Job stats undercut offshore fears

This year, offshore outsourcing is the hot-button economic issue. But just how many jobs are actually sent overseas?

According to a report from the U.S. Bureau of Labor Statistics (BLS), the number of American jobs lost to “overseas relocations” totaled 4,633 during the first quarter of 2004. This accounts for only two per cent of the nearly 240,000 jobs lost during that time. In fact, domestic outsourcing (jobs going from one American company to another) claimed more than twice as many positions (9,900) as offshore outsourcing did.

When the report was initially released in June, sentiment among the media seemed to imply that the impact of outsourcing on U.S. job losses has been greatly exaggerated. But some economists say the report doesn’t tell the whole story of outsourcing.

“There’s no problem with the numbers, just the interpretation,” says Charles McMillion, president and chief economist at MBG Information Services, a business information, analysis and forecasting company. McMillion points out that the report includes statistics gleaned only from companies that laid off 50 or more employees — a snapshot, he says, that “represents maybe three per cent of the job turnover at any given time.”

The real impact of outsourcing isn’t captured in the BLS report, McMillion says. “With product cycles as short as they are, and a dynamic labour market, the economy needs to generate large numbers of jobs,” he says. A better gauge of offshore outsourcing’s impact on the U.S. economy is not how many jobs are lost to it, but how many jobs are never created in the first place.

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Jim Love, Chief Content Officer, IT World Canada

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