Outsourcing results in minimal job losses

July 31, 2012

Free Market Foundation

The U.S. Government Accountability Office has issued its first review of the data and its results suggest that the impact of outsourcing on jobs is highly exaggerated:

Of the 1.5 million jobs lost in America last year in “mass layoffs” that is, when 50 or more workers are let go at once less than 1 percent were attributable to overseas relocation.

In 2002, only about 3 percent of the money directly invested by American companies overseas went to the developing countries that are most likely to account for outsourced jobs.

By contrast, technological innovation is responsible for a far greater number of jobs lost than outsourcing, yet few Americans suggest technological innovation be stifled for the sake of preserving old jobs.

For example, according to the Bureau of Labour Statistics, 4,633 workers were laid off because of off-shoring in the first quarter of this year. Over that same period, Kodak announced layoffs of 15,000 workers due to growth in digital photography, which reduced demand for film.

Source: Daniel W. Drezner, Where Did All the Jobs Go? Nowhere, New York Times, September 29, 2004.

For NYT text http://www.nytimes.com/2004/09/29/opinion/29drezner.html

For more on Globalisationhttp://www.ncpa.org/iss/tra/

FMF Policy Bulletin 26 October 2004