Even high-skill jobs aren’t safe from outsourcing

Once upon a time, we used to write editorials saying that the best way for individuals to respond to global competition was to increase their work skills. That was back when the jobs being outsourced were mostly low-skill manufacturing. But those days are long gone. Not only have many highly skilled jobs, such as computer programming, moved overseas, more and more research and development work is going to China, India and elsewhere, according to a new study released last week. In fact, a survey of more than 200 multinational corporations found that 38 percent of them planned to “change substantially” the worldwide distribution of their research and development work during the next three years.
As broadcaster Edward R. Murrow used to say: Good night, and good luck.
Posted by Phillip Brownlee

48 Comments

  1. morg
    Posted February 20, 2006 at 12:37 am | Permalink

    And to think 60% of those corporations payed no tax last year. All goods and services produced by these companies should be heavily tariffed.

  2. morg
    Posted February 20, 2006 at 12:41 am | Permalink

    Interesting facts about all things economic in USA.

    http://www.mbginfosvcs.com/

  3. writerdog
    Posted February 20, 2006 at 2:35 am | Permalink

    Gee Phil what have you been thinking when sevral people have said this for years? That they were just being alarmist? There were just many higher jobs to be had and the companies have cut cost by taking EVERYTHING oversea’s.

    Even the jobs like call centers and tech support have left the country. Try talking with SBC Yahoo tech support, they speak a fashion of english and call themselves “Steve” or “Julie” but the accent and demeaner are from India! Most of the call is, “What did you say? No I am sorry what did YOU say?”.

    Still think this country is not in real trouble? We have more then Al-Qaeda to face as an enemy to the American way of life!

  4. Sum1
    Posted February 20, 2006 at 4:43 am | Permalink

    I’d like to see a report that detailed what job/skill left the country and their pay scales.Balance this against the new job creation and their pay scales.

    One thing that I’ve noticed, if a corporation offshores to a company owned by the corporation they dont’ call it offshoring.

    Do the studies show them as being offshored, or is this a category that gets swept under the rug?

  5. Joe Williams
    Posted February 20, 2006 at 6:23 am | Permalink

    Good for those who are getting jobs. I know they are much needed in India and China.

  6. Damoon
    Posted February 20, 2006 at 7:23 am | Permalink

    And you call yourself patriotic, Joe?Have you thought about moving to China? I hear there are lots of jobs there.

  7. writerdog
    Posted February 20, 2006 at 7:24 am | Permalink

    Joe your sense of humor is beyond par. I know you always wanted to move to India or China but were just waiting for some jobs to open up! We in the United States will miss you, keep in touch ole friend.Perhaps as you set in your new home you can give us poor American a job cleaning out your gutters or washing your car.

    Fell well Joe.

  8. steve
    Posted February 20, 2006 at 8:43 am | Permalink

    The only type jobs which can’t be easily outsourced are in the service sector. Unfortunately, Bush has an illegal immigration plan to cover that.

  9. steve
    Posted February 20, 2006 at 8:45 am | Permalink

    I’ve always wondered if companies which acquire components and assemblies outside the U.S., have those low cost products in the U.S. GDP. Anyone an economist?

  10. BruceSpringsteen
    Posted February 20, 2006 at 9:05 am | Permalink

    “My daddy come on the Ohio WorksWhen he come home from World War Two.Now the yard’s just scrap and rubbleHe said, ‘those big boys did what Hitler couldn’t do.’

    These mills, they built the tanks and bombsThat won this country’s warsWe gave our sons to Korea and VietnamNow I’m wondering what they were dying for.

    Here in Youngstown, Here in Youngstown,My sweet Jenny I’m sinking down,Hey, darling in Youngstown.

    From the Monongahela Valley to the Masabi Iron RangeThe coal mines of AppalachiaThe story’s always the sameSeven hundred tons of metal each dayYou tell me the world’s changedOnce I made you rich enough, rich enough to forget my name.

    Here in Youngstown, Here in Youngstown,My sweet Jenny I’m sinking down,Hey, darling in Youngstown.

