Job Losses and Trade: A Reality Check

During the last campaign Senator Kerry used the fear of outsourcing to try and gain political advantage. The problem is that Kerry really was engaging in hysterical rhetoric. Consider the great Clinton Jobs Machine of the 1990s. Over 22 million jobs were created. But how many jobs were lost? Try over 300 million. How can this be? Simple, more than 300 million jobs were added to the economy for a net gain in jobs. Job creation and destruction are continuous processes. According to Brad DeLong, 360,000 claims for unemployment insurance per week is consistent with a stable unemployment rate. Some researchers have suggested that as many as 3.3 million jobs will move overseas between 2000 and 2015. That is 220,000 jobs a year. Statistically it is insignificant as that annual number breaks down to a weekly number of a bit over 4,000 jobs. When there are 360,000 first time unemployment claims for a stable unemployment rate 4,000 jobs is literally nothing. Passing any laws to address this “problem” is a waste of time, resources, and could very well end up costing more jobs in the long run. Bottomline: offshoring is not the big bogey man it has been made out to be.

Update: Boifromtroy notes that most outsourcing stays within the U.S.

FILED UNDER: Economics and Business
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. Anjin-San says:

    I am sure the guys who are trying how to figure out how to take care of their families after their jobs were outsourced are relieved to hear outsourcing is not a big deal.

  2. Steve says:

    Ahhh the old argument by pity. I haven’t seen that one in a while. No pity for the other 360,000 first time filers of unemployment insurance Anjin-san?

    Sheeesh.

  3. McGehee says:

    Pity is all Anjin’s got left.

  4. Anjin-San says:

    I feel bad for anyone who loses their job. What did I say to indicate otherwise? I don’t recall mentioning pity, which would be a bit condesending.

    I got laid off from an excellent corporate job a few years ago myself, so I know the feeling. Our work was outsourced to contractors who get no benefits.

    One thing to keep in mind on this topic is that many of the new jobs that are being created pay less then the ones they replace and have fewer or no benefits.

  5. Steve says:

    I feel bad for anyone who loses their job. What did I say to indicate otherwise?

    What did I write to indicate that I don’t feel bad for anybody who loses their job? I was merely trying to point out that the hysterical rhetoric is not matched by the data.

    I don’t recall mentioning pity, which would be a bit condesending.

    I didn’t say you did. But your argument is a classic example of the logical fallacy of the same name. Your comment was designed to elicit feeling “bad” for these people and thus undermining my position that this is not the problem it has been made into.

  6. Anjin-San says:

    Steve,

    Well you were referring to my post and you did say:

    Ahhh the old argument by pity…

    Are you retreating from that post?

    Unemployment in this country is not at a crisis point, nor is it cause for hysteria. On the other hand, it remains a serious problem. A very real problem for its victims.

    The president’s simplistic “the econoomy is strong & getting stronger” rheoritic is little comfort to real Americans who have lost their jobs or are underemployed. Guess its easy to be optimistic when you have a family fortune to fall back on. Or if you are a CEO who will get a multi-million dollar Christmas bonus next month.

    We have propped the economy up with family cash infusions via home refi’s. The equity well is not infinitly deep. Meanwhile the deficit is waiting for us out there like a vast iceberg. Ask Alan Greenspan if you don’t find me credible.

    While we ignore the deficit, the GOP is focused like a laser on gay marrige.

  7. Steve says:

    Ahhh, nice use of the red herring fallacy.

    The topic of my post was, and is about the hysteria attached to outsourcing. Note, I said nothing about hysteria in regards to unemployment in general. Further, I said nothing about the President’s rhetoric on the economy. Moreover, I made no mention of gay marriage, the deficit or Alan Greenspan.

    I take it you are completely out of ammo; hence all the blanks you have been firing off?

  8. LJD says:

    Whatever happened to good old fashioned American ingenuity? Sure, losing a job is difficult, but ultimately whose responsibility is it?

    If you have not diversified your skills enough, done some market research, (spend all day complaining in blogs and editorial columns) who can you blame but yourself? Even if you have truly fallen on hard times, does any one care, much less have any responsibility to support your family, other than YOU?

    Get out and retrain, pound the pavement, open up new opportunities for yourself. Don’t over extend your credit, don’t live beyond your means, don’t have twenty kids. The attitude of entitlement in this country is getting us nowhere.

  9. Anjin-San says:

    Steve,

    My comments about greespan, rheoritc & gay marrige are my own, I did not try to attribute them to you. They are just issues I am concerned about.

    And, there is a correlation between outsourcing & unemployment. My work brings me into daily contact with programmers, engineers, system engineers, etc. Some of them are losing their jobs to outsourcing. We may not be hemmoraging jobs, but we are bleeding.

  10. Steve says:

    Whatever. I looks to me like a lot of handwaving to distract from the actual topic.