The Harsh Truth About Outsourcing

Business Week ^ | March 22, 2004 | Paul Craig Roberts

[Southack]

"You're neglecting the minor detail of state and local taxes."

Of the U.S.'s four most populous states (California, Texas, New York, and Florida), half of them have no state income taxes at all.

Nor does every city have an income tax.

So if you want to factor such things in, go right ahead...just don't expect me to do it for you (it's simply not worth my time and would hardly apply anyway).

[sarcasm]

Yes, but what your Canadian study doesn't point out is that more Americans obtain more education each year...making data on the educational level wages of 1960 meaningless compared to 2000 simply because so many more Americans fit into the "college" catagory now than back then.

What percentage of the population has a college degree? Those who do not still compose a majority of the workforce.

Your Canadian study also uses a non-standard CPI calculation to adjust their wage data, and even then they conclude that American wages increased (albeit at a slower pace).

The non-standard CPI calculation that they used was devised by the Clinton administration in an effort to show that real wages hadn't declined - a good try by Robert Reich.

[Texasforever]

What about state, local, property, and sales taxes? Oddly those have gone up.

Property taxes are tied to home values and state and sales taxes vary widely by state. I am not sure what the point is?

[Southack]

"What about state, local, property, and sales taxes? Oddly those have gone up."

Not in Texas, which has no state income tax...nor in Florida, which also doesn't have an income tax...nor in Tennessee or Nevada or Alabama or any large number of other states.

I suppose a few states have passed increases in their income taxes, but some others such as California have REPEALED some of their taxes (e.g. car tax).

Now if you want to factor all of that in, go right ahead, but that's a bit beyond my interest in this thread.

[Nick Danger]

I just don't see the point in allowing a nation like China to gain wealth.

I fully support your right to keep your own property out of the hands of the Chinese. I don't invest there myself. But as soon as I start thinking I have the right to tell other people what they can do with their money, I have to sign up for them telling me what I can do with my money. Collectivism works both ways. I don't want any part of it.

[lelio]

I am not sure what the point is?

That overall taxes have gone up. While people can point to recent decreases in federal tax rates (which are accompanied by an increase in the deficit) more services are pushed to the state level, and people have to pay more taxes then. You have to pay the piper.

Plus I don't consider it to really be lowering taxes if the deficit increases. Its just pushing payments further out.

[sarcasm]

Sure - only 43 states have income taxes. A minor detail which shouldn't concern anyone.

[Southack]

"The non-standard CPI calculation that they used was devised by the Clinton administration in an effort to show that real wages hadn't declined - a good try by Robert Reich."

Nonsense. The *actual* U.S. Government CPI, as linked in Post #50 on this very thread, shows that real, inflation-adjusted wages have INCREASED.

That hardly creates a demand for some new hybrid CPI calculation to show that wages haven't declined. That sort of thinking won't even pass the smell test...

[Southack]

"Sure - only 43 states have income taxes. A minor detail which shouldn't concern anyone."

That's very true (finally). It shouldn't concern anyone since the point of contention was how many had *raised* their taxes, not that simply had them...

[sarcasm]

That hardly creates a demand for some new hybrid CPI calculation to show that wages haven't declined. That sort of thinking won't even pass the smell test...

If you don't believe me why don't you research the issue?

[sarcasm]

That's very true (finally). It shouldn't concern anyone since the point of contention was how many had *raised* their taxes, not that simply had them...

I suspect a goodly number have - mine sure have increased, even though we have a {cough} Republican governor.

[Southack]

"That overall taxes have gone up. While people can point to recent decreases in federal tax rates (which are accompanied by an increase in the deficit) more services are pushed to the state level, and people have to pay more taxes then. You have to pay the piper."

So the answer to your question would reside in whether or not you can show that half or more states have raised their income taxes since the Bush tax cuts.

Can you show that, or is that not the case?

