending all reliance on foreign oil by 2010
* Nobody will die of malnutrition next year!
* All techies will get dates for Valentines day!
"The US" is not benefiting from cheap labor - the benefits a corporation gains from outsourcing is passed mainly to the executives of the corporation through non-salary compesentation (options, bonuses, etc.), and to a lesser extent to the shareholders of said corporations.
The public is benefiting in the short term from the continually lowering retail price of consumer goods manufactured primarily in China.
The long term result is simple - good bye middle class. The growth in the service sector is primarily servicing said middle class, so the service sector dies with the middle class.
As much as I love capitalism, we are seeing its worst side now - as corporations realize they can behave with no morals (as modern society has decided there is no such thing, all is relative), there is no reason to create jobs, take care of employees, etc. There is nothing of concern other than the next quarter stock valuation...
To make it even worse, the modern system doesn't allow executives to benefit significantly from their stock shares until they SELL them (dividends are still overly taxed), so there is no real reason to think about the long term survival of the corporation either...
Add currency trading velocity issues and foreign holding policies for US treasury bonds, and the western economy is getting scary - inertia only lasts so long...
Because it doesn't save money to do that. Salaries are much higher in the US which is why US companies are outsourcing in the first place.
- Job loss in the last few years has continued unabated in the tech sector. By all reports, the new jobs created have been nontechnical, particularly in construction.
- This doesn't account for the fact that many people have dropped out of the labor market altogether (going back to school, early retirement, panhandling).
- Economists have a pathetic record for prediction. Right now we're in what's been termed a "jobless recovery." If that's a recovery (I remain unconvinced) then just where does Ms. Farrell see those 22 million jobs coming from in the next 6 years, and just when does she think they'll appear?
- Additionally, Ms. Farrell claims that cost savings from shipping jobs overseas will be passed on to the consumer. Ignoring the tendency of corporations to pass cost savings on to executive compensation rather than to stockholders or even (gasp!) consumers, just how would consumer savings help the average unemployed Joe on the street get a new productive job?
- On top of this, consider the setting for the comments. Ms. Farrell is telling a group of people in India not to feel bad about taking our jobs because eventually we'll turn out better than we started out. This is yet more bull in an article already reeking of manure. All it is designed to do is assuage someone's conscience.
It's one thing to say something substantive on the subject, but all that's been presented is trite expressions of hope that things will get better. I'm sure I'm not alone in hoping that they do get better, but until something meaningful is said, it's only so much bull.What is your Slash Rating?
The US product is about $10.5T:year, with about 100M workers earning about $40K:year. The $4T income are less than 40% of the revenue, with the other 60% representing corporate profit and taxes. Since corporations pay so little proportionately in taxes, and capital gains less still, the extra value is taken in corporate profits funneled to the very rich. Some estimates indicate that 15K US households (probably about 75K people, or .001%) own 5% of the Earth's property. The lack of job growth in the US, despite the looting of the Treasury for subsidies to these rich people, once again destroys the argument of "supply side" economics. After the debacle of Reagan's supply side, the last time these unemployment numbers were close to this high (excepting Bush Sr's next-closest nadir), you'd think this nonsense would be rejected. But I guess greed blinds even the survival instinct, when so much loot is flying through the air, without any merit to where it lands.
--
make install -not war
Hey, don't knock toilet unclogging. Plumbers make serious dollars.
"A great democracy must be progressive or it will soon cease to be a great democracy." --Theodore Roosevelt
and they dont count underemployment. I know alot of engineers who are flipping burgers and selling stereos burdened by student loans (which survive bankrupcy!).
Bingo!
The central planners talk of "jobs" as if they were all equal.
Even assuming the numbers claimed by the Bureau of Labor Statistics' talking head are true, what good does it do to replace one lost 6-figure engineering position with eleven minimum-wage, no health plan, burger-flipper slots?
Especially if, say, eight of them will be filled by illegal immigrants, two by engin-school grads who never got to engineer, and the eleventh by a former member of the (NON-minimum-wage, WITH health plan) burger-flipper's union, leaving the engineer still unemployed?
Now multiply by two million.
Great for the ruling class. Hell for the workers.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
been thinking about this lately. (I am still employed, but my company is having a pretty rough time right now.)