  11. GeorgeOrwell
    Posted February 20, 2006 at 9:30 am | Permalink

    War, it will be seen, is now a purely internal affair. In the past, the ruling groups of all countries, although they might recognize their common interest and therefore limit the destructiveness of war, did fight against one another, and the victor always plundered the vanquished.

    In our own day they are not fighting against one another at all. The war is waged by each ruling group against its own subjects, and the object of the war is not to make or prevent conquests of territory, but to keep the structure of society intact. The very word ‘war’, therefore, has become misleading. It would probably be accurate to say that by becoming continuous, war has ceased to exist.-Orwell

    “The illusion of freedom will continue as long as it’s profitable to continue the illusion. At the point where the illusion becomes too expensive to maintain, they will just take down the scenery, they will pull back the curtains, they will move the tables and chairs out of the way, and you will see the brick wall at the back of the theatre.”

    ~ Frank Zappa, 1977

  12. XXX
    Posted February 20, 2006 at 10:11 am | Permalink

    Joe, that’s about as traitorous a thing as I’ve heard in a while.

    I’m one of the lucky ones. My job can’t be “outsourced”. But a lot of the people I work with aren’t as fortunate. The company I work for has tried outsourcing with mixed results. When you add in customer service, delivery time, and quality issues, outsourcing isn’t such a grand idea.

  13. MOTHER
    Posted February 20, 2006 at 10:20 am | Permalink

    XXX,I don’t know that I would call Joe’s statement traitorous; stupid maybe. He is entitled to his opinion, misguided as it is.But maybe in his quest on finding a new job overseas, he might get lucky and be pronounced on of these: http://www.sickjokes.net/index.php/2006/01/30/microsoft_s_employee_of_the_month

  14. Joe Williams
    Posted February 20, 2006 at 10:28 am | Permalink

    XXX. That’s good. Let these companies learn how some outsourcing will be a failure or bad for their business.

    Manufacturing will come back to the United States in the form of Micro-manufacturing. It’s an up-and-coming trend. But It’s got to stay non-union or it will kill it and companies will continue to fine hard work ethic employees overseas.

    Unions don’t like technological change or streamlining of business operations, because some people will lose their jobs. Well! That is life. We have to get used to it. Life has been this way forever.

    XXX. I’m no taitor. I care about every person in the world, regardless if they are an American or not. If a poverish person in Africa or Asia finds a job and it happens to be an American owned factory, good for those people working.

    We are ok in America. With unemployment at 4.7%. Lowest than any place in the world. So I’m not worried about us in America, so long as socalist leftist liberals don’t control our political system, we will be ok and there will be plenty of jobs.

    There aren’t people starving in America, but there are people starving in India, China, and Africa and handouts haven’t help them for decades, but Industry, commerce is.

    If you want to deny a poverish person a change to get out of poverty no matter where they are at, then you are a heartless person and not worthy to be called an American.

    Being a selfish protectionist isn’t the best way to go about in our global economy.

  15. RustyFord
    Posted February 20, 2006 at 10:31 am | Permalink

    Joe, to quote from another of your crude comments: “If you don’t like it here, you can leave.”And don’t move slow enough for the door to hit your backside on the way out.

  16. Joe Williams
    Posted February 20, 2006 at 10:35 am | Permalink

    I never said I wanted to leave the USA. What are you guys talking about?

    All I said what good for those people getting jobs in China and India. What is wrong with that?

    If there is a plant opening up in a small town in Ohio. Well! Good for those people that are getting it.

    I’m just a compassionate person. This “you can leave. Don’t let the door hit you on the way out” I have no idea what you guys are talking about. Just spin from the left I guess.

  17. ksfarmgrrl
    Posted February 20, 2006 at 10:53 am | Permalink

    More Joeisms :)

    “There aren’t people starving in America.”

    “What are you guys talking about?”

    “I’m just a compassionate person.”

    “I have no idea what you guys are talking about. Just spin from the left I guess.”

