Monday, March 06, 2006

42 Million Jobs Susceptible to Offshoring

Bush, Republicans and Democrats have all maintained that the answer to outsourcing is education, but experts are no longer so sure according to an article in the Los Angeles Times.
"More education has been the right answer for the past few decades," said Princeton University economist and former Federal Reserve Vice Chairman Alan S. Blinder, "but I'm not so convinced that it's the right course" for coping with the upheavals of globalization.

Not that Blinder or other experts think workers would be better off not going to school. Rather, they point to emerging evidence that education may not offer as much protection against the effects of globalization as Bush and others claim.

"One could be educationally competitive and easily lose out in the global economic marketplace because of significantly lower wages being paid elsewhere," said Sheldon E. Steinbach, general counsel of the American Council on Education, an umbrella group that represents most of the nation's major colleges and universities.

Some analysts think that something like what Steinbach described is already underway.

Starting in 1975, the earnings difference between high school- and college-educated workers steadily widened for 25 years. But since 2000, the trend appears to have stalled. Census figures show that average, after-inflation earnings of college graduates fell by more than 5% between 2000 and 2004, whereas the earnings of those with only high school degrees rose slightly.

Most studies suggest that beyond the manufacturing sector, the "offshoring" of jobs has been comparatively modest. But some analysts say the ground has been laid for a substantial pickup. In a recent paper, Blinder offered a rough estimate that suggested that as many as 42 million jobs, or nearly one-third of the nation's total, were susceptible to offshoring. [Emphasis mine.]

These analysts warn that more education alone will do little to stop the flow of jobs to other countries.

"What's missing here from both parties is a global economic strategy and a worker adjustment strategy," said Anthony P. Carnevale, a scholar at the National Center on Education and the Economy who was appointed to major commissions by Presidents Reagan and Clinton.

"When they don't know what else to do," he remarked, "there's a tendency among politicians to stand up and say 'education.'
The whole problem of outsourcing needs to be reexamined. It's no longer enough to push education. Maybe we need to look into a little targeted protectionism. Maybe we need to "Buy American" whenever possible. One thing is certain, the key is to find a job that is less vulnerable to offshoring.
Until the last decade or so, most of what could be traded were manufactured goods that could be boxed up and sent abroad or bought overseas. Therefore, it was mostly American manufacturing workers who faced the brunt of competition. Services workers appeared immune and that seemed especially true of highly educated doctors, lawyers, computer programmers and financial experts.

But with the growth of the Internet, analysts say, many — although not all — sorts of service work can be performed almost anywhere in the world. Now many kinds of service workers are finding themselves exposed to the same global competition as their manufacturing counterparts. [...]

The crucial distinction in the future may not be between the more-educated and less-educated, but between "those types of work that are easily deliverable through a wire … and those that are not."
Manufacturing states have stuggled for some time now, but I'm afraid the pain of outsourcing is just beginning for the rest of America.


mikevotes said...

But Bush just told me while he was in India that if I'm worried about protectionism I'm an isolationist.

I should be willing to drastically reduce my standard of living so that US corporations can maintain their preeminence, because after I've taken care of them, they'll take care of me.



Kathy said...

Absolutely, Mike. They'll take you right to the poor house.

Kvatch said...

I should be willing to drastically reduce my standard of living so that US corporations can maintain their preeminence...

In fact, to believe otherwise makes you un-american, as I'm sure Rex would point out. ;-)