We are going to see more jobs. If Bush gets his way, most of them are going to be in competition with 'undocumented' (Ahem..), I mean ILLEGAL workers. So, we all know those are not going to pay well. Lots of people are going to be devalued for sure.
Jobs that involve people skills are going to become more important. Somebody needs to manage the teams, make deals, and other things. I have been seeing another trend along these lines as well.
Working professionals are forming groups to cut overall costs. So far I see this happening with law, accounting, taxes and other similar traditional services, but maybe technically oriented groups have a chance doing this as well.
Having your own in-house technical people may be too expensive, but buying some quality time locally, sans language and distance issues might be worth a small price premium. Personally, I hope this is an area that Open Source can begin to play a little harder.
I can't help but wonder what effect the growing license fees companies, like Microsoft, ask each year have on the job market. There are a lot of dollars going to one place that used to go elsewhere.
With Open Source working as it should and some greater degree of acceptance, perhaps some of this money will be distributed more evenly. Companies could choose to keep minimal staff and pay high license fees for one size fits all software, or...
They can choose to employ some more staff and combine that with services from a number of competing firms to solve their problems. The greater number of potential solutions might yield competetive advantages as well depending on who is involved.
If this sort of thing begins to really happen, polishing up those people skills might be the way to go. Your technical background will be valuable for advising execs on critical decisions and evaluating potential partners.
I have been getting some experience doing this on the side for a little while now. Once the execs learn there is a cheaper way, they need people to facillitate getting it done for them. Being able to work hands on, in a pinch, helps as well. I sort of ended up doing this for a couple of people I met when I began networking a couple years ago. (fear drives a geek to do strange things, I know!)
Thinking along these lines seems better than a long job search in any case. So, here it is, for what it is worth.
Anyone doing anything similar? Have any luck? Suggestions? I just might need them soon!
Blogging because I can...
Jesus breakdancing Christ. If I see one more hand-waving post devoid of either fact or theory, I will scream.
Free-trade is a basic tool of a capitalist economy. It has a proven track-record of working (eg: France under Napoleon, the modern EU, the US of fucking A!). There are also lots of statistics that show that protectionist laws save a few jobs at the cost of much greater costs to the rest of the economy. A certain law that protects US textile workers saved 75,000 jobs at a cost of $15 billion a year. That $200,000 that each of those textile jobs is costing is being taken right out of *your* pocket. That's money you could have, but do not.
Free-trade is also the only thing that makes sense in a democracy. People have rights, and it takes a very strong argument to limit those rights. Strong moral arguments give us reason to limit the right of people to commit murder. Strong economic arguments give us reason to limit the right of companies to form cartels. There are no such arguments in favor of protectionism. Morality says that people should hire whom they damn-well please, and economics says that this freedom is best for the economy in the long run. The only arguments we get in favor of protectionism is crap about patriotism, and hand-waving about "the destruction of the US middle class." Two points: One, as a Virginian, I care about as much about a guy in Texas as I do about a guy in Afghanistan. Two, the middle class did just fine when farm work, which was a middle class job, disappeared. They did just fine when factory work, another middle class job, disappeared. They'll do just fine when the programming jobs disappear!
The predictions in this article are precisely those predicted by economic theory. A certain class of jobs will be destroyed, but many more jobs will be created. Such predictions have been borne out numerous times before (NAFTA really didn't cause all American jobs to be sucked to Mexico, did it???) and will be borne out again.
Of course, this is assuming you believe in capitalism. If you'd prefer the stability of a socialist system, then by all means, move to a communist country! I take particular pleasure in saying this --- as a liberal I rarely get the chance to call *other* people communists, but that doesn't change the fact that calls for protectionism are nothing less than attempt to subvert the capitalistic ideals of this country!
A deep unwavering belief is a sure sign you're missing something...
"Apart from huge savings, it allows US companies to concentrate on their core competencies and the people (in the US) can move on to higher paying, more creative, more value generating jobs."
What higher paying, more creative, more value generating jobs?
Wansu, th' chinese sailor
Once it's a publicly traded company with subsidiaries and partnerships in multiple countries it doesn't really matter. The ships will be re-flagged, the profits will be transfer priced to tax havens, and the plants will be upgraded to wherever labour and environmental standards are the worst.
With agreements like the MAI, it doesn't really matter where the head office is. If the company's publicly traded, it'll be held by Institutional investors and round and round the profits go. The only ones that see the benefits are the executives.