    Good morning Joe. I love a great laugh in the morning. Do we amuse you as much? Seriously, I admire your tenacity and your willingness to keep posting. I am glad you are here, and that is no smart alec comment. I admire your consistency too. Keep posting dude, we need you for this blog to be fair and balanced.

  18. Brian
    Posted February 20, 2006 at 10:54 am | Permalink

    Joe,The point is that high paying R&D jobs worldwide is almost a zero sum game now. What we lose, someone else gets. So that means that the US is losing the ability to maintain its standard of living, and even worse, it is losing the infrastructure and the trained manpower to even make a stand on these issues.

    Yeah, yeah, you can claim that the unemployed scientists and engineers can go out and start up their own businesses..that’s where innovation comes from. Do yoiu know how difficult that is? Less than about 2 out of every 100 ideas make it to market…and funding a new business is a bureaucratic and monetary nightmare. Finally, most small start-ups end up partnering with large corporations who can supply critical manpower and resources. If that manpower and those resources are gone, what then? We’re not even funding our university researchers at a level to maintain global competitiveness.

  19. XXX
    Posted February 20, 2006 at 11:44 am | Permalink

    Mom, I’m sticking to my guns…He’s a traitor. Anybody that advocates the weakening of the US for the benefit of another country is a traitor.

    “But It’s got to stay non-union or it will kill it and companies will continue to fine hard work ethic employees overseas.”

    Joe, I doubt if you’ve ever been a union member or worked closely with unions. I hire a lot of contractors, and they’re exclusively union. That way, I know that they have the skill sets I require.

    “Unions don’t like technological change or streamlining of business operations, because some people will lose their jobs.”

    Joe, you’re full of shit. I won’t even waste the time to explain how wrong you are. You’re obviously one of the “ME” generation. Your youth and inexperience show in all of your posts. One of these days, hard reality is going to smack you right in the face and maybe, just maybe, you’ll gain some insight.

    “There aren’t people starving in America.”

    What freaking planet are you from? Do you have any idea how many people live in poverty in this country? How many children go to bed hungry? It aint all sunshine and blue skys, boy.

    Sorry Joe, I used to have some respect for you, but you just made my “Moron” list.

  20. flike
    Posted February 20, 2006 at 11:51 am | Permalink

    I agree, Brian.

    The US used to have the most successful model in the history of the human race: government funded primary research, conducted in universities all over the country, the results of which were freely published and available for use by (almost) any industry. From there industry scientists ran with the ball to their own benefit.

    It’s the primary research part, the goose that laid our golden egg, that has now been so severely damaged by partisan politics that, as you note, an American recovery may not be possible.

    This damage comes as a result of chronic underfunding and the culture wars being waged here for political gain, both of which have lead directly to a perversely greater value placed on industry scientists over primary science and especially American primary-research scientists.

  21. raptor
    Posted February 20, 2006 at 12:06 pm | Permalink

    True, other economies are booming, but everything is not in the toilet here…

    Time Magazine, Feb 13, 2006:

    “In absolute terms, of course, the U.S. is still the world leader in scientific research. A half-century’s worth of momentum is tough to derail.”

    So, while US might not be as dominant as ever, it is not all bad news. And, bipartisan support of the Bush competitiveness Initiative suggests it is likely to pass.

    What a concept..bipartisan support for something that can benefit the country. So, while there is definite concern, don’t give up on our country yet…

  22. Brian
    Posted February 20, 2006 at 12:58 pm | Permalink

    Of course the US is more productive..since tyhe average worker here gets 2 to 3 weeks of vacation compared to 6 to 8 in Europe, the average worker here puts in more than 40 hours/week, whereas there is a push now in many European nations to bring the workweek up to 40 hours. Asian economies are less productive because their labor is cheap and their infrastructure has sucked until recently.

    No, we shouldn’t give up on the US, but we should be afraid, very afraid, of the coming tidal wave.

