Care to comment on this article?

http://www.epinet.org/content.cfm/Issuebriefs_ib184

Did I pass the spelling test this time? ( I used short words)

From Dan's link:

The total number of jobs and job opportunities is a measure of what employment in trade-related industries would have been if the U.S. trade balance had remained constant (and holding everything else in the economy constant) between 1994 and 2000.

Does "everything else in the economy" include the net foreign investment in the US which balances the increase in the trade deficit? If so, it's something they had no business holding constant.

Hmmm... I should make clear that by "holding everything else constant" I take them to mean (based on the preceding note on "Methodology" in the article) that they're leaving everything about the economy unchanged from its historical trajectory, but holding the trade deficit at its 1994 level. If you read them literally, all you'd get would the uninteresting conclusion that if you start out with the 1994 economy and hold the trade deficit and everything else constant, you also end up with the 1994 economy.

Dear Dan,

Thank you for both the citation and your thoughtful response. Whatever our differing opinions, you are no light-weight and have my sincere admiration. I have read the memo, and see a lot of non-denial denials and blanket assertions made without proof. I will be looking up the source citations and pulling these contradictions apart looking for clues.

However just as a red glaring warning sign on the surface I will note two things:
(i) The BLS memo did not deny that offshoring could inflate productivity (even significantly) - it simply argued that it didn't
(ii) According to the quote summary above, the effects decellerated after 1995.

"In manufacturing, the combination of domestic outsourcing and offshoring has contributed about 1.5% per year to sectoral output per hour growth through 1995 but only about 1% per year thereafter and as a result, they do not appear to be an explanation for the productivity speed-up."

However this alone begs reason to differ. As it is popularly known, offshoring has in absolute terms and relative to the economy increased as a practice since 1995.

So how can the BLS estimate of output growth from offshoring have decreased after 1995 by 2/3rds???

This is a glaring red warning signal that something is wrong with the above analysis. When BLS admits that offshoring can inflate output, and then suggests that the output inflation has decreased during the very period when offshoring was growing by leaps and bounds then we have a contradiction in the evidence that suggests a need for deeper analysis.

For the record, I don't believe that there is any more of a conspiracy going on that of bureacracies and Administrations of both sides of the aisle being lazy, out of touch, and wanting to make themselves look good.

However even the BLS memo you quote has a contradiction in the evidence that indicates that not all might be what it appears to first glances. Thank you for bringing it to my attention.

Oddly enough, the number of mass layoffs where no reason for the layoff was reported, a continually growing portion of the mass layoff data, has more than doubled in 2003 over 2002. And the 2003 numbers are not complete yet.

The number itself more than doubled in the five years between 1997 and 2002. It is the only continually increasing annual number in the available range of data. For 2003, this mysteriously unexplained portion accounts for 12.1% of the layoff data set; 2.5 times the portion it represented in the 2002 data and 3.5 the portion it represented in the 2001 data.

So why are corporations suddenly so much less willing to indicate why they are laying off workers? Could it be because the reasons are unsavory? Are they perhaps afraid that bringing attention to the reason could cause a negative political backlash against the practice?

I guess we'll never know, as long as corporations are nervously ashamed about putting thousands of Americans out of work for their own pockets.

Useful site Dan, we should all use it in good health. And in poor income.

I would have thought there are at least two reasons why the BLS numbers are upward-biased (making off-shoring even less of an issue than the raw stats suggest).

First 'import competition' is a much broader term than just off-shoring. A lot of this is regular down-sizing in response to competition from other firms that are overseas-based.

Second, as Dan notes, small companies are missed. I would assume they do less off-shoring than large companies, so a large company sample would overstate the general trend.