Posted on 04/08/2005 11:00:44 AM PDT by churchillbuff
In March, the U.S. economy created a paltry 111,000 private sector jobs, half the expected amount. Following a well-established pattern, U.S. job growth was concentrated in domestic services: waitresses and bartenders, construction, administrative and waste services, and health care and social assistance.
In the 21st century, the U.S. economy has ceased to create jobs in knowledge industries or information technology (IT). It has been a long time since any jobs were created in export and import-competitive sectors.
The Bureau of Labor Statistics forecasts no change in the new pattern of U.S. payroll job growth. Outsourcing and offshore production have reduced the need for American engineers, scientists, designers, accountants, stock analysts and other professional skills. A college degree is no longer a ticket to upward mobility for Americans.
Nandan Nilekani is CEO of Infosys, an Indian software development firm. In a Feb. 18 interview with New Scientist, he noted that outsourcing is causing American students to "stop studying technical subjects. They are already becoming wary of going into a field which will be 'Bangalored' tomorrow."
Bangalore is India's Silicon Valley. A 21st century creation of outsourcing, Bangalore is a new R&D home for Hewlett-Packard, GE, Google, Cisco, Intel, Sun Microsystems, Motorola and Microsoft. The New Scientist reports: "The concentration of high-tech companies in the city is unparalleled almost anywhere in the world. At last count, Bangalore had more than 150,000 software engineers."
Meanwhile, American software engineers go begging for employment, with several hundred thousand unemployed. I know engineers in their 30s with excellent experience who have been out of work since their jobs were outsourced four or five years ago. One is moving to Thailand to take a job in an outsourcing operation at $875 a month.
A country that permits its manufacturing and its technical and scientific professions to wither away is a country on a path to the Third World. The mark of a Third World country is a labor force employed in domestic services.
Many Americans and almost every economist and policymaker do not see the peril. They confuse outsourcing with free trade, and they have been taught that free trade is always beneficial.
Outsourcing is labor arbitrage. Cheaper foreign labor is being substituted for more expensive First World labor. Higher productivity no longer protects the wages and salaries of First World employees from cheap foreign labor. Political change in Asia has made it easy to move First World capital and technology to cheap labor, and the Internet has made it easy to move cheap labor to First World capital and technology. When working with First World capital and technology, foreign labor is just as productive -- and a lot cheaper.
This is a new development. It is not a development covered by the case for free trade.
Outsourcing's apologists claim that it will create new jobs for Americans, but there is no sign of these jobs in the payroll jobs data. Moreover, it doesn't require much thought to see that the same incentive to outsource would apply to any such new jobs. By definition, outsourcing is the substitution of foreign labor for domestic labor. It is impossible for a process that replaces domestic employees with foreigners to create jobs for domestic labor.
Now biotech and pharmaceutical jobs and innovation itself are being moved offshore. The Boston Globe reports that Indian chemists with Ph.D. degrees work for one-fifth the pay of U.S. chemists. American chemists cannot give up 80 percent of their pay to meet the competition and still pay their bills. Rising interest rates will make it difficult enough for Americans to make their mortgage payments, and the dollar's declining exchange value will raise the prices of the goods and services that have been moved offshore.
Americans are unaware of the difficult adjustments that are coming their way. By the time Americans catch on to outsourcing, its proponents will have changed its name to "strategic sourcing" or "partnering."
Corporations, economists and politician have written off American labor. No end of the job drought is in sight.
I'm no fan of outsourcing but it's rapidly becoming an urban myth that we've outsourced most of the jobs in the nation. Last I checked it was in the low single percent.
Fact: The unemployment rate dropped from 5.4 to 5.2.
Fact: When the rate is dropping, we're going in the right direction.
Fact: 5.2 is a wonderfully low unemployment rate -- Europe would kill for that.
The ones that go will come back when the consuner starts to complain about heavy accents and such.
The security issue hasn't begun to be addressed in regards to sensitive personal ( ie taxes ) or company info being in the hands of someone in a country in which we have no prosecutorial authority.
No, it focuses on the kinds of jobs -- and his numbers says they're low-end. I know that people in my family who trained for high-tech can get other (less paying) jobs. What Roberts is pointing out is that the tech jobs are going overseas.
Haven't we been moving toward a service economy for decades? Plumbers, auto mechanics, tradesmen command lots of money yet they are begging for more workers. I also have heard that mfg jobs have stabilised and in some areas are increasing. The days of working at the factory are long gone. Most economists are pessimists.
Haven't we been moving toward a service economy for decades? Plumbers, auto mechanics, tradesmen command lots of money yet they are begging for more workers. I also have heard that mfg jobs have stabilised and in some areas are increasing. The days of working at the factory are long gone. Most economists are pessimists.
That's funny. You mean we have to move to India to get a job in a USA company?
I've decided that economists simply can't be believed. They all have investments of their own, and they have a financial incentive to make public statements that could improve the performance of those investments.
Not a joke, this country is heading down the tubes job-wise. Third world, here we come. It's getting almost too late to do a thing about it.
I know an IT guy, whose company outsourced some stuff to India. Well after the Indians screwed up the contract, took them twice as long to perform with triple the workers and the time zone diffrence, the company moved the work back herer.
According to this report
http://www.bls.gov/news.release/empsit.nr0.htm
Average hourly earnings went up 4 cents in March, hard to believe that happened if all the new jobs were low end.
The tech overseas push is ending. Too many failed projects, too many customer complaints, secondary costs are too high.
Yep... the cultural differences alone are enough to have a large impact on performance, and that is almost never taken into full account.
Translation: The market is working..
Why do you have one?? Since when a job is a right??
Not outsourcing necessarily, but just look around the IT departments at most US corporations in US-based offices. Let's just say that native US citizens are definately a minority.
We're doomed!!!! Unless we have the government in how to run a business correct??
Maybe to a degree, but I think that Penwar the engineer in India may be a sharp mathematical wizard but doesn't have a clue on what Americans need or want. Somethings will come back.
Anything that has to do with defense or nuclear energy should be covered by law as un-outsourcable.
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