Blue Mass Group

Reality-based commentary on politics.

Study: Boston, Lowell likely to suffer some of the nation’s largest job losses to offshoring

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Areas with high concentrations of information technology jobs are most vulnerable, followed by those specializing in back-office services. Large metro areas (a million or more) are also most likely to experience a higher percentage impact.

Along with highlighting the threat from foreign competition, the report suggests governments “pursue policies that boost productivity and innovation, assist workers who are harmed by offshoring, and modernize approaches to economic and workforce development.” Innovation or the ability to “make creative use” of innovations elsewhere, will likely offer the best protection against job loss, the study’s authors say. But the study also has specific advice for federal, state and local authorities, including encouraging education & training and business collaboration.

Interestingly, the report calls for a variety of policies to “level the playing field” between U.S.-based companies and foreign competitors, including spreading out health care costs “widely among residents and/or businesses” instead of relying on our current employer-based insurance model.

The report’s authors warn that “when indirect employment effects are considered, the metropolitan areas that are most vulnerable to offshoring could lose many more jobs than our estimates suggest. Because of multiplier effects, the total number of jobs lost in a metropolitan area because of offshoring could be 1.5 to three times as large.”

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  1. During his tenure I got stuck in hellacious Boston-shut-down traffic jams as he gallivanted around the city grabbing cash.  Now I have to savor the economic havoc wrecked by his “free” trade policies.

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    Marvelous.

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    Can we have a Democratic President next time?  Who meets people at the airport?

    • …make use of foreign suppliers, because the suppliers’ supplies could not be relied upon for parts in the event of a war.  (That included electronics, by the way, before the far east became the cheapest source for memory chips.)

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      Apparently, that’s not the case any more.

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      Let’s understand something.  The armaments industry is a huge one, and it is multi-national, selling to anyone who will buy.  Raytheon isn’t the only company that’s doing that.  There is no national loyalty in the armaments industry.  The armaments industry is, of course a parasite on the body not only politic, but also economic, but it employs lots of people, and is merely another of the welfare operations employed by government.  (Ref. Samuelson’s idiotic rant in the Washington Post yesterday, which contrasted “defense” expenditures with “welfare” expenditures–they are to peas from the same pod.)

  3. If you’re in IT and your job gets outsourced, there are 2 possibilities

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    A) It just made sense for the company and you can find a new job, maybe with a raise, within about 3 weeks

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    B) You really, really, really suck at IT.

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    There’s no shortage of jobs for programmers in this area right now.

  4. I work for a large NYSE company with a major presence in Downtown Boston. I just received a corporate email that as of next week all Accounts Payable work will go through India and we will be closing the Accounts Payable Department in the USA. Accounts Receivable is staying here. We still want to get paid fast but we can pay slow.

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    Good for the bottomline, bad for the middle class in America.

  5. [There seems to be a problem on the Brookings site — I can’t open the report.]

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    I’m concerned about the phraseology used here. I think we need to stop thinking about “jobs being lost” (see the comment about how easy it is to get a job around here IF you have the proper skill set). Work is outsourced, not jobs. Jobs are not created or destroyed, they are simply transformed (into better-paying, more productive ones).

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    Why do you think we’re the richest nation in the world? Because we do low-value-added work? I don’t think so.

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    Point is, we don’t make shoes (or buggy whips) in Massachusetts anymore. So what? Does that make us worse off? We can start wringing our hands when the unemployment rate starts to rise. Meanwhile, the problem in our state is one of a shortage of skilled workers, not a shortage of work.

    • More of the great education myth: if only Americans would just smarten up, we would be able to compete with these low-wage, often politically repressive, countries that lack labor, environmental, and consumer standards. our trade policies engage us in a global race to the bottom — a standards-lowering competition. It really doesn’t matter how skilled we become. Those jobs will continue to move to the countries with the worst standards, thereby driving our own standards downward.

