WASHINGTON DISPATCH

 

Nation Losing More Than Unskilled Work


By Peter G. Gosselin

Times Staff Writer


October 20, 2003


WASHINGTON — America emerged from its last binge of "offshoring" with a comforting story about how it could win in the great global reshuffling of labor.


Promoted by then-candidate Bill Clinton in the early 1990s and embellished by a slew of tech gurus, the story said that we could afford to lose jobs to countries such as Mexico and Taiwan because most involved low-skill "muscle" work — the departure of which would free us up for what really mattered, namely high-skill "mind" work.


With the nation once again gripped by the fear that it's losing its economic essentials, what is today's comforting story?


Answer: There is none.


"What was so nice about the old story line was that it drew a bright line between who was immune to global competition and who wasn't, and left us the better half," said Gary C. Hufbauer, a senior fellow with the Institute for International Economics, a Washington think tank. "This time it's not so clear. There's no broad-based happy story."


Indeed, though much of the worry about offshoring these days is focused on the loss of U.S. manufacturing jobs, what's most unsettling about the recent outflow of work is that it includes a hefty chunk of the very high-skill, white-collar "mind" jobs that were supposed to be America's strong suit.


Just ask John C. Napier. The 53-year-old electrical engineer was laid off by data-storage giant EMC Corp. in mid-2001. He said that the Hopkinton, Mass., company subsequently shifted the product development work he was doing to India. (An EMC spokesman says the firm recently opened an Indian facility, but that no U.S. workers have lost jobs to it.)


"There's a lot of airy-fairy talk about how the U.S. benefits every time a job goes overseas because the work's done for less and another American is available for more productive purposes," Napier said. "But it looks to me as if the benefit goes to the country that gets the job."


A recent study by consulting firm Economy.com concluded that about one in every five jobs to leave the country since 2000, or almost 200,000 positions, was in information technology, finance or business and professional services — all types of work that the muscle-to-mind story promised would remain firmly planted here.


A second, widely cited forecast by Forrester Research Inc. estimated that by 2015 about 3.3 million U.S. jobs would move offshore, all of them in services — and many in such high-end occupations as life sciences and law.


A third report by market researcher Evalueserve Inc. suggests that 10% of the nation's 140 million workers are in jobs that are open to being shifted offshore. Although company Chairman Alok Aggarwal said he didn't expect "anything like that number to actually move," others are not so sure.


"These are conservative estimates," said Forrester Vice President Stephanie Moore. "Networks and satellites make it possible to shift a whole class of high-knowledge-content jobs Bill Clinton couldn't even have envisioned when he was talking in the early 1990s."


As international economist Hufbauer puts it: "If your job can be digitized, it can be moved."


What's as striking as the recent job losses themselves is how different the response to them has been compared with a decade ago. Politicians who were once reliable advocates of open borders and free trade have suddenly begun manning the barricades.


The Bush administration has sought to protect manufacturing jobs with steel tariffs that it previously opposed and has suggested it may do something similar for white-collar service jobs. A bipartisan group in Congress recently blocked efforts to extend a program tripling the number of foreign professionals, especially Indian computer programmers, who can work here.


Compare this with President Clinton teaming up with congressional Republicans in 1994 to jam through the North American Free Trade Agreement on the grounds that in any global competition for jobs and growth America was sure to come out on top.


The current crop of economists, meanwhile, has generally asserted that there was nothing to worry about. Some have maintained that the number of jobs escaping overseas was comparatively small, so that the trend posed no great threat to the United States. Others have said that by making the world more efficient, offshoring actually helped the U.S. economy and U.S. workers.


Neither response is as persuasive as the muscle-to-mind story of the 1990s, and neither sits well with those most affected by the latest round of job shifts.


If the numbers are so small, Seattle University faculty member Jeff Gilles asks, why did the school have to revamp its computer science curriculum this year to steer away from areas where jobs are vanishing in droves and toward specialties where the work is likely to stay put for now?


"We saw the trend, and it's one that's not going to go away," he said, "so we had to respond." Specifically, Gilles explained, the university has shifted its concentration from such things as software development, which increasingly is done overseas, to "business integration" — writing the one-of-a-kind code that lets companies tailor off-the-shelf programs to their needs.


As for Napier, the former EMC engineer, he has his own question: If the benefits of offshoring are so great, why is he still out of work?


His answer is that economists overlook a crucial detail: "The people who get forced out of the old jobs that go overseas are not the ones who get the new jobs."


The fact is, this time around, just like the last, Americans are being asked to make a leap of faith — that the U.S. economy will once again respond by finding ways to create new jobs and raise living standards. Only this time, they're being asked to make that leap without the benefit of a comforting story.