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We do not subscribe to the notion that outsourcing reduces aggregate employment in the long run. Neither does technology or immigration. Rather, the issue is whether better jobs are replaced by worse ones. Better in terms of pay, fringes, working conditions, and job security. More broadly, the issue is whether we are getting more rather than less inequality.

It is easy to rest on the notion that employment always recovers from job losses due to outsourcing. This is tantamount to the idea that a country always recovers from aerial bombing. For families directly affected by outsourcing, there may be no recovery. Families have finite resources and working lives. A financial reversal can have permanet effects. Over and against this, there is the benefit of some minute change in consumer prices. As consumers we stand together, but as wage-earners we hang separately.

Some people defend outsourcing on the grounds that its ill effects could be alleviated by a non-existent safety net. This cold comfort for obvious reasons. We might add that the trend in the Federal budget makes any such safety net ever more unlikely. Nor is the liberal urge to balance the budget helpful in this dimension.

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According the BLS survey on Extended Mass Layoffs (more than 50 layoffs lasting more than 30 days), there were some 240,000 job separations in 2004Q1. For 4,600 of those – that is, less than 2% of those layoffs – overseas relocation was cited as the reason.

If you look at all job losses - and not just the ones involving mass layoffs - outsourcing is even less important. In this recent survey, it’s noted that that if the oft-cited estimate that 300,000 US jobs are lost to outsourcing every year (and there is apparently reason to believe that this is probably an overestimate), this works out to about half of 1% of employment in the nine sectors directly affected by outsourcing. When you consider that roughly 30 million jobs are lost in the US in a given year, that means that 1% of jobs lost in a given year can be attributed to outsourcing – and quite probably less than that.

[ 16 February 2005: Message edited by: Oliver Cromwell ]

(Which reminds me, I keep forgetting to find a copy of that.)

[ 17 February 2005: Message edited by: Mandos ]

Maybe the insecurity has more to do with living in an economy where 30 million people lose their jobs every year. In that context, the 300k lost to outsourcing is hardly worth worrying about.

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Maybe the insecurity has more to do with living in an economy where 30 million people lose their jobs every year. In that context, the 300k lost to outsourcing is hardly worth worrying about.

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Offhand, I'd guess that a principle concern would have to revolve around health insurance. If you or someone in your family has a pre-existing condition, losing your job can have drastic consequences. It's true that even more jobs are created, but if your new employer's insurer won't take you on, then you're toast.

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http://thelowestdeep.blogspot.com/2005/01/last-thought-on-taxes-and-health.html
http://thelowestdeep.blogspot.com/2005/02/how-elastic-is-demand-for-medical.html

As a financial commentator pointed out in a Report On Business article, the big three automakers are the last big industry in the US.

When China starts exporting cars, that will be the end of that.

At the same time, I read an article by a software writer in Financial Post who believed his work was secure because he didn't think people in India could figure out how to write software.

[ 17 February 2005: Message edited by: Oliver Cromwell ]