Arnold Kling  

Offshorable Jobs

Here is Wisdom... Technological Determinishm...

Today's Wall Street Journal reports on Alan Blinder's estimates of jobs that might go offshore.

he has been refining those estimates, by painstakingly ranking 817 occupations, as described by the Bureau of Labor Statistics, to identify how likely each is to go overseas. From that, he derives his latest estimate that between 30 million and 40 million jobs are vulnerable.

I do not think that the education systems in India and other countries are up to delivering anything like thirty million skilled workers.

However, I do expect that in another decade there will be tens of millions of Americans in different occupations than they are today. Technological progress will be far more important than trade in causing these shifts. More churning in employment will be caused by computers and robots than by trade.

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COMMENTS (15 to date)
Nathan Smith writes:

"India and other countries" can't deliver 30 million skilled workers? Really? Certainly they can produce that many secondary school graduates, if not tertiary graduates. Maybe that doesn't make them skilled, but then, that just leads back to the question: What does the education system have to do with it? Employers can train the workers, or there are correspondence courses, courses-on-tape, etc. If there's a demand for skilled workers, the formal education systems are not necessarily the only source of supply.

John S. writes:

Presumably if such a study had been performed in the 1890s, it would have shown that the manufacture of buggy whips was ripe for offshoring. To say nothing of horseshoes.

Dog of Justice writes:

China has ~1.3 billion people, India ~1.1 billion. 30 million skilled workers is only 1.25% of their total. There is no obvious reason why they won't be able to deliver this, given that both countries are finally on somewhat stable development paths.

Of course, there is also no obvious reason why computers and robots won't restructure more and more of the economy. The question is which force is stronger at the moment (from the perspective of the American worker), and that requires at least slightly more detailed analysis than you offered in the post.

Bill Kruse writes:

I read Blinder's Foreign Affairs piece when it came out--very reasonable and well-written. It was basically a wake-up call for smug techies who never got around to acquiring people skills. But now, it's morphed into aid and comfort for all kinds of protectionists (Trumka/AFL-CIO being first out of the box), plus Blinder's "painstaking" analysis of 800 occupational categories. One wonders what the "painstaking" aspects are. The occupational categories do not capture important subtle distinctions within occupational groups and, in any case, despite considerable offshoring to date, there doesn't seem to be an impact on the growth of these occupations in the US.

This seems to be the Card-Krueger minimum wage thing all over again--i.e., academics lunging to make a controversial point and getting a little sloppy with their analysis, then the "findings" get snapped up by interest groups who hype it beyond recognition. For example, looking at the WSJ article, I can see union types translating it into: "Former Fed Vice-Chairman says US employment will be reduced by 30-40 million due to offshoring." The good professor will then say "Ohhhh noooo, that's not what I meant," but will be drowned out.

Justin writes:

Obviously, the point has been made that there are sufficient supply of foreign talent to move that quantity of jobs offshore. The real point is the transition the American workforce is experiencing towards different types of jobs. This will allow for the American worker to be enganged in jobs increasingly focused on human capital rather than physical (i.e. creating uses/applications for the new technology that is created as opposed to the physical production of that technology). This transition will engage the American worker more than ever, creating an increasing level of satisfaction, which in turn will lead to higher quality of life. Obviously, this is not a bad thing. Change is hard. But evolution is always necessary.

kingstu writes:

Is the sky falling again?

Vince writes:

Is there a link somewhere to Dr. Blinder's report?

Matt writes:

Have you been to a university in India or China? I've been to ones in China, and the fear is greatly exaggerated. I don't have the number in front of me, but the "middle class" in China is around 300+ million. However, many of them lack a solid education. The number of people who can do these jobs is maybe 100-200mil. Even spotting Blinder 200 mil, am I to believe 15-20% of China's best workers are going to be working for American bosses? Who will do China's work?