[Texasforever]

Plus I don't consider it to really be lowering taxes if the deficit increases. Its just pushing payments further out.

Not really unless you believe economic growth will be flat from now on.

[Southack]

That hardly creates a demand for some new hybrid CPI calculation to show that wages haven't declined. That sort of thinking won't even pass the smell test...

"If you don't believe me why don't you research the issue?"

What an ABSURD thing to say! Are you a listbot? Am I talking to a program rather than a person...because a cognitive human adult should reasonably be able to comprehend that I *already* researched the issue in order to first post the official U.S. government data showing wages are up (message #50, this thread) as well as listed examples of increases in personal wealth nationally (e.g. air conditioning in 98% of Southern homes now versus 1959, more cars per household, more Americans now own their own homes than back then, more Americans invest in the stock market, those stock market portfolios are larger now than then, etc.).

But all of a sudden I'm starting to have the opinion that I'm talking to last-word-itus software that simply tries to be annoying for as long as any humans will dare to post to it...

[Starwind]

Wages of US workers in real terms have generally decreased. They are lower than what they were in the '70's and '80's.

Here is the BLS data series CES0500000051 published in the BLS monthly Real Earnings releases for Total Non-Farm Average Weekly Real wages in 1982 Dollars:

Series Id:     CES0500000051 Seasonally Adjusted Super Sector:  Total private Industry:      Total private Data Type:     AVERAGE WEEKLY EARNINGS, 1982 DOLLARS
Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Annual
1970	314.15	314.46	313.90	311.58	312.65	311.17	312.30	313.36	311.94	311.32	309.85	311.86
1971	312.90	313.06	314.82	315.06	316.08	317.19	315.69	317.54	318.42	319.39	320.38	322.34
1972	327.62	328.58	329.53	331.23	330.44	331.41	330.69	331.63	332.70	334.60	333.77	333.87
1973	334.01	334.26	333.82	332.34	331.78	331.94	333.64	327.99	328.76	326.66	327.23	324.96
1974	321.48	319.78	318.04	317.23	317.94	318.31	317.25	316.39	314.08	312.91	308.37	308.09
1975	306.48	304.43	303.58	303.33	304.92	305.32	303.23	306.41	304.97	304.63	305.03	305.53
1976	306.05	308.55	306.71	306.90	309.16	308.81	309.09	309.70	309.43	308.22	309.59	309.24
1977	306.39	309.66	309.05	310.23	310.46	310.21	309.59	309.73	309.97	312.68	311.54	310.34
1978	306.85	309.66	311.22	312.10	310.91	312.12	311.41	310.31	310.13	309.66	308.56	308.38
1979	307.37	306.78	306.65	298.65	300.82	299.52	297.84	296.97	296.20	294.47	293.28	291.83
1980	286.69	286.14	283.85	281.18	279.40	278.12	278.64	280.31	279.67	280.40	280.81	279.89
1981	280.85	278.05	279.63	279.35	279.07	278.07	276.33	276.59	274.20	274.86	275.52	273.12
1982	268.82	276.22	276.00	274.72	274.33	271.74	271.77	271.91	272.69	270.47	271.68	274.65
1983	276.54	275.53	276.30	276.23	277.29	277.43	277.98	275.63	277.91	280.38	279.39	279.45
1984	279.53	280.26	280.00	281.60	279.67	280.47	280.47	277.33	278.14	275.72	277.15	278.73
1985	276.37	275.27	276.01	275.89	275.71	276.23	275.18	275.88	276.32	274.77	274.48	275.59
1986	274.78	274.87	276.90	277.35	277.96	276.23	275.75	276.92	275.14	275.51	276.80	275.58
1987	274.98	276.27	274.09	273.20	274.18	272.22	271.81	274.00	271.80	272.54	273.32	271.58
1988	271.19	271.52	269.85	270.72	271.26	270.65	270.72	268.34	268.65	270.74	269.09	269.55
1989	270.42	268.83	267.88	267.89	264.53	264.99	266.29	266.55	266.23	268.36	265.77	265.30
1990	264.41	264.21	265.02	264.17	264.29	264.96	263.51	260.90	259.98	258.20	258.69	258.44
1991	257.68	258.18	257.54	257.97	257.77	258.95	259.07	258.75	258.75	259.38	258.00	257.99
1992	257.81	257.99	257.98	259.43	258.61	257.43	257.93	258.35	258.38	257.45	257.39	257.33
1993	258.32	258.02	257.33	258.88	258.13	258.01	259.06	258.30	259.35	258.58	258.93	259.10
1994	259.39	258.46	260.20	260.54	260.48	259.90	260.31	258.75	258.17	259.89	259.43	259.60
1995	259.15	258.84	258.79	257.47	256.67	257.81	258.53	258.46	258.80	259.02	259.29	258.31
1996	255.06	258.78	258.23	257.96	258.49	260.22	259.40	259.94	260.74	260.36	260.62	260.82
1997	260.43	262.11	263.17	264.20	264.50	263.88	265.12	266.73	266.55	266.93	268.43	269.07
1998	269.58	270.80	271.07	271.75	271.76	271.06	271.78	273.12	272.78	273.54	273.84	273.80
1999	273.59	274.37	274.24	274.42	275.12	275.73	275.61	275.61	275.36	275.28	275.36	275.36
2000	275.93	275.60	273.89	276.20	275.51	274.75	274.95	275.05	274.49	276.00	275.50	274.39
2001	274.64	274.10	275.87	274.89	274.12	274.42	275.75	275.51	274.08	274.86	277.27	279.28
2002	277.83	278.28	277.76	277.38	277.34	279.99	278.29	279.09	279.41	278.90	279.30	280.07
2003	279.00	278.16	277.49	276.67	279.19	279.29	279.24	278.08	277.33	278.96	281.09	278.80
2004	279.68(p)	279.48(p)
p : preliminary

