Outsourcing: A New Occupational Hazard

Who does Bill Gates think he is fooling? Microsoft`s
Chairman spent the last week of February on the

college stump
trying to talk up

computer engineering.
But nothing he can say can
overcome the fact that students have been reading
announcements from every American high tech
company, including Microsoft itself, about thousands of
engineering and research jobs being moved to Asia.

On February 16 the Associated Press reported that
Siemens announced that the firm will move most of the
15,000 software programming jobs from its offices in the

and Western Europe to India, China, and Eastern

“Siemens has recognized that a huge amount of
software development activity needs to be moved from
high-cost countries to low-cost countries,”

explained a Siemens managing director. [Siemens Plans Huge Jobs Outsourcing]

According to

official US statistics
, at the end of

February 2004
the US economy had 229,000 fewer
jobs in computer systems design and related disciplines than in
January 2001, a decline of 17.2 percent in three years.
Architectural and engineering employment lost 33,000
jobs during the period, a decline of 2.6 percent (the
data are from the BLS payroll surveys). With the economy
shedding more knowledge jobs than it is creating, new
graduates face poor prospects.

The typical economist is too much a True Believer to
notice what is being done to

Americans` occupations
by outsourcing. High school
and college students are much more astute. They are
abandoning occupations that can be outsourced.

Nationally, enrollments in

computer science

computer engineering
are down 23 percent this year.
At MIT, the premier engineering school, enrollment in
electrical engineering and computer science has fallen
33 percent in two years. The New York Times (March
) reported that even MIT`s best graduates are
abandoning their computer engineering profession for
investment banking. Presidents and deans of engineering
schools are expressing concerns that

education has no future in America.

It has been years since the US economy has created
any net new jobs in export or import-competitive
industries. Obviously, trade and our massive trade
deficit are not the stimulus to our export
sector that economists claim.

Overall, there has been no job growth in three years.
The economy during this period has lost 2.97 million net
private sector jobs. The few areas of job growth are
concentrated in lowly paid

nontradable services.

The BLS in its February 11 job projections for the
next ten years emphasizes that seven of the ten
occupations with the largest projected job growth are so
menial that they can be learned with short-term
on-the-job training. They are not high paying jobs and
they do not produce any export earnings: nursing aides,
orderlies and attendants, waiters and waitresses,
janitors and cleaners, cashiers, food preparation and
serving, including fast food, customer service
representatives, retail salespersons. As Business

“most of the big growth areas will be low-skill and

Economists and pundits who keep talking about the
wonderful high tech economy that outsourcing is creating
are talking about China, not the US. Writing in the
Wall Street Journal
online (Feb. 20), Steve Liesman,
senior economics reporter for CNBC, points out that jobs
in this “recovery” are as conspicuously absent as
weapons of mass destruction in Iraq. Liesman pours cold
water over the favorite “solution” offered by
economists–education: “In Oct. 2001, this country
passed an ignominious milestone: For the first time
ever, the number of college-educated unemployed
surpassed the number of unemployed who don`t have high
school diplomas.”

When US firms produce offshore, the products are not
potential American exports. Offshore production reduces
the ability of the US to export, while turning what was
formerly domestic production into imports.

Offshore production
thus delivers a double blow to
the trade deficit.

Unable to pay for its imports with exports, the US is
paying by giving up ownership of its assets. Foreigners
are becoming the owners of our real estate, companies,
and government and corporate bonds. When they acquire
ownership, they also acquire the future income streams
produced by these assets. As Warren Buffett recently
made clear in

Fortune magazine
our trade deficit is making us poorer.

What will balance our trade deficit is the collapse
of the dollar. Economists like to emphasize that a
decline in the exchange value of the dollar will make US
exports cheaper, and more will be sold abroad. They
don`t like to emphasize that

dollar decline
pushes up the price of all imported
goods, from energy to those “cheap foreign goods”
in Wal-Mart. Americans lose both ways: first they lose
good jobs in exchange for cheap foreign goods; then they
lose the ability to pay for the foreign goods as the
falling value of the dollar drives up the prices of the
foreign goods. People trapped between falling incomes
and rising prices are not people with a future.


Craig Roberts was Associate Editor of the WSJ editorial
page, 1978-80, and columnist for “Political Economy.”
During 1981-82 he was Assistant Secretary of the
Treasury for Economic Policy. He is the author of

Supply-Side Revolution: An Insider`s Account of
Policymaking in Washington