March 4, 2004
All Jobs Count
Nobody can say for sure how many U.S. jobs will be "offshored" to places such as India, but the best estimates are around 3.5 million between now and 2015. If that number sounds scary, try this one: The total number of U.S. jobs destroyed over the same period is likely to be well over 300 million. Capitalism eliminates jobs constantly, but except during recessions it creates new ones even more quickly: In 1999 alone, 33 million jobs were destroyed and 36 million created.
In short, the loss of a few hundred thousand jobs per year to offshoring is a small part of the churning that goes on in the U.S. labor market. Precisely because every job loss is painful, it makes more sense to think of ways of stimulating employment generally than to craft legislation to address 1 percent of the problem.
That has not stopped state and federal legislators from touting 1 percent solutions. Sen. John F. Kerry, the leader in the race for the Democratic presidential nomination, has sponsored a measure to require phone-based service workers -- IT support people and so on -- to inform callers of their location. A measure buried in the recently signed omnibus spending bill stipulates that certain work for the federal government may not be done overseas. According to the National Foundation for American Policy, more than 30 bills have been introduced in more than 20 states, including Virginia and Maryland, seeking to regulate or slow offshoring.
These efforts are misguided, and not just because they are the equivalent of trying to stop illegal immigration by reinforcing the patrol on a 10-mile section of the Mexican border. Why, for example, is it important that consumers know if their call is being answered in Bangalore or Austin? If the service is poor, they can take their business elsewhere; if the service is good, what's the difference? The answer is that there isn't any difference, which is why there is no consumer outrage on this issue. There is, however, political outrage, reflecting insecurity over jobs -- insecurity that really reflects the lack of new job creation in the economy overall, not the small phenomenon of offshoring.
Restrictions on government contract work being done abroad are no more logical. If pursued at a federal level, they undermine the U.S. position in global trade diplomacy: The United States has pressed for government procurement around the world to be open to international competition. At a state level, procurement restrictions create a new layer of red tape that is more costly than it's worth. In New Jersey, for example, a contract with a call center was canceled because 12 jobs would have moved abroad; the extra cost to the state's taxpayers was $900,000. Marylanders, beware: Two bills restricting state contracts are floating around the legislature.
Politicians want to be seen responding to the job anxiety of the moment. But they would do better to think big about the job market. They should struggle to improve public education. They should invest more in retraining for laid-off workers. They should minimize taxes that directly penalize job creation. And they should fight against changes in the tax code that benefit the wealthy, exacerbating the inequality that technology and globalization tend to accentuate.