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Labor Department Downplays Offshoring
twitter writes "The New York Times is reporting the US Labor Department's first assessment of International Offshoring. The report claims that less than 3% of Q1 2004 jobs were lost to offshoring. Companies were asked if workers had been replaced and taken at their word. A Federal Reserve governor is also quoted as dissmissive. Estimates by Goldman Sachs are 20 times higher. Despite Washington's IP fetish, no one quoted is worried about the export of US research and knowhow. Your job and 830,000 others are gone."
Kerry will stop this offshoring nonsense!
oh wait, his wife's companies are offshoring as much as anyone else.
ummm...
NADER '04 !!!1!
Here is some advice that I took after I graduated college. During my last few years of college there was a lot of talk that companies may start outsourcing their work to places such as India. Living in an area where there is a large air force base I was given the advice to get a job there working with either with a contractiong company or the civil service (government). They are so strung for computer-minded people that they can offer up to a $60,000 hiring bonus on top of about $60-70,000 per year just to get you to work for them. And the best part? The US government isn't going to outsource your job anywhere. The only thing to worry about, however, is that your job can be eliminated. But the benefit of working for the civil service? They also have to find you a new job of similar pay.
Hmmm.
The report claims that less than 3% of Q1 2004 jobs were lost to offshoring.... Estimates by Goldman Sachs are 20 times higher.
So 60%? I don't think so...
I feel for people who've lost jobs -- my wife lost hers, twice, and several of my friends did as well. But you know what? It keeps the labor market dynamic. "Well, if this is dynamic, I want none of it!" Sorry, but that's a kneejerk reaction: if people overseas can do it cheaper, and maybe even better, WE HAVE TO LET THEM. If we don't, then some day they'll come along and simply overpower us, because they -aren't- stagnant. Look at what happened (say) to American automakers when they were dismissive of Japan! How about textile workers? It's part of being in a global economy. Unless we wish to become entirely self-sufficient and isolationist, we HAVE to learn to do well what we do well: innovate, create jobs, create wealth and opportunity. But don't try to bail out a tepid economy with finger pointing and a leaky pot.
Yes, when you take a survey, you expect people to be honest, the very few that aren't honest won't make much of a dent in distorting the picture.
Anyway, I don't know why slahsdot is playing protectionist when it comes to tech jobs in the US. You people enjoy the fruits of offshoring in cheap computers, gadgets, and other electronics. Tech jobs aren't any more sacred than manufacturing jobs. Adapt or die.
Slashdot Moderation: From positive to terrible in 2 "insightful" posts.
It is not downplayed in India. BPO jobs: Devil in sheep's clothing? Call centres put Indian mores on the hook
You know why? Because companies that do this should be taxed to hell and back for doing it.
Fine, but be prepared to pay at least twice what you now pay for a lot of your consumer goods, including your PC, TV, clothes and most of what you can buy so cheaply at the mall or Wallmart. Why is it OK to outsource the manufacturing jobs so you can have cheap electronics, but when the job being outsourced is something you're trained / interested in, it's wrong?
... is to be the best ! No matter the cost, if no one is able to do your job, you are safe. With the development of automatic code generation, middleware and so on, the number of coder will fall in a near future. Trying to reduce offshoring is just a way to gain time. Remember the beginning of the modern era, when labor worker where replaced by machines... but there are still manual worker, they are doing "haute couture" and earn a lot of money. Now, it is the same thing with software. But, maybe we are all wrong, maybe there ain't enough job for us all, not enough place, not enough ressources... Want to drive a SUV ? Eat super maxi menu ? We can't go on like this, it is time to slow down, relax and live a better life. The more is not always the best.
No. That's not how it works. It -is- a level playing field, almost by default: their cost of living is lower than ours, regardless of the reason. That means that there are certain things that they can do cheaper. WE HAVE TO LET THEM. Eventually, their economy will get better, raising their cost of living... or it won't, and they'll no longer be a concern. But if you try to "level" the playing field, you're just kidding yourself. If someone else can do it cheaper, and you don't let them, YOU WILL LOSE: that's the only sure bet. Check history if you don't believe me; gov't instituted remedies in situations like this just don't work, as most socialist countries were fine examples of. Free market may not be fun, but it's the only game that consistently wins, because there's nothing artificial, and greed -- the great human motivator -- is allowed to run rampant.
My job has not been shipped offshore. There is no risk of my job being shipped offshore.
Of course, I've escaped the rut of the corporate/educational/medical IT structure and gone into business for myself. There's no more worries about losing my job because some corporate bigwig doesn't know how to use a computer correctly. I don't worry about the High Point Furniture Market doing badly, causing a warehouse glut and staff cutback. I can no longer use victim-mentality to explain what goes wrong with my career.
These days, if I don't make much money, it's because of the ups and downs of the retail cycle. It's because I need to get off my butt a bit more and do some work. It's because of a lot of things, but it isn't because of offshoring of my job.
