Myth: Offshoring Doom and Gloom for U.S. Workers; Reality: More Hope Than the Hype

New Bain & Co. analysis reveals 50 times more Americans quit jobs each month than get offshored


New Bain & Co. analysis reveals 50 times more Americans quit jobs each month than get offshored

New York — July 8, 2004 — While the extinction of the American worker due to offshoring continues to fill the front of news pages, new analysis from Bain & Co., a global business consultancy, suggests differently.

Bain pointed to recent data that shows little proof that offshoring represents a major source of U.S. job loss. In April 2004 alone, the U.S. economy witnessed a "net gain" of 330,000 jobs — a result of 4.36 million people starting a new job and 4.03 million people losing or leaving their jobs (approximately half left voluntarily and approximately half were laid off or fired).

"Bain estimates that roughly 40,000 jobs are currently offshored each month — or approximately 1 percent of all job losses," said Mark Gottfredson, partner and co-head of the Capability Sourcing Practice for Bain & Co. "That means that 50 times more Americans quit their job each month than get offshored."

Bain's analysis was based on a combination of publicly-available sources, e.g., Bureau of Labor Statistics studies, and its own proprietary research.

A Brightening Jobs Outlook

Bain said it sees the clouds partially clearing and a brightening jobs outlook forming for U.S. workers. The business consultancy pointed to offshoring projections through 2008 that range from a continued 40,000 jobs per month on the low side, to 80,000 jobs per month on the high side. But even the more dramatic projection for U.S. jobs shifting abroad still suggests that offshoring losses will be dwarfed by other factors, such as voluntary and involuntary severances.

In addition, many studies show that the effects of low population growth, coupled with a retiring baby boomer workforce, will cause a pronounced U.S. labor shortage starting in 2008. Therefore, even with up to 3 million jobs being offshored by 2012, the U.S. is likely to have a shortage of approximately 3 million to 7 million jobs by then. Where will shortages likely occur? Just one case in point: Studies show a projected six-fold increase in the size of the shortage of registered nurses in the U.S. by the year 2020.

Bain's analysis further evaluateed relevant employment factors such as current industry size and employment levels, as well as industry and job growth projections through 2012. The results showed losses in some industry job categories, but signs of growth in others.

Highlights of Bain's analysis include:

* In terms of percent growth, some of the greatest job gains are projected to be in the categories of computer systems design (4.5 percent); management, scientific and technical consulting (4.5 percent); community care services for the elderly (4.5 percent); Internet services and data processing (3.9 percent); ambulatory health care services for the elderly (3.9 percent); educational services (2.6 percent); and business security and support services (2.5 percent).

* The continued re-shaping of the projected American jobs landscape will see job losses, however, in traditional industry categories, including cut and sew apparel manufacturing (-12.2 percent); apparel knitting mills (-8.7 percent); fabric mills (-5.9 percent), apparel accessories (-5.4 percent); fiber, yarn and thread mills (-5.3 percent); metal ore mining (-4.8 percent); coal mining (-3.5 percent); and pulp, paper and paperboard mills (-2.8 percent).

The business consultancy was quick to point out, however, that this jobs analysis is of "known" employment categories. Alluding back to its historical view of capability sourcing and shifting, commercial innovation has traditionally been the biggest source of new job creation in the United States, according to Bain.

So, what is the prognosis for the future? Bain steered clear of crystal ball predictions, but did point to the emergence of new technologies, like nanotechnology and fuel cell technology, as possible future sources of new job growth.

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