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      As Fortune Magazine reported last year:

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      The skill premium, the extra value of higher education, must have declined after three decades of growing. The Fed researchers didn’t pursue that line of thought, but economists Lawrence Mishel and Jared Bernstein at the Economic Policy Institute did, and they found supporting evidence in the new Economic Report of the President, issued within days of the new Fed survey. It cited Census Bureau data showing that the premium had indeed fallen sharply between 2000 and 2004. The real annual earnings of college graduates actually declined 5.2 percent, while those of high school graduates, strangely enough, rose 1.6 percent.

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      Those high-skill white collar jobs are leaving . . .

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      The other main possibility is that something unexpected and fundamental is changing in the way the U.S. economy rewards education. We don’t yet have complete data, but anyone with his eyes open can see obvious possibilities. Just maybe the jobs most threatened by outsourcing are no longer those of factory workers with a high school education, as they have been for decades, but those of college-educated desk workers.

    • Of course jobs are created and destroyed. Unless you’re arguing that we’ve had exactly the same number of jobs in this country for the past years.

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      In any case, the unemployment rate is not the sole measure of how workers are faring in an economy – things like wage growth and median income also matter. For many employees, productivity is rising a lot faster than wages, and corporate profits are rising faster than median wages. Some people who aren’t among the top 10% of households who have done disproportionately well under this presidential administration have a problem with that.

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      The unemployment rate also doesn’t measure underemployment, people who used to have well-paying jobs who are now working at lower-paying service sector jobs.

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      Finally, I’m curious how you measure “richest nation in the world.” If you mean “has the biggest pile of money” or “largest GDP”, then the U.S. would qualify. But that doesn’t say anything about how wealthy Americans are, unless you factor in wealth per person. (Otherwise, you could argue silly things like “the state of New York” is wealthier than “Bill Gates,” but the average New Yorker certainly isn’t).

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      The U.S. is NOT the richest nation if you’re measuring GDP per capita. And if you’re measuring income per capita, we’re not even in the top 5 (that’d be Luxembourg, Norway, Switzerland, Denmark and Iceland, according to World Bank figures from 2005).

      • to hear the fist-pumpers yell, “We’re Number 1!” In fact, there aren’t too many measures where we come out on top. Take away the top 5% of both countries, for instance, and the average Canadian is wealthier than the average American.

      • You raise some excellent points, most of which I agree with. But you miss my point. I guess you’ll have to wait till my book comes out, because it’s way too lengthy of an argument for a short comment here.

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        We’re talking past each other, I think, because when you say,

        Of course jobs are created and destroyed.

        you are talking about individual, specific jobs, and I’m talking about total number of jobs.

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        Yes, obviously, individual positions come and go. As I said, we don’t make buggy whips here anymore. But that doesn’t mean there are a bunch of buggy-whip experts sitting around looking for work.

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        My point was that jobs are not “shipped overseas” to use a common expression. The work is, and the people who were doing that work here find something else (more productive) to do. Not each and every person, of course, but on the whole, the economy is better off.

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        As a result, we gradually transform our economy to one of higher-value-added jobs. As I said, you raise some perfectly valid issues about how that productivity is shared/compensated for, but that’s an issue of social/political dimensions, not one of economics. Thirty years of slanting the tax code to favor high-income individuals and corporations has taken its toll.

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        But, the truth is that most workers find something to do. Some may not wish to be retrained, or are emotionally not equipped to start over, so may drop out of the workforce, and I don’t mean to minimize the potential for individual tragedy, but again, on the whole, our workforce continues to thrive and prosper. So, no, I’m not suggesting the number of jobs is static.

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        Unless you’re arguing that we’ve had exactly the same number of jobs in this country for the past years.

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        That was my point in referring to the unemployment rate — the population has grown, but so have the number of jobs, leaving the unemployment rate (with all its flaws, as you point out) pretty much unchanged.

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        No time for more, but thanks for this post — very provocative!

  6. …interpretation of x-ray images is being shipped to India via the Internet, why would any sentient being in the US want to spend tens, if not hundreds, of thousands of dollars to become a radiologist?

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    That is merely one example.

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    One of the things that is lost to the “free traders” is that there has to be not only free movement of goods, but also free movement of labor, and equalization of governmental subsidies for each.  The EU does it a bit–not perfectly–but the GATT, NAFTA, etc., is horrendous in that.

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