US outsourcing - big or small, friend or foe?

Andrea Hopkins

WASHINGTON: While the US economy is finally churning out jobs, years of anger over outsourcing have left a huge hangover: politicians are wrangling over it and workers still feel threatened by it, even though no one agrees on the numbers.

The latest furor over the shift of jobs to low-wage countries was sparked by a government report that found only 2.5 percent of first-quarter mass layoffs were caused by offshore outsourcing, suggesting national hand-wringing over the issue was overdone.

While supporters of outsourcing -- including employers who rely on cheaper foreign labor as one way to cut rising costs -- hailed the data as the first sensible word on an emotional issue, they braced for the backlash.

"That's not what people want to hear. What they want to hear is that it was all outsourcing," said Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers.

The controversy over the loss of U.S. jobs to foreign workers has raged as the nation struggles to create jobs in the wake of the 2001 recession.

A May survey of 1,000 Americans conducted for the Employment Law Alliance, an independent network of labor attorneys, found 6 percent of workers had lost a job because work was sent offshore, while nearly 30 percent knew someone else who had. One in 10 felt their jobs were under threat.

Still, many don't see the pink slip coming.

"We thought our jobs are pretty secure here," said one high-tech worker at Dell Inc. in Austin, Texas, who was laid off about two weeks ago after he returned from vacation. Four others on his team of product testers were also sacked.

"They said the client side is being handled by our group in China, and the service side is going to be handled by testing in India," said the worker, who declined to be identified because he still hopes to find another job with the No. 1 computer maker.

ONE BY ONE

The lack of concrete data showing how many jobs have been lost has muddied the outsourcing debate -- and critics say the new Labor Department study has done little to help.

For one thing, the report would not have counted the jobs lost by the five Dell workers because it measured only mass layoffs of 50 or more workers from large companies -- not the thousands of jobs that trickle away one by one.

Thea Lee, assistant director for international economics at the AFL-CIO labor group, said the study was also misleading because it counted outsourcing as a fraction of the massive churn of jobs that occurs in the country -- such as when a worker switches from one employer to another -- rather than as a much larger percentage of permanent job losses.

Lee said perhaps the most questionable aspect of the data was that it did not audit the reasons for the layoffs, allowing employers to avoid the politically sensitive outsourcing label if they could pass job cuts off as due to restructuring.

"It is easier for them to give one of the other reasons as opposed to offshore outsourcing. Everyone understands these number are politically very charged and ... they'd just as soon have this not be a big political issue," Lee said.

Using the yawning trade deficit as a measure of investment flowing offshore, Lee estimates a third to half of all jobs lost in recent years disappeared due to outsourcing.

In Austin, the laid-off Dell worker worries worse is yet to come, noting that up to 80 percent of jobs at the computer giant can be done remotely -- though not, he argues, as efficiently.

"I interviewed yesterday for a position and that manager told me we're all in the same boat -- eventually that's going to happen to all of us," he said. "The feeling around here is that everyone's job is in jeopardy."