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


The nanotools and devices category is projected to grow at an impressive annual compound rate of 109 percent through 2008, while the growth in nanomaterials is projected to increase at a rate of 24 percent annually.

Similarly, fuel cell technology may actually fuel the jobs market, showing projected average annual compound growth of 41 percent per year through 2006.

Added Gottfredson, "how many people knew what a Webmaster was 10 years ago?"

History Repeating Itself

According to Bain, the global re-shuffling and re-location of capabilities has been a fact of life in the United States since its earliest industrial days. Starting more than 200 years ago when the United States shifted from an agrarian society, some asked, "but where will all of the farmers go?" Well, they went to the factories.

And over the last 20 years, when some manufacturing jobs went offshore, some asked, "where will all of the factory workers go?" Well, we now know that the United States ushered in historic numbers of well-paid information technology jobs.

And now, when some IT jobs are being outsourced — and Bain said the fact is most of the IT jobs being offshored today are lower-value call center jobs — some are again asking "what's next for the American worker?"

"The world is witnessing seismic shifts in how capabilities are sourced," said Rudy Puryear, partner and co-head of Bain's Capability Sourcing Practice. "But America has been at similar crossroads in the past and not only has weathered the storms but has in fact prospered. So the question shouldn't be if the United States will prosper, the real question is how."

Bain acknowledged that manufacturing jobs, as a percent of the overall workforce, have indeed been declining. But the firm also stated that the decline started over 50 years ago. And at approximately 15 million jobs, the current total number of U.S. manufacturing jobs is roughly where it was in 1960, while the real hourly wage has increased by almost 50 percent over the same period.

Bain agreed that the "shape" of U.S. manufacturing has certainly changed, and individual workers have been affected differently, but the analysis demonstrated that U.S. manufacturing has — at a minimum — held its ground.

Similarly, Bain's analysis explored the facts behind the recent attention paid to so-called IT job and wage erosion. While there was saturation in the media proclaiming the bursting of the information technology bubble, Bain pointed out that, overall, average nominal IT salaries actually increased by roughly $2,000 from 1999 through 2002. The business consultancy additionally emphasizes that an assumed annual 3 percent wage indexing over the three-year period would have driven the increase up to approximately $5,000 in real wages. Specifically, high-value job growth in many key IT categories flourished:

* The largest percentile movement — positive or negative — was the 10.7 percent increase in network communications and data communications analysis jobs. And the average salary for these jobs in 2002 was $61,390. For reference, the average salary reported by the Bureau of Labor Statistics in 2002 for all U.S. jobs was $36,764.

* And the second largest jobs increase was the 7.4 percent increase in software application engineering jobs, which had an average salary was $73,800 in 2002.

While many higher-salary IT job categories were growing, several categories did see job losses. It is noteworthy that the largest IT job category decrease — a 10.2 percent decline — occurred with data entry keyers. The average salary for these positions was just $23,190 in 2002, which is less than half of the average salary recorded in the fastest growing IT jobs category observed in the same period (network communications and data communications analysis).

"Bain's analysis revealed that the majority of IT jobs offshored have been on the lower-end of the salary bar. In fact, we found that the total number of data entry keyer jobs lost was larger than the total job losses recorded for all other IT job categories combined," summarized Puryear. "It's turning out that reports of the death of the American worker may have been greatly exaggerated."

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