7 Analysis of the data on BPT
7.3 Analysis of Labour Market Data
The impacts on he labour market are these most dicussed . Let´s look closer on the accurate U.S. data. The U.S. economy employed 146,3 million people in March 2007 and the unemployment rate was 4,4%.15 Offshoring is often seen as threat to white-collar jobs in high-income economies. Acording to Olsen (2006: 5) the ratio of jobs vulnerable to offshoring rises with the technological progress. In 2003 of 18,1%
workplaces in the USA might have been offshored, 19,2% in EU15, 18,6% in Canada, 13% in Korea. However this prediction does not mean that this ratio of jobs must be really offshored.
Forrester (in Olsen, 6) predicts that in 2015 offshoring will have caused the loss of 3,3 million of jobs will be lost in the USA. However there are many examples supporting the idea that the number of the assumed loss of jobs is exaggerated. The critiques (for instance Farell 2006, Mann 2004) of this estimation point out that it firstly involves all kinds of jobs and not only the white-collar jobs, majority of job which will have been lost take place in the sector of manufacturing. Secondly this estimation does not take into account that there are new jobs created in the USA due to offshoring of foreign plants to the USA. Due to the fact that offshoring occurs in both directions (from and into the USA) the USA receive also foreign direct investments from abroad.
$121 billon of FDI was invsted in the USA in 2004 and created 5,4 million of jobs.
Foreign subsidiaries conributed by 14% to US private R&D expenditures. (Farell 2006:
3)
Mann´s objection to predictions of job losses is that the use information technologies will be further extended accross sectors of the economies as the price of software will probably decrease due to offshoring as the price decreased when
15 http://www.bls.gov/news.release/empsit.nr0.htm
hardware production was offshored before. This rise of usage of computers further raises the demand for computer specialists. (Mann 2004: 6)
Let´s look on the more detailed data. The employment in the sector of sevices may be divided into three groups: „Management, professional, and related occupaions“,
„Service occupations“ and „Sales and office occupations“.16 Table 10 presents the employment and unemployment rate in the three catgories of jobs in the sector of services.
Table 10: Employment, Unemployment Rate in the Sector of Services 2000-2006
2000 2001 2002 2003 2004 2005 2006 Mar 2007
Employment
(thous.) 46301 47043 47180 47929 48532 49245 50420 51791
Unemployment
rate 1,80% 2,30% 3% 3,10% 2,70% 2,30% 2,10% 1,80%
Employment
(thous.) 20777 21183 21766 22086 22720 23133 23811 23708
Unemployment
rate 5,20% 5,80% 6,60% 7,10% 6,60% 6,40% 5,90% 5,90%
Employment
(thous.) 36169 35785 35408 35496 35464 35962 36141 36412
Unemployment
rate 3,80% 4,40% 5,60% 5,50% 5,20% 4,80% 4,40% 4%
Employment
(thous.) 103247 104011 104354 105511 106716 108340 110372 111911 Unemployment
rate 3,18% 3,74% 4,63% 4,74% 4,36% 4,01% 3,67% 3,38%
All service jobs
Source: Bureau of Labor Statistic17
The number of people employed in the sector of services reached on average 111 911 000 in March 2007 and the sector of services employed 76,5% of American labour force. The unemployment rate in this sector in March 2007 was slightly higher than in 2000 but it was sill under the American average rate. The unemployment rate in the sector is 1,5 percent points above the average American rate. The unemployment
16 http://www.bls.gov/webapps/legacy/cpsatab10.htm
17 http://data.bls.gov/PDQ/servlet/SurveyOutputServlet
rate is the highest in the category of Service occupations and it exceeds the American average rate. The jobs in this category are mostly non-offshorable since it involves the serving jobs in restaurants or personal services in general.
There can not be any relevatnt connection of the rise of offshoring and the higher unemployment rate. The jobs in the two rest categories may be offshored but the data proved that the employment has been rising in the observation period even when the uneployment rate remained stable or slightly increased. This conclusion is valid particularly for the category Management, professional, and other related occupations where the number of employed people increased from 46 301 000 in 2000 to 51 791 000 in March 2007. The data thus denies any correlation between rising extent of offshoring in services and rising unemployment in the sector of services.
No doubt that there were some jobs lost due to offshoring. However according to Farell offshoring caused only 1% of job losses. Furthermore she reports that 75% of employees in services released due to offshoring found a new job within the period of six months. Their salary was on average 11% lower than in their lost jobs. (Farell 2006:
2, 3-4) Let´s have a look at more detailed data of hourly wage in the sector of services in table 11.