Want to be insulated against offshoring of jobs? Learn carpentry, or HVAC maintenance, or any number of trades. Then, buy yourself a van, hit the road and work for yourself. The rewards are greater, the hassles are more easily managed, and you get paid extra for working with bigger problems or worse customers.
Oh yeah, and you'll get a thank you occasionally, from those you do the jobs for.
Visit Lockjaw's Lair. He won't bite.
Excuse me but zero jobs should be lost to overseas workers.
Ah yes, the boundless economic ignorance that leads to +5 insightful on Slashdot.
An economy where no jobs are going overseas or coming back is a lifeless, growthless economy. Acting as if even one job moved overseas is somehow a problem does nothing but illustrate your own particular ideological blinkers, which prevent from thinking in any halfway rational way about complex topics like economics and globalization.
If it ain't broke, you need more software.
"Comapnies that do this should be taxed to hell and back for doing it?"
This post betrays an utter lack of economic sense, and a complete disregard for individual rights. So you think companies should be taxed to hell for hiring employees outside of the U.S., and then Slashdotters think this idea is insightfull? What the hell happened to keeping the federal government out of private buisness? I see now that most of you slashdotters are all about personal rights, so long as those rights are yours and rights aren't given to other people who might use them in ways that you don't like
Your idea that "zero jobs" should be lost to workers overseas is completely, utterly, assinine. Anyone who thinks this sort of thinking is "insightful" needs to learn some basic economics. Everyone benefits when companies become more productive because their products are made cheaper. We have seen a net increase in the number of americans employed as a result of international trade, because those people in foreign countries who get jobs will now be able to purchase more expensive American jobs.
You really piss me off. Saying that we should tax the hell out of companies so that they keep all their workers here is mindlessly stupid from an economic viewpoint, and utterly unamerican. Is there any consitutional basis for controlling whom private companies wish to have for employees? No! Mind your own god-damned buisness. If you think too many companies are outsourcing, then start your own company with only american workers and american inputs, and see how long you last in a free market. The truth of the matter is that it's the American People who are pushing for outsourcing becuase they demand cheaper products. And why shouldn't they?My blog
As a U.S. IT worker, I helped do my part for GE outsourcing. I traveled to New Delhi and GE's new facility in Haryana State where I helped to set up the infrastructure for helping to offload work from the GE financial units.
I can tell you that I did not feel the least bit sorry for the American call center employees whose jobs were sent to India. The Americans in the call center were men and women right out of high school and college with crappy attitudes and a streak of laziness a mile wide.
The Indian workers had master's degrees and had drive and ambition. The Americans did not even care about the job competition and thought they were owed work. Sorry, I cannot agree with protecting an entitlement!
That being said, there is still a barrier. Despite English being the common language between India and the U.S., Most Americans cannot understand the Indian accent and get rather frustrated. (I am sure it works both ways. ) Also, some of the Indians take a "Brahman" or intellectualy superior view and treat their American customers like crap, especially women.
The offshoring will level off in my opinion. Some companies will still try to gain competetive service level where empathy and understanding are part of the customer experience.
Hear, Hear! I'm sick of hearing protectionist garbage, particularly on slashdot. I like to think of this as a place where intelligent people can debate ideas. It discourages me enough when some guy says that we should tax the hell out of companies who think about outsourcing, but then when people go and say this sort of thinking is Insightful? Give me a break! It makes me think of a bunch of Neanderthals with clubs sitting around in a cave. One of them stands up and says "GROG SMASH," and the others point and grunt approvingly - "Grog Insightfull!" they chant, and Mod him a notch.
My blog
Has no-one thought of the possibility that Goldman Sachs might be wrong ? I don't know how trusted they are (I'd assume at least a bit, as they're used as a reference,) but even the most trusted firms/whatever can be wrong.
/prefers to be an optimistic pessimist: Plan for the worst, try/hope for the best.
I'm not saying the Labor Department is right, but there's a chance that Goldman Sachs is wrong. I mean, they are estimates. I could do some quick researching, round to the nearest hundereds places, and report that as an estimate.
You're all pessimists.
If an overseas worker is considerably cheaper than an American one, if we eliminate the savings through taxation, overseas companies will simply form that capture the difference. Then the US company will evenutally go bankrupt (and wipe out even more jobs). Imagine how expensive a cheap Ford would be if all car parts were required to be made in America.
Realize that many technology jobs have been replaced by automation that lets a few people do work that many would have been required to do years ago. That's a much bigger factor than offshoring. If you want to protect yourself learn as much as you can about what others use your products to accomplish, even if you are no more efficent than an indian programmer in lines per hour, you have a tremendous advantage over him in making software that will do more for your company (because you can see how it is used).