  23. Joe Williams
    Posted February 20, 2006 at 1:08 pm | Permalink

    XXX. Feelings mutual.

    And yes! I have worked under Union contracts and with Unions for several years, and I’ll tell you that I am quite impressed with the incompetence, nepotism, and blantent laziness and worthless that many (not all) but many people who are considered die hard unionare. I actually not surprised that companies outsource. I would.

    You go out and ask any business owner what is the most difficult and challenging part of their operation. They will all say “hiring good employees”.

    Kids are not starving in America. That is propaganda. You show me a staving kid and I’ll show you a unicorn. Yes! There are kids malnourish because of bad parents and terrible public school lunch programs.

    But there are so many programs and charities that keep people feed in America. People die from starvation, and that doesn’t happen in America.

    Anybody who advocates for socalism and communisim I feel is wrong. I won’t go so far as calling them a taitor, that is just a slanderous word.

    It’s ok XXX. Go back to your liqour and cigarettes. Just blame the world on people like me. I could care less.

  24. KansasClassicLiberal
    Posted February 20, 2006 at 1:08 pm | Permalink

    Some recent studies of adult literacy might hold a clue as to why employers have to send jobs overseas. (American Institutes for Research titled “The National Survey of America’s College Students” and also one by the Association of American Colleges and Universities)

    Besides that, what is the solution to keeping jobs in the United States? Adopt the declining standard of living of Europe?

  25. CrusaderX
    Posted February 20, 2006 at 1:20 pm | Permalink

    Corporate law students are taught Chinese and study Chinese laws because of this whole fiasco. Fortunately however, the legal profession can not be “outsourced” because as long as there are disputes among people they’re always gonna need a$$holes like us.

  26. CrusaderX
    Posted February 20, 2006 at 1:25 pm | Permalink

    Labor in China and Taiwan is cheap as hell! Boss Tweed has found a way to reassert himself in economics in the 21st century! Except today he is known as Martha Stewart.

  27. flike
    Posted February 20, 2006 at 1:51 pm | Permalink

    Labor in China is cheap, but it ain’t cheap in Taiwan. You must be thinking of Thailand instead.

    If Taiwan’s air ministry would open up direct flights to mainland China, Boeing and Airbus – as well as Textron, Raytheon, and Bombardier – would see a huge boom in aircraft sales. Why? So all the Taiwanese who’ve moved their factories to the mainland could fly back to Taipei on the weekend.

    There are thousands of Taiwanese factory owners who’ve relocated to Guangzhou or other areas on China’s east coast.

    Taiwan imports Thai and Phillipina workers to do routine factory work, although high-tech LCD display work is still done largely by extensively-trained local labor.

    Lots of instant “widows” would be created on the mainland, too (as these owners would abandon them each weekend, instead of every once in a while, for their wife back in Taipei).

  28. Joe Williams
    Posted February 20, 2006 at 2:03 pm | Permalink

    China wages have increased so dramitically that they are even outsourcing to Cambodia and Mayanmar. There are plenty of young professionals in the large cities making the equivilant of $60,000 a year being Marketing executives and engineers. Sounds in par equal to that of the USA.

    In the long run, its painful people. The shift and the outsourcing is not a good thing in the short term, but eventually it will make the whole world in par with each other where there will come a time that no place would be considered a source of very cheap labor. But to get there we have to develop these nations and we do it by commerce, not handouts.

  29. raptor
    Posted February 20, 2006 at 2:03 pm | Permalink

    Gotta go with Joe on the hunger thing. Yes, there are people who are “food insecure”, as NPR labels it, abut 38 million (http://www.npr.org/templates/story/story.php?storyId=5023829) don’t know where their next meal is coming from.

    Of those, about 37 million (http://www.usccb.org/cchd/povertyusa/) are described as being in poverty.

    But, as both above sources point out, there are food banks, food stamps, charities, etc., etc., etc. that prevent any type of wide spread starvation that is so common in so many other countries.

    America obviously has its needs, poor, etc. It is impossible to eliminate poverty. But, America is nowhere near the desparate states of other countries that are doing everything they can to support their people.