Here's where you're wrong. Profits do not lead to growth; Growth may be a strategy to increase profits. Growth (in business terms) may not lead to more jobs, or those jobs may be elsewhere.
The desire for more profits may lead to expansion, but only if that's what will result in higher profits. Take Porsche for example. Increasing their production capacity tenfold would likely lead to lower net profit, as it would erode their sticker price. Prestige is their buying motivation. Make Porsches commonplace and you lose the prestige.
In the forest industry, it was quite common in the 90's for a company to open one new higher capacity plant while closing an old plant. The old plant often employed more people (the new one was more mechanized). The company has grown, but less people are employed.
Similarly, An auto manufacturer may "grow", increasing it's production capacity by outsourcing parts that had been produced in-house to multiple offshore subsidiaries. By shifting it's ratios of parts supplied by each plant they can keep costs the lowest, while billing the highest in the countries with the lowest effective taxes (transfer pricing). Now the company has grown by increasing it's profits, but there are less jobs.
Offshoring depends on the market for your product not decreasing to increase profits. Unfortunately, if production is commonly offshored from the consuming market, incomes fall in the market, leading to less sales, which decreases profits.
(For those who've never taken an ethics course, this is called Kant's Categorical Imperative.)
This is only true is the growth is distributed evenly. Logic does not bear your assertion out.
A "growing economy", in business terms simply means that larger amounts of money are being transferred. If I were to sell you a rock for a promissory note for 200 trillion dollars, then buy the rock back for the promissory note, we would have increased the GDP by 400 trillion dollars, which is about 4000%. But who did this benefit? Only me, as I'd now have an asset with a book value of 200 trillion dollars (liquidating this asset is annother matter).
Much of what goes on in the economy (and one of the areas of largest growth) is companies acquiring eachother and merging. Often this is done by a stock swap. If two large companies swap stock at market value, the book value of the transaction adds to the GDP, and it appears that the economy has grown. Rarely are jobs created by stock swaps. The merged company may decide to grow, but often the reason to merge is something that precludes growth.
Manufacturing jobs (but we already knew that).
And now thanks to the Internet, intellectual jobs, which would include (but is certainly not limited to) programmers, tech support, accountants, scientific research, financial research, and eventually, executive positions within companies.
The only jobs that won't eventually export are those which require a physical presence, such as police, fire fighters, doctors, auto mechanics, retail sales clerks, burger flippers, etc. (But I'm sure we can import some people for those jobs, or replace them with robotic telepresence... eventually.)
Actually, the only job in this country which is guaranteed not to be outsourced, is President of the United States. But I hear the pay is lousy and the hours are long.
They say the first thing to go is your penis. Well, it's either that or your brain. I forget which...
The reality is that outsourcing is good for the economy over the long run - low paid, low skilled jobs are moved elsewhere, and the economy focuses on new jobs. We've all heard these arguments in terms of blue collar work ("car manufacturing, etc"), yet the demand for information technology workers filled the gap.
The same goes for what's happening now: in the long run it will be good. The danger is in the short run: sudden loss of jobs without the ability to restructure could be damaging.
We only benefit from the cheap labor if we are a stockholder. If we are a working for a living wage we end up losing. Why dont you consider more than a stock index when you think about an economy? Why dont you think beyond basic economics class and think about what is really important to our a country; the citizens not the corporations are what we should be supporting.
unzip; strip; touch; finger; mount; fsck; more; yes; unmount; sleep
That would appear to be the good news. I think that the bad news is that outsourcing isn't going to last long as a real solution for cutting certian labor costs. Instead, companies are going to realize that it really is dangerous and conterproductive to export too much proprietary data and work to outside firms. Instead of purely outsourcing a job to India or elsewhere, companies are going to put more effort to set up real offices in those countries bringing the foreign workers in-house. It has been going on for a while, but recent progress in telecommunication has led companies to choose quick-and-dirty outsourcing to bridge cultural and political gaps and reap cost savings. As executives become more adept at dealing with the foreign cultures and labor marketplaces (esp. by acquiring foreign executives who understand the foreign places) they will be able to achieve both better cost savings and better overall security by untying their internal organization from traditional geographic divisions. Companies will further embrace doing whatever part of their business "needs" to be done in whatever part of the world they can do it cheapest. It's still globalization, but it's more pervasive than just redistributing production centers and opening new markets to sales. It's re-distributing the locus of control within each company.
