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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."
An Indian journal reporting that Indian outsourcing is good!
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"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."
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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!
Unemployment statistics are trash. They don't include recent college grads or those who have been unemployed for a prolonged period of time because no one bothers to register unless they are eligable for unemployment benefits. After a while people are no longer eligable and so they stop registering as unemployed, the statistics assume they are employed which isn't necessarily the case.
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...
"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."
Just for the record, the department of labor was predicting a job gain of 17 million for 2003. In reality there was a loss of tens of thousands of jobs. The 22 million prediction sounds like re-election propaganda...
and they dont count underemployment. I know alot of engineers who are flipping burgers and selling stereos burdened by student loans (which survive bankrupcy!).
Religion is a gateway psychosis. -- Dave Foley
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
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).
- In the last three months, more than 40 percent of the unemployed have been out of work more than 15 weeks. That's the worst number since 1983.
- According to the monthly payroll survey for January, jobs rose by 112,000. Before you start cheering, that doesn't actually keep up with population growth.
- Since the recovery officially began in November 2001, employment has actually fallen by half a percent, while the working-age population has increased about 2.4 percent.
All of these facts (with more available) come from Paul Krugman's editorial in the NYT today. His column should be required reading for anybody who wants to talk about the economy.- 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.
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make install -not war
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.
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.
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.
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.