    And, if they can do work for far less than US workers, US companies are going to be interested. Profit motive (oh-oh, that dirty word!) and responsibility to their stockholders are motivations.

    I am not defending the “greedy corporate monsters”, just presenting another side. After all, there is plenty of greed all around—corporate as well as union workers.

  30. Posted February 20, 2006 at 2:38 pm | Permalink

    Joe W. writes, I am quite impressed with the incompetence, nepotism, and blantent laziness and worthless that many (not all) but many people who are considered die hard unionare.

    This from the man who said King wasn’t a liberal.

    What crap are you making up this time?

    The Teamsters and the Steelworkers put me through college. I couldn’t have done it working at Wal-Mart.

  31. Posted February 20, 2006 at 2:41 pm | Permalink

    And while were on the topic of human rights and democracy, perhaps one of you enlightened conservatives can explain this conundrum–

    In the State of the Union Address, our great leader said,”At the start of 2006, more than half the people of our world live in democratic nations. And we do not forget the other half — in places like Syria and Burma, Zimbabwe, North Korea, and Iran — because the demands of justice, and the peace of this world, require their freedom, as well.”

    Here’s my question–why didn’t Bush mention the LARGEST country without democracy, the Peoples’ Republic of China? The country that under his father had gathered tens of thousands of students in Tianamen Square demanding freedom and even carving a Statue of Liberty?

    Why didn’t he say anything about China?

    Hmmm . . . I’m sure it had nothing to do with the fact that his friends–you know, the haves and the have-mores–and even his own father are making huge fortunes by pandering to totalitarian Chinese officials.

  32. raptor
    Posted February 20, 2006 at 2:55 pm | Permalink

    I wish I could read his mind and give you an answer PL, but I haven’t a clue.

    I am curious, tho, about your assertion that his father (as well as others) is making a fortune by dealing with China.

    Couple thoughts..one, is this a bad thing? Would you make a fortune if you could? Second, are you saying there anything illegal about it? Third, what kind of fortune by doing what? Fourth, are they the only people making fortunes by dealing with other countries?

  33. raptor
    Posted February 20, 2006 at 3:10 pm | Permalink

    Check out http://www.uschina.org/member_companies.html and see a list of over 250 US companies doing business in and with China. Good sized companies, Dell, Harley Davidson, United Airlines, Microsoft, Ford, GM, Chrysler, etc., etc., etc.

    China is a huge, growing market. It is part of an international economy that won’t go away by ignoring it. No, its politics are not what we are used to, but that doesn’t stop the huge economic engine it has become.

    So, Lib, I ask: What is the harm, problem of people investing and making money in China? You throw that statement out like it is understood to be a bad thing. Please explain…

  34. Posted February 20, 2006 at 3:39 pm | Permalink

    Raptor–

    Was there anything “illegal” with doing business with Nazis before WW2, because the Bush family did that too.

    Making money in China becomes bad when the profit motive outweighs the freedom motive. This is what I believe happened with George H W Bush in the Tienanmen Massacre and with GW’s continuing to pander to them.

    Didn’t they shoot down one of our spy planes?

    The Chinese own us. They make money selling us manufactured goods, thanks to Wal-Mart, and they make money loaning us the money in gov’t loans to buy all the crap they sell us.

    They got it going on, making money on both ends. Meanwhile our big Washington insiders–Bush, Cheney, H. W. Bush, et al.–are making so much money, it doesn’t matter how many democracy activists die, there or here.

    Bush isn’t fighting for democracy. He’s fighting for the monied class to be able to make more money. If democracy helps, then he’s for “democracy.” If it gets in the way, then democracy has to go, and go it does.

  35. Posted February 20, 2006 at 3:45 pm | Permalink

    BTW, I lived for a year in Chongqing, Sichuan Province.

    I was given a map with a circle around the city and told not to go outside the circle.

    I invited people to my house who would have liked to come but they told me that as a westerner and a Christian, they couldn’t socialize too much me, lest they be caught up in some future purge.