You can verify the source yourself. Go to http://data.bls.gov/cgi-bin/surveymost?ce and check "Total Private Average Weekly Earnings, 1982 Dollars - Seasonally Adjusted - CES0500000051" then retrieve the data and chnage the year range to include 1970-2004.

[Myrddin]

I was hoping they'd explain how Europe and Japan can outsource to us and do Okay but our corporations have to outsource to "developing nations'" cheap labor to survive.

Europe has a high labor cost/tax structure compared to the United States. My company bid software work at a schedule and price that no European company could legally match. That was in 1998. An Indian company could have eaten our lunch with their much lower labor rates (comparing rates today). The Indian competition was not there in 1998. It is here now. The 15 engineers that implemented the 1998 contract are now spread all over the U.S. in new assignments. They can not economically compete from the San Diego office that was so viable in 1998.

BTW, an Indian company could kick our butts on labor rate today, but I seriously doubt they could beat us in the areas of quality and schedule. For short fuse projects, we can deliver the goods before the Indians can even figure out what is desired.

[sarcasm]

You're becoming testy and increasingly obnoxious. I merely stated that you might research the CPI-U-X1 and the connection with Robert Reich.

BTW, I still reject your conclusions. It's also laughable that you would call me a "listbot" while repeating the same argument that I already dismissed.

[sarcasm]

Thank you!

[Southack]

BLS Shows Average Real Wages Higher in 2004 Than in 1964

Your BLS source shows a net *rise* in wages if you go back beyond the stagflation spike of the early 1970's (when unemployment was high and far fewer women and minorities were available to the skilled labor pool). Click on the link above to illustrate.

[lelio]

Thanks for the informative post. From what I can tell it looks like Reagan put the brakes on what was a drastically reducing weekly salary (that fall of in just 1979 is scary), and then it started to fall under Bush I. Rose under the last bit of Clinton's term, probably mainly due to the dot com economy. Too soon to tell what's happening to wages right now.