Home Updated on April 11, 2005  

 Outsourcing
 Immigration
 Hate Crimes
 H-1B Visa
 South Asian
 Candidates
 IACPA's 10th
 Anniversary
 Media Talk
 Census 2000

2.5% of layoffs are linked to outsourcing: Labor Dept. report

By Eduardo Porter

International outsourcing, politicians from both parties often say, has turned into a scourge of American workers, who are losing jobs on a large scale to competition from cheaper workers abroad.

But according to the first government effort to actually measure the phenomenon, such fears may be overblown. A new report released on June 10 by the Labor Department on mass layoffs found that in the first quarter of this year, 4,633 workers were laid off because their jobs had been moved overseas, a mere 2.5 percent of the total of 182,456 longer-term job losses reported by companies in the period.

Officials acknowledged that the numbers clearly undercount the total number of jobs lost offshore. For one thing, the new data only cover layoffs at companies employing at least 50 workers where at least 50 filed for unemployment insurance and the layoffs lasted more than 30 days. Even more important, the report does not account for jobs created by American companies overseas that did not involve a direct layoff in the United States.

The new data, however, do seem to fortify those experts who have long argued that outsourcing plays a relatively small role compared with other more important factors affecting American job gains and losses.

“Offshoring is not at the heart of the matter,” said Robert Reich, who served as labor secretary under President Bill Clinton. “I don’t think it is a major part of the job picture.”

Instead, many experts say, the job market is driven more by rapid productivity growth, allowing companies to accomplish more work with fewer workers; the introduction of new technologies, which destroy many jobs while creating many others; and the overall level of demand in the domestic economy.

Indeed, while nearly three million jobs were lost from March 2001 through August 2003, the recovery in the economy has added 1.4 million jobs since then. And despite the job losses, the Labor Department found during the first quarter, overall the economy added an estimated 595,000 jobs during that period.

The new data from the Bureau of Labor Statistics found that some 16,000 layoffs in the quarter had been due to the relocation of jobs.

Of those, more than 60 percent had been moved to another part of the United States. Of the reported 4,633 jobs lost to other countries, nearly two-thirds had been moved within the same company to a location abroad, while one-third were outsourced to another company.

American corporations have been putting operations in other countries for many years. But concern over offshore investments surged not long ago as companies took advantage of advances in telecommunications and other technologies to move a new set of operations, from customer service call centers to computer programming tasks, to lower-wage countries like India that are turning out educated software developers who are paid far less than Americans with comparable skills.

(By Permission, The New York Times)



Copyright © 2001-2004, Indian American Center for Political Awareness. All rights reserved.

India Abroad Center for Political Awareness Home Page Sitemap 1 5 6