October 26, 2004

Study Shows Outsourcing Statistics Underestimated

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During the 2004 presidential campaign, outsourcing of American jobs to foreign countries has been a hot domestic topic. Research conducted by Cornell University and the University of Massachusetts – Amherst reported that the U.S. Bureau of Labor Statistics has grossly underestimated the number of jobs outsourced. The research found evidence of 48,417 jobs shifted out of the country between January through March 2004. For that same time period, the U.S. Bureau of Labor Statistics reported only 4,633 private-sector jobs in companies with 50 employees or more were lost due to shifting. Overall, the study predicts a total of 406,000 outsourced jobs in 2004.

The study entitled “The Changing Nature of Corporate Global Restructuring: The Impact of Production Shifts on Jobs in the US, China, And Around the Globe,” was conducted by Cornell Prof. Dr. Kate Bronfenbrenner, industrial and labor relations and University of Massachusetts Amherst Prof. Dr. Stephanie Luce.

“We found that people use the term in a number of different ways … the basic definition is hiring another company to do part of your work, whether part of a service or of a good,” Luce replied when asked about her definition of outsourcing.

Bronfenbrenner said, “Our definition [of outsourcing] is jobs and production leaving one country to go to another country.”

Bronfenbrenner explained that the report and the BLS used different methodologies to measure the number of jobs exported in the first quarter of 2004.

Luce said that for their research a team of assistants checked Lexis reports for stories of companies moving production out of the country. From this initial source, the research team then inquired into company reports to confirm that jobs had been transferred.

Bronfenbrenner summarized that the BLS received its data through a general survey. The questionnaire was sent out and asked companies to self-report on the number of jobs they shifted out of the country. Bronfenbrenner predicted that since companies did not want to create public backlash for moving jobs out of the country, they minimized their numbers and avoided the word outsourcing. “You can’t rely on companies to report whether they are shifting jobs out of the country,” Bronfenbrenner said.

“We know that a lot of companies are trying to keep this quiet,” Luce said.

In reference to the BLS’s statistics on the number of relocations of work actions by employers, Gary Steinberg, press officer for BLS, said, “This is not an exclusive account of jobs moving overseas but it’s all that we have.”

“We are losing good jobs and those are being replaced with low wage jobs,” Bronfenbrenner said. Their research found that a disproportionate number of jobs shifted out of the US were unionized. The study claimed that twenty-nine percent of exported jobs in the first quarter of 2004 were union jobs while thirty-nine percent were from unionized facilities. Rick Hurd, industrial and labor relations, explained that unionized jobs have higher pay and benefits along with representation in negotiations with employers.

“A lot of the movement out of the country is a deliberate strategy to break unions,” Luce said.

Luce explained that the people who have lost their jobs due to outsourcing are having severe trouble finding work of equal pay and benefits. Luce claimed that many have just given up and dropped out of the labor force altogether. Others have accepted low paying and low benefit jobs. Furthermore, some people have retrained and found good paying jobs again but now those jobs are leaving the country as well.

“When a major employer leaves the community, it’s devastating to those workers,” Bronfenbrenner said.

The report stated that China and Mexico are the top two countries to which companies have shifted jobs. Luce explained that Mexico is chosen because of its close proximity to the U.S. and the trade agreements that keep tariffs down. China is selected because of its incredibly low wages and minimum environmental and labor regulations.

“This is a global story,” Bronfenbrenner said.

The report stated that many companies located in European nations with high wages and labor standards are also exporting work to Eastern European countries and Asia.

“The only candidate that intends to do anything aggressively about it is Kerry,” Hurd said.

Hurd explained that Kerry’s plan includes the creation of international qualifications on labor standards on trade. Bronfenbrenner supported Kerry’s position on job exportation as well and explained that she believes he intends to stop rewarding companies that are shifting jobs out of the nation.

Luce said that the issue of job exportation is only a small part of the real problem that is facing our nation, the issue of job creation.

“The general concern with the election is just that there are not enough jobs,” Luce said, “Both candidates have been avoiding the larger question all together.”

Luce and Bronfenbrenner both believe that the first step to the government adequately addressing the problem of job exportation is with the creation of a data tracking system that can accurately measure the number of jobs leaving the U.S.

“We can’t just rely on the media,” Bronfenbrenner said.

She explained that beyond this initial step, the government needs to address our global trade policy and stop rewarding companies for moving jobs out of the country. Further, non-governmental organizations such as labor, environmental, and civil rights groups need to collaborate to put pressure on the government. Luce explained that stronger assistance programs need to be created for those who have lost their jobs and the issue job creation needs to be addressed.

The study confirmed that 48,417 jobs were shifted out of the country between January and March of this year with 23,396 to Mexico, 8,283 to China, 3,895 to India, 5,511 to other Latin American countries, 4,419 to other Asian countries and 2,933 to all other countries. The researchers predicted that media tracking only identifies approximately two-thirds of the production shifts to Mexico and one-third of the jobs shifted to other countries. The researchers expanded upon the data and predicted that as many as 406,000 jobs were shifted out of the US in 2004 compared with 204,000 jobs lost in 2001.

Bronfenbrenner and Luce were originally commissioned by the predecessor to the US-China Economic and Security Review Commission to conduct a study on the extent and nature of production shifts out of the U.S. and into China from Oct. 2000 through April 2001. In July 2004, Bronfenbrenner and Luce were asked again by the USCC to update the research, concentrating on the period between Jan. 1 through March 31, 2004.

Archived article by Casey Holmes
Sun Staff Writer