Luce co-authors outsourcing study disputing federal data

October 22, 2004

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By Linda Myers
Cornell News Service

A report to a bipartisan congressional commission co-authored by Stephanie Luce, assistant professor of Labor Studies, suggests that federal officials are grossly underestimating the number of American jobs being sent overseas.

The study documented 48,417 U.S. jobs outsourced to other countries or publicly announced as being scheduled for outsourcing, from January through March 2004. For the same period, the U.S. Bureau of Labor Statistics reported that only 4,633 private-sector jobs in companies with more than 50 employees were lost.

Luce and her co-author, Kate Bronfenbrenner, director of labor education research at Cornell University’s School of Industrial and Labor Relations, obtained the information for their report through online tracking of media reports, corporate research and the creation of a database of information on all production shifts announced or confirmed in the media. Their study was commissioned by the U.S.-China Economic and Security Review Commission, which sought the information because there is no government-mandated reporting system to track production shifts from the United States to other countries.

The authors believe their methodology only captures one-third of all production shifts in most cases, which, if true, would bring the actual number of jobs lost to outsourcing in 2004 to 406,000 by year''s end, compared with 204,000 in 2001. "We know we''re not capturing all the numbers because companies are wary about the negative publicity and often don''t share it fully with reporters," said Bronfenbrenner.

The researchers, who also studied U.S. job outsourcing from Oct. 2000 through April 2001 for a predecessor commission of the bipartisan Congressional group, saw these important differences in their new, 2004 study:

Unlike in 2001, when the majority of job shifts were to single destinations, this year the shifts are to multiple destinations simultaneously, some from the United States to "near shore" or close to home, such as Mexico and Latin America, and some to "off shore" or far away, such as China and other countries in Asia. This trend is global, with companies in European countries also simultaneously shifting jobs to Eastern Europe and Asia, and high-wage Asian countries shifting jobs to low-wage neighboring countries and to China.

Also unlike 2001, white-collar service jobs, particularly ones involving information technology and call centers, are being shifted from the United States and Great Britain to India. That change is especially tough for U.S. service workers because the U.S. Department of Labor''s Trade Adjustment Assistance (TAA) program only offers compensation (income support, relocation and job search allowances, and a health coverage tax credit) to workers who lost jobs that produced a "product," as defined by TAA rules, state Bronfenbrenner and Luce.

Other key findings included in their executive summary are as follows:

Of the documented jobs that left the United States for other countries in January through March 2004, 23,396 went to Mexico, 8,283 to China, 3,895 to India, 5,511 to Latin American countries other than Mexico, 4,419 to Asian countries other than China and 2,933 to other countries.

The U.S. Midwest lost the most jobs to outsourcing (18,968) from January through March 2004. Other U.S. regions that lost a lot of jobs were the Southeast (8,604) and Northeast (7,223). The states hardest hit were Illinois (7,555 jobs lost) and Michigan (5,283 jobs lost).

Unionized jobs accounted for a disproportionate 39 percent of the U.S. jobs that moved to other countries during the time period studied. In addition, 29 percent of the companies shifting production out of the United States were unionized, the report showed.

From January through March 2004, there were 69 production shifts from the United States to Mexico (compared with 30 during the same period in 2001); 58 shifts to China (compared with 25 shifts in January-March 2001); and 31 shifts to India (compared with 1 shift in January-March 2001). The companies shifting jobs to China tend to be large, publicly held, highly profitable and well established, with 72 percent of them owned by U.S. multinationals.

The report is titled "The Changing Nature of Corporate Global Restructuring: The Impact of Production Shifts on Jobs in the U.S., China and Around the Globe."