Federal Reserve Board Vice Chairman Roger Ferguson

The number of service jobs in the United States that are migrating to lower-wage countries appears to be relatively small compared to overall em-ployment in the U.S., said a top U.S. central bank official.

In remarks to the Cato Institute in Washington on Oct. 7, Federal Reserve Board Vice Chairman Roger Ferguson warned against overstating the impact of “outsourcing.” Outsourcing has become increasingly popular due to the growth of the Internet and other communication tools. The issue has stirred debate during the U.S. presidential campaign, with voters consistently citing job insecurity as a major area of concern.

Ferguson, however, indicated that outsourcing seems to be having a limited impact on U.S. employment.

Although he acknowledged the absence of any “conclusive data,” Ferguson cited a study by the Forrester research firm projecting that fewer than 300,000 jobs a year will be displaced through services outsourcing over the next decade –– “less than 2 percent of the 15 million in total gross job losses” expected during that period.

Ferguson also argued that “only a fraction” of those jobs represent high-skill, high-wage jobs and that the United States itself gains employment by performing service jobs for other countries. “We must not exaggerate the importance of outsourcing to the nation’s overall employment picture,” he said.

He also warned against erecting trade barriers to prevent jobs from leaving the U.S.

“The proper response to the disruptions associated with trade is not to reduce trade, but rather to ameliorate the pain associated with those disruptions through enhanced assistance and retraining for displaced workers,” Ferguson said. Ferguson said that past corrections of large external trade and investment imbalances in industrial countries generally have happened without crisis. “Whether or not this will remain the case, I am confident that protectionism is not the appropriate response to our growing current account deficit,” he said.