    I heard about the re-education camps in which my friends nearly starved to death because there was no food. One of my Chinese friends was sent to prison for typing–the red guards claimed the typewriter was a coding device.

    This is the government that has so much power over our executive branch that GW can’t even declare they should be free.

  36. raptor
    Posted February 20, 2006 at 3:51 pm | Permalink

    And if the Chinese “own us” as you allege…who did that? Is it GW’s fault that Walmart buys goods there? Does our government force hundreds of businesses do business in and with China?

    Bush’s ancestors doing banking wtih a political party 60 years ago is a reach, even for you, to indict the president. That was a legitimate government prior to Hitler’s atrocities, and has no bearing on anything today.

    Your indictment of the Washington insiders making money in China is laughable. Prove amounts, and show me they are the only people benefitting from trade with the world’s largest economy. Show me how Caterpillar, Pepsi, New York Life, Boeing, Herbalife, etc., etc., are not benefitting. Or are they all Washington insiders as well?

    Are you also indicting the entire Fortune 500 for putting profit over freedom? Or is your shallow allegation only against the government? Or more specifically, against the President of the United States and alleging he is on some secret mission to sell the US to China?

    I asked you for harm..for illegallity. All I get are your assumptions. Ill founded, unsubstantiated claims, at that.

  37. Steve
    Posted February 20, 2006 at 4:23 pm | Permalink

    raptor, you just can’t win with Gala — er, ProudLib. He’s always got the one-up on you, and everyone else, for that matter. Who could have forseen that he’d actually lived in China?

    We should all bow to his superior wisdom and go home.

  38. raptor
    Posted February 20, 2006 at 4:25 pm | Permalink

    You have a point, Steve. Oh well.. provides entertainment on a Monday…

  39. Posted February 20, 2006 at 5:04 pm | Permalink

    Norman–I already warned you.

    I actually DID live in China. I worked at the Chongqing Yi Shui Yuen or as they say in Sichuan dialect, the Congqing Yi Show Yuen.

    But now its name has been changed to the University of Medical Sciences.

    I’m going to hurt you if you keep it up.

  40. Posted February 20, 2006 at 5:11 pm | Permalink

    Raptor–I don’t get it. Are you arguing that China is a democracy?

    Since it’s not a democracy, why isn’t Bush Co putting pressure on it to become one?

    You’re trying to re-frame this into “why is making money bad?”

    Making money is not bad. I’m all for it. I made money when I was in China too.

    But that isn’t the issue. The issue is that Bush had invade and occupy Iraq for “freedom” and as for China, Bush can’t even put the word in the State of the Union.

    Why the hypocrisy?

    Because he and his backers are making money in China. Making money is not bad UNLESS it becomes more important as gov’t policy than democracy and fighting tyrrany.

    That’s the situation Bush Co is in vis a vis China.

  41. Posted February 20, 2006 at 5:18 pm | Permalink

    BTW, I’ll get you the facts and figures on Daddy Bush’s investments in China, investments that kept him from helping the non-violent freedom demonstrators cut down without mercy in Tienamen.

    I’ll research it and get you the links.

  42. CrusaderX
    Posted February 20, 2006 at 8:32 pm | Permalink

    PL, that’s true, he doesn’t say anything about China because he doesn’t want to close the U.S. off from doing business with China’s HUGE consumer market. Also, the fact that they have the largest military force in the world as well as their posession of nuclear weapons won’t make taking over China as easy as Iraq. It should also be noted that the chemical weapons that Bush claimed Iraq to have (serin nerve gas, agent orange) were developed by US, and we gave them to Saddam during Iran’s aggressive military campaign. That administration was worried that Iran would “destabilize” the middle east with it’s Islamic Revolution, so we got in bed with the Iraq to help them, so we sent them biological agents to devastate the Iranians because Iraq was a secular country. Of course Saddam used these weapons against the separatist Kurd minorities in northern Iraq because they threatened his regime. Anyone who believes that the U.S. is a champion of human rights is a fool who buys into the whole comic book idea of a pure Captain America who fights for Truth Justice and the American Way. Consequently the American Way takes precedent over the former.