A fable that I am stealing from an Econ prof goes as follows. Imagine a bright engineer announces a development that allows him to covert grain into cars. He buys tons and tons of grain, which goes into one end of his factory, and out the other end roll cars (at considerably less cost than Detroit can produce them). The machine is rather automatic, so while he doesn't hire too many people, there are a few jobs created in his machine. Everyone is amazed at his prowess, even Detroit who has to adjust to compete with this new competitor, they vow to become more efficent producers.
A few years after he begins operation a bright, hungry investigative reporter gets the scoop of his (or her) lifetime, the factory does not convert grain into cars, it's a cover on a large boat dock (grain is exported and cars are imported). After he blows the lid of the story his cars are taxed, protested, and disliked. Why would it be alright to convert grain into cars through an industrial process, but not alright to trade for it? That's why I'm a free trader.
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
It also turns out that offshoring is a complicated business. I have participated as tech lead in three offshored projects. Only one of these ended up "profitable", costing us less than domestic talent would. Even though offshore workers earn a much lower salary than their US counterparts, the markup on their services is not small. We were paying $35/hour for talent that we could get for about $55/hour domestically. I think a lot of companies will experiment with offshoring and quickly discover that there are many sharp rocks under those inviting waters. The companies that are seeing biggest gains are those that set up offices in the offshore countries and hire the locals as employees, rather than consultants.
From a larger view, the baby boomers are starting to retire. If you check your census statistics, that is a huge skill deficit that we just don't have the population to replace in a growing ecomony. Therefore, if we wish to continue similar growth rates to what has happened over the past 50 years, we will need to:
- Immigrate
- Automate
- Offshore
Remember 1999? Companies were recruiting waiters and putting them through IT training, just to make up the shortfall. If you knew where the power switch on your computer was, you could get an IT job. Well, back then, we had a shortfall of 4.7 million skilled workers. If similar growth is projected forward and the baby boomers are subtracted from the labor pool, we're looking at a shortage of over 20 million skilled workers by 2010. This will make the shortage of 1999 look like a picnic. Some predictions even show us using up all the available offshore talent by 2012 or so.So whine all you like about offshoring. Soon, it'll be the only thing that keeps our economy growing.
I agree with what you are saying (especially the bit about a knee-jerk reaction). We cannot isolate ourselves and create an environment that stifles competition. And certainly attacking the high health costs and the sue-happy will help.
However, the problem I have with outsourcing and international competition is that it is not a level playing field. We have many requirements on companies that run in the US -- environmental standards, insurance requirements, minimum wage, etc. (I am sure that others can come up with even better examples) -- that many of the countries we are dealing with do not have. I agree with the parent poster in that I think there should be a tax to compensate for the differences in requirements for employees. How can we expect an American firm who has to spend millions to be environmentally friendly to be able to compete with an Indonesian firm with absolutely no attempts to be good stewards with the land?
This is not an easy problem, but I think attention needs to be given to the requirements on our companies. I do not propose that we lower our standards. Rather, perhaps we should require companies working in foreign countries to either meet our standards or apply a financial penalty for failing to do so.
Our countries companies cannot hope to compete with other countries given the current environment in America. Maybe this means that America itself needs to change to keep up.
I believe in de-evolution. God made the world perfect, man fell, and its been going downhill ever since!
Free Markets are like black holes, no one has ever seen one, but theoretical academics will argue to the death about what they are like. Economics is a soft science based on assumptions about human behavior.
If US companies want to ousource, fine, just quit giving them taxpayer dollars (corporate welfare) and access to government R&D.
Assuming of course we actually have a free market. We don't. A free market assumes many buyers and sellers of the same product and perfect information; when you have just a few sellers of a product and disinformation in the form of advertising, you have something that does not at all resemble a free market.
What are you talking about? American companies are around for one reason, and one reason only: to make money. They hire GOOD programmers in India CHEAPLY. They save money. Simple as that. There is no 'conspiracy' for a group of companies to not compete over quality: as soon as this happens, a new player will come in not following these rules and take over the market. It's how free trade works.
If I buy components from China or India instead of your company, and your company loses business and you get layed off, I have outsourced your job as part of the global economy. However since I am getting lower cost components and become more profitable, I can hire more people to assemble my product. Then as I realize that other local companies are eating into my business by selling at a very slightly lower price, I now start looking for offshore manufacturing and shift my workers to other jobs required by the additional volume. I become more competitive and profitable, but my local competition loses business and has a layoff. So far I have outsourced your job and the jobs of another local company. Both of these companies had layoffs that were not due to outsourcing.
So far I have outsourced your job and the your company's manufacturing by putting you out of business.
When the Bureau of Labor Statistics asks mine and the two other companies about outsourcing, two of them have lost jobs but not due to outsourcing. I have done outsourcing but have hired some people to help with the additional volume.
Net result of the survey? Few or no jobs have been outsourced, and the jobs that were outsourced did not result in a layoff. So much for government statistics!