Table 11: Average hourly earnings in the sector of services 2000- 2007
2000 2001 2002 2003 2004 2005 2006 March 2007 Total private 14,28 14,75 15,21 15,48 15,88 16,37 17,07 17,22
change Y/Y % - 3,29 3,12 1,78 2,58 3,09 4,28
-Private-service
providing 13,91 14,38 14,83 15,08 15,48 16,00 16,74 16,89
change Y/Y % - 3,38 3,13 1,69 2,65 3,36 4,62
-Professional and
business services 15,92 16,56 17,10 17,28 17,75 18,43 19,64 19,88
change Y/Y % - 4,02 3,26 1,05 2,72 3,83 6,57
-Information 19,42 19,96 20,70 20,99 21,68 22,57 23,60 23,90
change Y/Y % - 2,78 3,71 1,40 3,29 4,11 4,56
Data in table 11 shows that the trend of decreasing wages has not been prevailing in the sector of services. Private-service providing branch whose wages are
$0,30 below American average however it includes mostly jobs which can not be offshored (waiters etc.) so the lower salary in this sector is not connected to offshoring.
The other branches recorded higher hourly wage than average and they all grew steadily between 2000 and 2007. Let´s even closer on the data on the sector of ICT which is discussed so often in public. The data are presented in table 12.
Table 12: Changes in Hourly Wage and Employment for U.S. Computer Specialist Occupations
Occupations 2005 2000 2005 2000
Computer and information
scientists, research 45,21 35,30 28,07 25 890 25 800 0,35
Computer software engineers,
systems software 40,54 34,08 18,96 320 720 264 610 21,20
Computer software engineers,
applications 38,24 33,80 13,14 455 980 374 640 21,71
Computer systems analysts 33,86 29,43 15,05 492 120 463 300 6,22
Computer programmers 32,40 29,31 10,54 389 090 530 730 -26,69
Database administrators 31,54 26,83 17,55 99 380 108 000 -7,98 Network systems and data
communications analysts 31,23 27,83 12,22 185 190 119 220 55,33 Network and computer systems
administrators 30,39 25,81 17,75 270 330 234 040 15,51
Computer support specialists 20,86 19,08 9,33 499 860 522 570 -4,35 All computer specialist
occupations* x x x 2 738 560 2 642 910 3,62
All US occupations 16,37 14,28 11,4 141 730 000 136 891 000 1,8 Hourly wage /$/
Note: *„Estimates for detailed occupations do not sum to the totals because the totals include occupations not shown separately. Estimates do not include self-employed workers.“
** Hourly wage for the US private sector
19 http://www.bls.gov/oes/oes_dl.htm, http://data.bls.gov/PDQ/servlet/SurveyOutputServlet, http://data.bls.gov/cgi-bin/surveymost, http://www.bls.gov/ncs/ocs/sp/ncar0002.pdf
The data in table 12 confirm that newly created jobs in the sector of ICT are on average higher-paid. The only job categories where the number of jobs decreased were jobs of Computer programmers, Database administrators and Computer support specialists. The number of people in computer-related jobs increased within the period of observation by 3,62%. Moreover the hourly wages in the sector of ICT services are usually much higher than the average American hourly wage.
It may be surprising how small part of employment the ICT jobs present. Table 13 shows the percentage ratio of employment of computer-related jobs to the overall American economy.
Table 13: Number of computer-related jobs in the USA
Occupations
All computer specialist occupations* 2 738 560 1,93%
All US occupations in 2005 141 730 000 100%
Source: Bureau of Labor Statistics20
20http://www.bls.gov/oes/oes_dl.htm,http://data.bls.gov/PDQ/servlet/SurveyOutputServlet
It is obvious that computer-related jobs present less than two percent of American jobs. Computer support specialists, Computer systems analysts and Computer software engineers present the largest part of computer-related employment.
The number of employees in the first group slightly decreased, the employment in the second group rose and there was a steep rise in the job category of Computer software engineers, applications.
What are the conclusions from the chapter analyzing data on U.S. labour market? The branches of services that were involvd in offshoring did not on average record the rise of unemployment rate while the extent of offshoring was growing.
Moreover their unemployment rate was on average lower compared to the average unemployment rate in the U.S. economy. The unemployment in the ICT sector represented in 2005 slightly less than two percent of he U.S. labour force. The employees within this sector had in 2005 substantially higher hourly wage compared to the average hourly wage in the U.S. economy. Some of the statistical categories of employees in the ICT sector earned on average two or three times more per hour than the average employee of the U.S. economy. It is true that the number of the jobs of programmers decreased (and it was not the case only of the programming jobs) but the employment in the sector of ICT between 2000 and 2005 increased even despite the burst of the bubble of internet business in 2001. It means that the ICT branch sucessfully recovered from it. My final conclusion is that there is „much ado about nothing“.