  43. J R
    Posted February 20, 2006 at 11:29 pm | Permalink

    Ok.

    Joe Williams? You are thus far the lowest form of life I have yet encountered.

    Your “compassion” for starving people in foreign nations is your justification for exploiting them at slave wages! And you get the double benefit of debasing working folks right here in your own country!

    These blogs have shown me much of what is wrong with America. You Joe or whatever your name really is, you get the prize. You are the epitome of what is wrong with America.While I play at jabs with the deluded working folks who oughtta be on my side, you sir define the evil that misleads them

    Now I gotta say Joe in fairness, that I could not do your job. No dignified human being could. For while you relish the prospect of forcing your own fellow Americans into a prostrate submissive position to you, you no doubt have earned that way of thinking by way of a life of experience on your knees to others such as you. You kissed ass to get there, and by god you got some ass kissing coming.

    The calls for you to leave America were correct Joe. You and yours gotta go if this nation is gonna resemble anything it pretends to be. But if you choose to stay, and stay the course, stand warned that before I feel your patent leather heel on my throat you are gonna feel the toe of my work boot well up your anal orifice. Now I know that is not what you have been accustomed to receiving… or giving. But you better get used to the idea it is what you got coming.

  44. CrusaderX
    Posted February 20, 2006 at 11:43 pm | Permalink

    “workers of the world, unite! you have nothing to lose but your chains!”

    Karl MarxCommunist Manifesto

  45. Posted February 21, 2006 at 4:36 am | Permalink

    Everybody outsources, including all of you, unless you do everything for yourself — grow your own food, design and build your own car, make your own gasoline, etc.

    Some outsourcing is smart; some is beyond stupid – done entirely at the demand of corporate ciphers tied to the latest fads.

    The effect of smart outsourcing on jobs is no different than the effect of creativity. If one company invents a new process to make a product for a lot less money, that company will enjoy good growth; but all its competitors will lose market share and lay off people. Yes, people get laid off and displaced because of creativity.

    Shall we all now rail against creativity?

    In this case raised by Phillip, the real issue is that young Indians and Chinese are interested in high technology jobs; and they put out the hard years of effort to get degrees in those difficult subjects, while American engineering schools keep losing students, despite dumbing down their curricula.Here is what it says in the study report that Phillip links to:“The study contended that lower labor costs in emerging markets are not the major reason for hiring researchers overseas, though they are a consideration. Tax incentives do not matter much, it said.

    Instead, the report found that multinational corporations were global shoppers for talent. The companies want to nurture close links with leading universities in emerging markets to work with professors and to hire promising graduates….

    The American executives who are planning to send work abroad express concern about what they regard as an incipient erosion of scientific prowess in this country, pointing to the lagging math and science proficiency of American high school students and the reluctance of some college graduates to pursue careers in science and engineering.”

    The article mentions that as companies increase R & D investments in Asian talent, some companies will be reducing R & D in the USA and Europe, but no numbers are given, which is suspicious. It may well be that, overall, high tech employment in Europe & the USA will rise more than in Asia.

    Historically, companies looking for strong technical talent have hired foreign engineers on visas, but the US government approval process has gotten so bogged down that people wait for years to get their green card. Some of the high tech outsourcing issues would go away if high tech immigration were streamlined. But, no, the INS people are busy trying to keep the foreign workers from getting American jobs, not that there are adequate Americans available to do most of them. So, the companies have been forced to establish working relationships overseas in order to tap that talent – a.k.a. “outsourcing”. This is a case that proves how foolish it is for government to try to improperly control people.

    Meanwhile, unskilled indigents walk across the border by the millions, untouched.

    In fully managed economies, it may be possible to stop outsourcing, but managed economies have atrocious track records. Injecting a bureaucrat into every business transaction has proved to be the best way to create corruption, not prosperity.

