On the surface, it looks like a sign of the times for a sluggish U.S. job market: Technology bellwether IBM Corp. is said to be moving as many as 4,730 of its well-paid computer-programming positions to India, China and elsewhere overseas.
With all the talk about a jobless recovery, and a manufacturing sector that has felt the sting of low-cost competition abroad, this latest report naturally raises some disturbing questions.
Is America shipping all the good jobs to Asia? Should we all practice saying, “Welcome to Wal-Mart. May I help you find something?”
Not even close. In fact, the long-awaited rebound in job creation is happening right now. And from a broad standpoint, even the reports about tech jobs moving offshore are hardly the sign of weakness they might appear to be.
No question, job creation has lagged, especially compared to a fast-rising stock market and red-hot economic growth of 8.2 percent in the third quarter. Pessimists are focusing on the Labor Department’s latest finding that major U.S. companies added just 57,000 positions to their payrolls in November.
But that measure, based on data from established workplaces, almost always understates job growth at turning points in economic recoveries.
The Labor Department also collects data by telephoning households directly and asking about employment status. The so-called “household” survey turned up much more robust results last month–a whopping 589,000 new jobs.
The difference stems mostly from activity outside large companies. With demand rising, small businesses that maintain little cushion in their workforces have started to hire again.
At the same time, the ranks of self-employed entrepreneurs have expanded sharply. And at bigger companies, both the dependence on temporary workers and the length of an average workweek are trending higher, suggesting job creation ahead.
Economist Brian Wesbury of Chicago’s Griffin Kubik Stephens & Thompson investment firm expects the U.S. to generate 3 million jobs in 2004.
“The economy has turned a corner,” Wesbury says. “We’re there.”
Of course, such lofty pronouncements offer little consolation for the IBM workers said to be losing their positions to Chinese and Indian engineers who earn much smaller paychecks. It’s only natural to feel sorry for those folks.
But here’s the hard truth: When jobs can be done more efficiently offshore, it pays to let them go. Over time, those painful decisions unleash resources in the U.S. for commercial activities with greater added value.
That’s especially true in the world of technology, where startups turn into giants in a heartbeat. Even as IBM considers shipping its programming work offshore, younger companies like Amazon are hiring engineers aggressively.
Beyond that, it’s only natural for multinationals like IBM to expand operations in the world’s two most populous countries. The rewards flow back to its Armonk, N.Y., headquarters in the form of repatriated earnings and capital savings that can be invested in new jobs.
Ultimately, the U.S. economy benefits more from “offshoring,” as it’s called, than from misguided efforts to keep jobs where they don’t belong–witness the damage done by the administration’s steel tariffs. Creating something new is the best way to compete, and America is finally hitting its stride.
