QandO

February 22, 2004

Insourcing
Posted by McQ

We’ve seen a lot in the news lately about the ‘outsourcing’ of jobs. But, per this article, while the US may be a victim of outsourcing, it isn’t a one-way street out there. It has also been the beneficiary of ‘insourcing’.

While outsourcing has captured current attention, it is not a new phenomenon. If the term is defined as jobs operated by U.S. companies in foreign countries, the current total is 10 million positions, or 7 percent of domestic U.S. employment. Further, there's been an upward trend in the number of outsourced jobs since the mid-1990s, when trade barriers were significantly reduced following the signing of the NAFTA and GATT agreements.

What is less well publicized and understood is that "insourcing" also occurs in our economy. Insourcing happens when foreign companies establish jobs in the United States.

The latest statistics show insourcing accounts for over 6.5 million jobs nationwide. Although this is less than the number of outsourced jobs, the gap has actually narrowed in the past quarter century. That is, there's been a recent trend of foreign companies adding jobs in the U.S. faster than U.S companies have increased jobs in foreign countries.

So a trend which is working in favor of employing more Americans with insourcing than losing jobs to outsourcing.

Part of that upward trend is probably attributable to the weak dollar. That too will contribute to more ‘insourcing’ since foreign currency will have more purchasing power against the dollar and thus make labor in the US more of a bargain.
US labor is a bargain for another reason as well. The US labor force is among the world’s finest in terms of productivity.
As to the jobs being lost to outsourcing, they’re readily identifiable:

With an increasingly globalized economy, more and more jobs will be candidates for both outsourcing and insourcing. The jobs most vulnerable for outsourcing are those performing routine tasks, not requiring close supervision, and where lower-cost foreign labor is readily available.

IOW, essentially jobs which require unskilled and less skilled workers. Which brings us to a very important point:

While ‘insourcing’ brings jobs, we have to be aware of the type jobs which are easiest to move around. Obviously most job seekers aren’t looking for low paying jobs consisting of routine tasks, but if the trend in outsourcing is to move those type jobs first, it’s a sure bet that much of what we see as ‘insourcing’ jobs (which obviously are some OTHER country’s outsourced jobs) aren’t going to be of the type most are looking for.

So while it may be a trend that kicks down the unemployment numbers a bit, understand that we’re most likely only moving around low paying jobs.

Which brings us back to the usual remedy:

Yet the implication for American workers is the same as my father gave me years ago: to get a good-paying, you must get an education. The updated version is: to get and keep a good-paying job, you must get more and more education.

Want a good paying job ... get a good education. Seems simple enough

Want a good education? Avoid government run schools at all costs.

Hmmm ... not so simple.

“Nuff said.

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