The benefits of disappearing jobs

The U.S. labour pool will fall dramatically by 2015 as baby boomers retire, says Diana Farrell of McKinsey Global Institute. However, the generations of workers who follow them will have better jobs. One reason is outsourcing.

Jobs are being "offshored" to the United States, even as American jobs are outsourced overseas. For example:

IBM is sending 3,000 jobs overseas to India – but the cost savings will help it create 4,500 U.S. jobs this year.

South Carolina's huge BMW plant represents the "offshoring" of German jobs because that country's labour laws, among other things, give America a comparative advantage.

Similarly, Mercedes are made in Alabama, Hondas in Ohio, Toyotas in California.

Many American jobs have disappeared over the past century, and continue to do so:

During the 20th century, hundreds of thousands of miners lost inherently unsafe jobs to mechanisation – but John L. Lewis, leader of the United Mine Workers of America, once said that he hoped to see the day when no man would make his living by going underground.

In 1999 alone, 33 million U.S. jobs were wiped out – by a dynamic economy that created 35.7 million jobs.

Each job American companies outsource to India translates into annual savings of $20,000 to $30,000, say experts, and those savings help create better jobs in the United States.

Source: George Will, Sometimes Jobs Ought to Disappear, Fort Worth Star-Telegram, February 20, 2004; Marilyn Alva, U.S. Firms' Outsourcing to India Reaps Big Savings, Political Heat, Investor's Business Daily, February 20, 2004.

For Will text http://www.townhall.com/columnists/georgewill/gw20040219.shtml

For more on Benefits of Trade http://www.ncpa.org/iss/tra/

FMF Policy Bulletin\24 February 2004