No Smoking Gun on Job Losses Gives Offshoring Foes Little Ammo

Ann All

Sometimes it's easy to get to the truth. Just ask the "researchers" who only had to wait for some ice to melt to determine that Bigfoot isn't real after all.


Sometimes it's not easy at all. Despite lots of anecdotal claims about the loss of American jobs due to offshoring, it's hard to find conclusive data. Companies don't always seem sure how much work they send offshore, much less how many jobs are lost due to the practice.


A study by two Canadian economists published earlier this summer found that offshoring has only a minor impact on U.S. jobs and that job losses are offset by increasing sales of U.S.-produced goods and services in countries such as India and China.


Raymond Panko, a professor of IT management at the University of Hawaii, has reached a similar conclusion after studying data from the Bureau of Labor Statistics' Mass Layoff Statistics program, which tracks layoffs of 50 or more jobs. According to a Network World story about Panko's study, of the nearly 1 million layoffs since 2004, just 16,197 can be attributed to offshoring.


Panko acknowledges this data doesn't reveal smaller layoffs due to offshoring, which could add up to a significant number. And since mass layoffs account for only about 5 percent of total U.S. job losses each year, the data hardly provides a comprehensive view. Still, writes Panko:

... if offshoring really is massive, it should show up strongly in the 2004 MLS data. It does not. So in the one data source in which the hypothesis that IT offshoring is massive can be tested at least roughly, there is no support for the idea that enormous numbers of IT jobs are being offshored. This does not mean that offshoring is negligible - only that it does not appear to be large compared to total employment or total IT employment.

Like the Canadian economists, Panko contends that jobs lost to offshoring are only a problem in the absence of job gains. Hires continue to outweigh job losses in the United States, he notes. He also mentions strong growth projections for IT jobs, especially for high-skill positions like systems analysts, database administrators and system software engineers.


The only IT jobs not expected to grow, says Panko, are "lower-level computer-support professionals and plain vanilla programmers," not coincidentally the types of jobs that many companies choose to offshore.

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