    The issue seems to be the speed of change. But can it be controlled? If, for example, we raise barriers against GE’s outsourcing work on a product to China, then Siemens or Nokia will gain a competitive advantage that GE can’t match in the marketplace. GE will end up laying off people in that product line.

    Any limits put on GE for outsourcing would sustain its disadvantage against companies from other countries that are not limited. GE would have to either abandon the product line and lay off all the people or move the entire product line to an overseas subsidiary.

    There is no stopping outsourcing, short of abandoning the free market and imposing tariffs and embargos, which would just cause retaliation from all other countries and stop our economy cold. None of these draconian measures are going to happen, no matter who controls Washington or the state house.

    So what is to be done about highly trained technical people losing jobs to outsourcing? As Phillip notes, this isn’t unskilled labor, its people with college degrees. We can’t keep going back to college as the local opportunities shift around; and there isn’t any incentive to retrain if any job might disappear overnight. But — before proposing solutions, perhaps someone could state, with authority, just how big this problem is.

    I suspect it isn’t huge. How big is it? Is it a local, state, or federal problem?

    Government has a role in smoothing major economic disruptions, whether by policies or laws or even welfare. Unfortunately, a few weeks of ordinary unemployment compensation can’t put a laid off aerodynamicist or IT specialist back into a job equivalent to the one he lost if all the jobs are gone. But if it isn’t a major workplace disruption for a region, state, or the country, is it government’s job to be concerned about those job displacements?

    Should everyone be indemnified against any change? No government is big enough to do that.

    In Aerospace, highly skilled workers have always moved around as major contracts dry up at one company and new contracts are awarded to other companies in other cities. We move a lot. Always have. Thousands of people at a time, and often – many make three or four major moves from one coast to the other in the course of a career.

  46. ksfarmgrrl
    Posted February 21, 2006 at 8:52 am | Permalink

    Cal, you quoted:

    Tax incentives do not matter much, it said.

    Instead, the report found that multinational corporations were global shoppers for talent. The companies want to nurture close links with leading universities in emerging markets to work with professors and to hire promising graduates….”

    That captures the truth perfectly. I could not have explained the high tech boom in Austin any better myself. Talent, talent, talent. You really should read Richard Florida’s “The Rise of the Creative Class” if you truely want to propel Wichita into the future.

    And in 21 years of experience in economic and business development, I have yet to see ANYONE make a decision based on taxes. Tax incentives for business expansion and relocation are the biggest hoax ever perpetrated on the American taxpayer.

  47. ksfarmgrrl
    Posted February 21, 2006 at 9:02 am | Permalink

    What are the main factors that draw real talent to communities? Quality of life ranks right at the top.

    These highly skilled and in demand people can live anywhere in the WORLD that they choose. Why would they want to live in your town? Can you honestly answer that question? Can Hays, Salina, Pittsburg, Topeka, KC, answer that question without spouting the chamber of commerce line? Does anyone in ks even know what quality of life means? Good parks, lots of entertainment, low cost of living, etc? And…are ya ready ks? GOOD SCHOOLS. TOLERANCE and DIVERSITY?

    BTW, good article on retiring boomers yesterday. Those are quality of life relocations. And those are the people you want to move to your community, right?

    In economic development, we talk a lot about infrastructure, tax breaks, transportation, etc. But where is the talk about quality of life if talent is what matters? Most communities in ks are embarassed to talk about their quality of life except in vague terms.

    Really. Why would anyone live in ks when they could live anywhere in the world? If you cant answer that question honestly, you will never be competitive in a global economy.

  48. ksfarmgrrl
    Posted February 21, 2006 at 9:04 am | Permalink

    I’m still laughing at this cal:

    “In Aerospace, highly skilled workers have always moved around as major contracts dry up at one company and new contracts are awarded to other companies in other cities. We move a lot. Always have.”

    You know what they say in my profession? Economic development directors are the highest paid migrant workers in the nation. Lmao, we move every 3 years!!