Here's some predicitons: The biggest U.S. export for a while is going to be culture. Foreigners who want to work for U.S. globalized companies in their own countries are going to have to work in many ways within western cultural frameworks and they will bring that culture home to their families and neighbors. The U.S. dollar will continue a long, slow decline in (relative) value, as will the Euro, eventually. This is a natural result of the strengthening of competing currencies of the foreign nations which will be supplying the new, eager middle-class labor forces. As more countries follow India's example of embracing western culture and education, they will gain a share in the job market.
Hopefully, as western culture (particularly the English language and the values of capitalism) become more pervasive, people will also break down political barriers. It all does seem a long way off, but almost certainly the 100 years of the 21st century will witness more and faster changes in the human landscape of the world than the 20th, due to the interconnectedness of the world (think about, for instance, that probably for all of the next 100 years, people will be able to make a phone call or send email anywhere in the world instantly. In 1900 this was hardly even a dream.) and the continuously-increasing pace of technological advance. Probably third world nations will not disappear, but wealth and poverty are likely to be distributed more evenly (geographically, anyway) throughout the globe. That is, after all, what we're ultimately worried about in out own small way. We (all) want the opportunity to make ourselves useful and prosperous. It's just going to take some suffering and upheaval before things equalize. Buckle up.
A data point on the quality of outsourced tech support:
My neighbor's HP Pavilion kept putting a window on her screen last week, saying her Windows license had expired, and that she needed to enter her credit card number and expiration to validate her copy of Windows, but not to worry because her credit card would not be charged.
My neighbor is in her 80s, but her memory is good and she didn't remember anything about an expiration date for Windows. So she called HP support and got a man with an Indian accent. She told him the problem, and he asked, "How old is your computer?" She told him it was a couple years old, and he said, "If it's that old, Windows could be expired. Try entering the information as requested and see what happens."
Fortunately, my neighbor is much smarter than HP's outsourced call center, and didn't take their advice. She called me and we cleaned mimail.s off her computer. She promises she won't buy from HP again.
Why, yes it did.
Good piece here
>If you'd prefer the stability of a socialist system, then by all means, move to a communist country!
Logical fallacy here. You are ignoring other solutions like better economic planning and fixing the problems our policies have done.
Good piece at the nation here: Lets not forget that free trade is largely an illusion when farmers keep getting subsidized and when social safety nets, wages, and the environment take a beating in the name of 'free trade.'
As a European independent consultant/developer contracting to a range of clients in the SME and similar sectors I've seen absolutly no impact from outsourcing over the past few years and I'm still scratching my head trying to figure how it could.
The problem is that for my clients the idea that they could develop any system specification sufficently precise to give to an outsourcing company is frankly ludicrous. For example I've been writing a medium sized clothing hire program for a client for the past 6 months. This sounds like an ideal 'specify and hand out to india' project, except that the client really didn't have much idea what they wanted when we started beyond 'we want a hire program', 'here's an old DOS based-system that does something like' and 'we have these bits of paper'. The amount of iteration, exploration, respecification and general systems analysis that has gone on from then is frightening, but hardly unusual. In the process I've crawled though virtually every aspect of the business and even sat in with them on visits to their suppliers, associates and clients. You can't do that from india.
Now, of course I've considered splitting the work by doing the systems analysis myself and subcontracting the rest to india. However because of the iterative nature of the process that's not really feasible, plus the relatively small size of the project would mean setting up overheads etc would negate the cost saving. Some might say that the development process shouldn't be iterative but I should insist on completing and signing off a full spec up front, but while that could be done it wouldn't lead to satisified clients, and my clients do have the wit to realize that.
The same goes for all my clients. I simply don't see how they could replace me by outsourcing to india because they simply don't have the analysis skills to do so. The only way I can see it happening is with a larger 'software' house who can scale by having multiple projects which they outsource for, but do the analysis work here. Trouble is it's difficult to see how the additional overheads of such a company could compete with my almost complete lack of them.
Now, having worked in big business IT a few years ago (financial & manufactoring sectors) I can see how outsourcing would work there because the analysts developed tight specs which were then handled by the programmers - obvious candidates for shipping offshore. Even their though I distinctly remember when I reached analyst (and even analyst/programmer) level that I spent large amounts of time walking around manufacturing plant and talking with people to understand jobs I was adding IT functionality too worked. In fact doing what I do now to some extent, but on an intra-company level.
So, I'm not disputing that development jobs can be outsourced, but surely because of the human interaction needed for much analysis and development work there is a natural limit as to how far it can go and result in satisfied clients. Also, because the use of IT increases all the time in breadth of penetration into the business environment I'd postulate that the general trend for work will be upwards - although there will be a natural impact while the pecentage of work that can be done by outsourcing reaches it's natural effective level, and this impact will be sever in some areas of developer employment but non-existent in others.
Yes, I believe that sauces will be involved in these 22m new jobs, mainly ketchup and mustard.
The market for techies as cheap burger flippers cannot be underestimated, as we have the skills to operate the tills that seem to so confuse your average McDonald's worker.
not $22 million in jobs.
Just to stay even with the number of new workers entering the workforce, the US needs to add 300,000 jobs per month. Multiply 300,000 by 12 months by 6 years (the difference between now and 2010) and you get 21.6 million, a number suspiciously close to the 22 million cited in the article. I'm guessing that the job creation number is based on horseshit.
Trust me, I'm normally one of the most vocal opponents of protectionism. However, beyond a point, you simply have to drop ideology and adopt a more pragmatic position. The loss of so many jobs overseas without a new industry to replace them (and right now there really isn't one) will seriously weaken our country.
And regarding the analogy - a better one would be to consider import of raw materials. The government has a long history of imposing tariffs on foreign sources of raw materials when they threaten the health of our domestic industries. Well, right now companies are "importing" the tech support services of foreign employees and are undercutting the domestic supply, and I'm willing to suspend my anti-protectionism leanings and support some manpower tariffs in the name of stabilizing our economy until there's another industry to transition all the extra workers into.
*shrug* As I said, I don't like it when the government interferes in the economy. I just don't see a better option in the near future.
Microsoft delenda est!
Its not about the cash for them anymore. Its about points, being the top player in the game for the thrill of it, and staying in the game.
Given that it is about staying in the game, outsourcing jobs to India is irrational because it will ultimately put them out of the
Indian tech workers are smart, politically aware, and socially aware.
They will not be content with the American business colonialism of outsourcing.
They will use outsourced American jobs to build up funds and to learn how to run tech companies( or given our greedy, short sighted, overpaid American CEOs.....how NOT to run a tech company)
Once they do, they will form their own Indian owned tech companies.
Unlike the American tech companies paying Indian wages and selling their products at American prices these early Indian owned tech firms will sell their products at Indian prices.
They will either drive American Tech companies out of business or their competition will severly limit their profits.
In short, American CEO jobs will be outsourced to India in the end. They will be out of the game
Steve
to Canada.
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The amount was 13.5 billion dollars.
US used to grant an aid of $25 million to India annually. That too was stopped when Congress got worked up over some issue. But India is now attracting investment, not aid. See the various projects underway here:
http://www.bharat-rakshak.com/ubb/ultimate
And then you have the nerve to repeat this supply-side bullshit--look how much the stock market soared when Clinton raised taxes on capital gains! The taxes on capital gains have to be incredibly huge before they start to matter--people will invest if an investment makes money, they won't invest if it doesn't make money--taxes on the profit made will have little effect on this.
On the other hand, taxes on labor have a very direct and simple effect on jobs. Corporations have to pay more wage taxes for every additional employee they hire IF they choose to hire that worker in the United States. Wage taxes and the lack of a nationalized health care systems (an exponentially increasing cost our employers are also expected to pay for, unless workers do without) are incentives for factories to move to either completely undervalued countries (India) or more progressive countries like Canada, which currently has a fantastically booming economy.
Bottom line: there has been no economy in the history of the world that has been able to withstand long-term trade deficits. It's great to save money on Indian labor, but unless we can find something else for American workers to do, unless we can find something else to export, then it doesn't do either the world or America any long term good. If you save 58 cents by outsourcing to India, hey, great, that's 58 cents more for the American economy. If you just spend the whole dollar on American labor, that's a whole dollar spent in the American economy.
If my high paying Programing job has been outsourced to India and I am now working for Wal-Mart for $5.50 an hour, what "Toys" would I be buying ? Isn't it more likely I would be trying to figure out how to pay rent AND eat this month ?
Food, clothing, and appliances are a small part of poor and middle class people's expenses, and outsourcing and mechanization is primarily reducing the cost of these goods.
The biggest expenses tend to be housing, medical, and auto. For the heavily in debt, you can add in credit cards. Housing and medical are skyrocketing while auto is rising more modestly. Funny enough, to take advantage of low prices in large stores like Walmart, you need a motorcar, which will, in all likelyhood, cost you more than all of your spending at said stores.
If you really want to help the working class, break up the pharmaceutical and medical cartels and push for subdividing our oversized houses and building affordable housing to get rents and property prices under control. Reducing auto expenses would require a massive overhaul of our cities and infrastructure, but the benefits would be massive.
Walmart could push the cost of food, clothing, and appliances to $0 and in several years rising health, housing, and auto costs will eat that all up.
I think Slashdot is blowing the whole economy thing out of proportion because it has adversely affected the tech sector. If you'll all remember, we were riding high for 4 or 5 years on completely inflated stock prices, endless supplies of venture capital, and completely crazy business plans with no hope of producing profit. The market corrected for these problems and we're back where we should have been today if we continued the same level of growth as we had 5 years ago. The only reason it seems horrible is because 25 year olds fresh out of college can no longer expect to make $75k/year making web sites. Boo friggin hoo. Many people work their entire lives in their profession and never earn more than $45k/year. Quit crying about it and acting like it's some personal tragedy that your 4 year degree doesn't automatically entitle you to a 6 figure salary anymore.
More to the point... American dollars go to India, and there are only two things that can happen:
1. They spend the money on American goods
2. They just keep the money
Case 1 is a wash, and Case 2 (which never happens), would be wonderful... we could just keep printing dollar bills and never have to work. Unfortunately, when we import goods or services, the other countries want something in return.
America is prosperous largely because it's a huge free-trade zone. Imagine if people in Massachusetts complained about imports of cars from Michigan, and passed a law that said you had to buy a car made in Massachusetts, so that jobs wouldn't be lost to low-cost labor in Michigan. Or suppose Massachusetts insisted that Michigan adopt all of Massachusetts' labor laws. Would the people in Michigan want that? Would the people in Massachusetts want to drive cars designed in Brockton?
Or another example... suppose a state complained about all the computers "imported" from California or Texas, and insisted that any computers in be made and designed in the home state. Who would be hurt by that? People who can't afford expensive computers, that's who. It doesn't happen, nobody even suggests it, because it's freaking brain-dead stupid.
Some states make certain products, other states make others. Free trade among states reduces income inequality among states, and allows us to be peaceful neighbors.
Well said. I would like to add, that the boom made a lot of people *think* they could do technical jobs when in fact they were underqualified.
In my last job, (yes, I found a better paying job in this down economy) I interviewed countless wannabe techies trying to find someone to do rather simple stuff. Most people who came through the door were underqualified and wanted too much money.
If people in Massachusetts were trying to maintain their standard of living, and Michigan were a country where major killers were things like starvation and dysentary, I would see no problem with banning car imports from Detroit. All of this outsourcing is serving to do one thing; balance the economies of the U.S. and India/China. They gain, and we lose.
I believe preserving this country's standing as a dominant world power is morality enough...certainly equal to the morality of putting a hard-working American out on the street after 30 years of labor for a company. If it were only a question of morality, we would be dividing up our cumulative wealth and spreading it equally about the earth; but the reality is that is we MUST not do that, lest we be equally divided in national strength.
Wealth, on a national level, is determined not by what you have, but what you can produce.
We could redistribute every penny of current American wealth equally around the globe, and within a short period of time, the same order would redevlop, the same nations would be prosperous and the same nations would be poor. The Soviet Union had an incredible stash of natural resources, and a very educated and capable population, but they were piss-poor because they insisted on taking five dollars' worth of materials and labor and using them to produce two-dollar shoes.
Many people work their entire lives in their profession and never earn more than $45k/year.
Uh, buddy? That's a problem. How can anyone expect to pay off education debt, raise a family, and retire comfortably without burdening an already-crippled social security infrastructure if we begin to accept the notion that a $45k salary after 35 years of service is "normal?"
I'm not saying they should be making 6-figures either, but I am saying that in our culture, it is impossible for a family to live comfortably on $45k/year perpetually, while trying to put 2.5 kids through college and save for retirement. It can't be done.
Now, if both parents want to work and bring in that kind of money, well then it becomes possible, but if both parents are working, who's raising the kids? A stranger. And THAT, my friends, is a huge part of what's wrong with society today. THAT is why your kids won't listen to your or respect you.
But I'm getting off-topic.
Like woodworking? Build your own picture frames.
Well we can produce less as we ship it all overseas. I have been in the manufacturing industry in the past, and one of the larger problems is becoming finding tool and die makers. After all, it's nice to internet this and program that, but somebody has to make the die that stamps the case out for your computer. In the 80's, apprenticeship programs were eliminated left and right, as we would theoratically never need such "old style" skills anymore. Things were shipped overseas and the entire skill pool in this country evaporated. I can see the same thing happening across the board. Just extract this situation to its logical conclusion; every job here is outsourced to India/China/etc. What is left in the US?
so there is no real reason to think about the long term survival of the corporation either...
Quite so.
I've often thought the capital gains tax rate should be very high initially and very low in the long term. Something drastic like exp(-time/5 years), for example.
The main objective being to motivate shareholders and executives to think of the company's long term best interest and not just jack up earnings by cutting maintenance, R&D, selling the family jewels, etc.
One worrying development is just how much executives are motivated to sacrifice a company's long term health in order to meet earnings estimates put out by the Wall Street analysts.
If there were a similar way to make politicians or the public fiscally-minded, too, it would be nice. Something along the lines of "your share of this year's federal deficit is going onto your VISA card on April 15" would help shape things up in a hurry.
Your choice: pay more taxes, spend less, or lock yourself into an onerous debt. Most politicians are only too happy to give people less taxes, more spending and retire before the debt comes due.
"Provided by the management for your protection."
This is true. By sending out jobs overseas, we actually gain jobs. We are giving jobs away to ourselves!!! By the same token, When we give breaks to large corporations and rich people, it is the average people who benefit!
Also, by killing people in Iraq, we are actually improving their lives.
The high end jobs pay about $11,000 a year in social security and medicare taxes (counting the employer half of the contribution). 3.3 million of these will off-source to locations where no tax is paid, just as the boomers are retiring.
The argument you've made basically boils down to "we've seen this before and it didn't hurt us". However, your assumption that we have seen this before does not seem accurate. In the past we've seen exportation of unskilled labor, mostly factory jobs. The argument at the time was that we will retrain and become more skilled and a higher quality workforce than other nations, which will in turn raise our standard of living. However, now we're seeing job loss in white collar educated positions. How can you tell someone who has a PhD already that they need to retrain? that they're not educated enough? As such, it's hard to say this is not the beginning of a long downward spiral, where the money at the top of the paradigm begins to shift to other nations over the long run. You may make the case this is good for world stability as a whole, but I'm not so sure it's good for citizens of the U.S..
From the article: She pointed out that the Bureau of Labour Statistics was predicting a job gain of 22m in the US by '10, against a job loss of 2m due to offshoring.
And then there's this article, which points out that because of globalization, technology and stagnant prices, none of the old statistical models of employment work, and apparently no economist has come up with a new model, since their predictions over the past year have been completely wrong.
So I doubt I'd trust what any economist, or group of economists, or the BLS, has to say about future employment numbers.
--Rob
Towards the Singularity.
I should have noted earlier that I also agree that it's hogwash to suggest that trade creates jobs. It does, however, lead to lower-cost goods, which benefits the lowest earners.
Unfortunately, the person who lost his $20K job knows he lost his job, and the 2 million people who subsequently saved a dime on their shower flip-flops don't even notice the savings individually. But when we tried protectionisom with autos in the 70's, the point was made much more clearly. At the time, import quoatas meant that it cost $4K to buy a $3K Toyota. The alternative was to buy a $3500 Chevy, which at the time were a pieces of shit. And average-income folks got pissed. Yeah, workers were happy in Detroit. But only in Detroit.
Wait, let me get this straight.
First she says that companies save $.58 on the dollar in outsourcing - then states that this goes to the investors. How does that benefit workers?
Then she states that India consumes goods as a result of their increased wealth. Ok, so I lose my job as a developer but I can always go to work in a factory to produce goods that will be shipped to India for consumption?
Oh wait, that won't work because all of the factory jobs are now in Mexico.
Good thing that that investor has his extra pocket change. Maybe he'll drop it in my cup on the way by.