Heather writes:

The fallacy with so many of these calculations is that they assume that the transition is feasible. I have worked at and with many companies that have tried outsourcing, only to bring the work back because the execution makes the costs a wash. Between language barriers, cultural differences in work ethic, preferences for nepotism, and so on, it is incredibly difficult and costly to offshore anything that is not highly automated.

David W. writes:

This is becoming a fact of America's economy. We are living in a world in which we must maximize our output at the lowest possible cost in order to achieve the highest profit possible. We live in a world that only cares about and ultimately revolves around money and making the biggest buck you can. Unfortunately, that philosophy is offshoring a lot of jobs that Americans are MORE THAN CAPABLE of handling. My father is currently training people overseas to do his kind of job, basically training them to do his job so he can get canned in the near future. With offshoring becoming more and more popular, more and more jobs will be at risk, and eventhough the economy will thrive whether Americans fuel it or not, the job security of America will be nothing in the years to come.

Randy writes:

I've been thinking lately that we could and should outsource much of the military. I imagine a market of millions who would jump at the opportunity. Yes, I can see that patriotism might be seen as an issue, but I don't think that most Americans have a particularly strong sense of patriotism anyway (sense of entitlement, certainly, but not patriotism). So why not?

michael writes:


We are living in a world in which we must maximize our output at the lowest possible cost in order to achieve the highest profit possible. We live in a world that only cares about and ultimately revolves around money and making the biggest buck you can.

it has always been, and will always be, like this - humans do not generally take action without expecting a profit, be it material or spiritual

Unfortunately, that philosophy is offshoring a lot of jobs that Americans are MORE THAN CAPABLE of handling.
It's not a matter of being capable of handling, it is a matter of the value of the jobs/labor decreasing below the point at which Americans will choose to do it. Would you pick up garbage for $100/hour? I would! But if the value of picking up garbage decreases to $5/hour, then I will do something else... same thing is happening in the jobs which are being outsourced. This is a GOOD thing, when all is said and done - we all better get used to re-educating ourselves, and continually re-skilling if we expect to maintain our current and future standard of living.
Kent Gatewood writes:

Outsourcing the military worked really well for the Romans. I bet the Israelis could get really good rates outsourcing to the Palestineans.

Brian Wang writes:


In case you haven't already found the link to Blinder's article in Foreign Affairs.

R. Richard Schweitzer writes:

Alan Blinder's points include the proposition that we need to consider more than the "net" effect of offshoring, which presumably is taken as the net of employments (however measured) gained and employments lost. By inference, that may include the net of losses and gains in the sources of specific kinds of employments (manufacturing, material & food processing, services, etc.). Mr. Blinder chose numerous services as examples for projections over an extended (20 year+) future period.

What may be missing from "Economists' " discussions is closer consideration of the effects of future demands or needs for the supply of services, and of the factors that must exist to generate those demands and needs within any economic perimeter (especially our own), leading to their being met by supply from without (outside) that economic perimeter.

It would appear from the Blinder (and other's) projections that there is an assumption that there will be the same or increasing (by current trends) demands and needs for the services selected. That would imply that "offshoring" those services would have no adverse or reductive effects on the factors that generate the demands and needs.

If a contrary view is taken that there will be some reductive effects on demand, supply from without probably would not increase as projected, and, if responsive to demand, might not increase at an increasing rate as now projected.

A remaining factor that could be considered for evaluating such projections is the nature of economic perimeters (territorial, regional, zones, social orders, etc.), which seem to be in a current state of "readjustment;" Some might say, "realignment." Reference is often made to "trade zones," but things are probably not quite so simple and , as some have noted, there are perimeters within perimeters (e.g. , U.S. within NAFTA).

We are now also seeing overlapping of segments of perimeters, and in connection with "human capital" widespread movements of peoples out of, and into differing perimeters.

There are many factors besides current (or even historic) trends that should be included in these conjectures, such as Blinder's and others', and which certainly need examination before assuming conclusions or taking any actions to attempt to shape the results of ongoing changes.

R. Richard Schweitzer

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