Another reason the press exaggerated the loss of high-tech jobs is that the extreme cycle in Silicon Valley has been wrongly generalized into a nationwide phenomenon. The unemployment rate in San Jose fell from 6.7 percent in July 1994 to 1.3 percent by December 2000. But local unemployment subsequently soared to 9.1 percent by January 2003 -- a two-year shakeout as frightening as the corresponding collapse of Silicon Valley stocks. By this March, San Jose unemployment was still 6.8 percent, nearly double the 3.6 percent rate in Orange County. Yet even in 2000-2002, when computer specialist jobs were declining nationwide, Jacob Kirkegaard at the Institute for International Economics (iee.com) showed such jobs were rising substantially in Virginia, Maryland and New Jersey.
The notion that huge numbers of computer specialist jobs are being outsourced to India implies the experts at our own Bureau of Labor Statistics must be horribly mistaken. This insult to the BLS is not based on any economic facts but on estimates from Forrester Research -- former cheerleaders for the dot.com craze, with no expertise in economics. In an overly publicized 11-page $249 report, "Forrester has increased its estimate of how many U.S. services jobs will go offshore in the near term. Long term, we believe that our previous projection of 3.3 million by 2015 is still accurate."
To put such a blue sky "projection" in perspective, The Economist noted the United States routinely loses about 30 million jobs every year (millions even quit!) but gains even more. The gullible business press failed to notice that Forrester is not talking about a net loss of jobs at all. To do so would require serious economics, of the sort used in BLS projections. Forrester doesn't do economics, or at least nothing recognizable as economics.
If U.S. companies generate 1.3 million new computer specialist jobs by 2012 but 300,000 of those are in other countries, the net result would still be a gain of 1 million in the United States. The press also missed the fact that computer specialists account for merely 14 percent of Forrester's alleged 3.3 million "outsourced" jobs. Such a small number is perfectly consistent with the BLS projection that the United States alone will experience a net increase of a million computer specialist jobs.
Forrester's list of service jobs supposedly threatened by offshoring includes nine BLS categories ranging from management to sports. Half the gross job losses supposedly occur in the lowest-paying category of "office and administrative support," such as call centers. Yet Kierkegaard notes that management accounted for two-thirds of all jobs lost among these nine categories from 2000 to 2002. That was not because U.S. corporations were suddenly being managed from the Philippines, but because of cyclical white-collar cutbacks in manufacturing. Forrester somehow imagines managerial jobs will account for 9 percent of future service jobs moving offshore, but that only makes sense for branches of U.S. companies that provide face-to-face services to business located abroad (provincial folk may be aghast to learn the first letter in IBM always stood for "international").
Since the alleged offshoring of high-paying computer-related jobs is an obvious hoax, the outsourcing agitators have lately switched to fretting about low-paying, non-technical jobs at call centers. Sen. John Kerry, D-Mass., even introduced a bill last November requiring call center operators to disclose what country they are in. We are assumed to prefer talking to someone in Oregon rather than Ontario (which has a lot of call centers). But the call center worker in Oregon might be a prisoner. Ten state prison systems operate for-profit call centers.
That is one way to avoid the hectic turnover that plagues this unpleasant job the politicians seem so eager to protect. In any case, consumer-to-business communications by phone will be rapidly displaced by automated voice software and broadband Internet, not to mention the virtual ban on telemarketing.
Complain about offshore call centers if you like. Economist Mike Evans finds them the service sector's equivalent of the Yugo, facing a similar fate. But don't confuse taking phone orders for the latest televised kitchen gadget with a high-paid, high-tech career. Americans do not send thier kids to college so they can sit at a sewing machine all day, nor end up in a big room full of tiny cubicles and ringing phones.