Monday, September 17, 2012

Which Comes First?

It's a simple enough question: "Could Outsourcing Be Good For The Economy -- And Worker?" And the answer is "of course." Depending, that is, on what the economy is doing - and how you define the "Worker." If economic progress is always a process of "creative destruction," you have a question - which is driving which: the creating, or the destruction?

When creativity drives destruction, no-one really gives a rip about offshoring, because the reason why jobs are being "sent oversees" is that otherwise, there'd be no-one around to take them. As an example, when the technology bubble was still going strong, more than a couple of restaurants were having difficulty keeping their staffing levels at an acceptable number, and they were forced to close. Now, while this wasn't an ideal situation for the restauranteurs, the workers weren't in altogether a bad spot - they could either move into the technology sector that was sucking all of the oxygen out of the local labor market, or they could go to one of the many other restaurants that desperately needed workers, and apply there. For the most part (and that's important to keep in mind) it was a winning scenario for the individual workers. Because the technology sector was hungry for people, the training needed to land entry-level technology jobs was being provided by the employers themselves - the question wasn't "Do you know how to do this work?" The question was: "Can we educate you on how to do this work?" People with the initiative to take classes to expand their skills or move from other parts of the country found that businesses were ready to loosen the purse strings to help out, in exchange for a modest commitment. Politically, at this stage, offshoring wasn't an issue. Any cheerleading for (or doomsaying of) the practice was drown out in the roar of the bull market.

When destruction is driving (or demanding) creativity, it's a completely different story. While, in a down economy, outsourcing may be an economic good that benefits the labor force as a whole, it's not the labor force as a whole that shows up in political attack advertisements. Where and when unemployment is high, retrained workers will always be at something of a disadvantage, especially after radical career shifts. Given a choice, employers want to keep labor costs low, and a worker who needs to support a family is likely to have higher salary needs than a childless singleton fresh out of college, and so is more likely to want more pay or to jump ship at the earliest opportunity. And the uncertainty level is high - it can be tricky to navigate the risks of standing pat with the skills one has and trying to find a new position that uses them, versus incurring the expense of acquiring new skills and hoping to recoup those costs later. Just as importantly, even when unemployment is at record levels, there is a segment of the population that firmly believes that only "dead weight" hits the unemployment line, and so hiring the laid-off is to bring "someone else's problems" into their organization. And that's part of the reason why President Obama and Governor Romney are sniping at each other over the issue right now. No matter what an economist tells them about the practical benefits of offshoring, all the typical American sees is the threat of being unemployed and in need of another job - and fast. Anyone seen as increasing the chances of that happening to them is The Enemy.

In the end, the expectation that politicians should present offshoring jobs as an economic driver, something to be embraced rather than feared, is a looser - the individual costs are immediate and sometimes dramatic, while the benefits are uncertain and in the future. And, as with anything else, those who stand to loose are going to be very vocal about the downsides. Political support for offshoring is typically going to be unheard, because it will really only come in a bull market, when economic growth drives the need to offshore, due to tight labor markets. And politics is seldom driven by non-issues.

No comments: