In a much debated research paper last year, Princeton economist Alan S. Blinder concluded that up to 38 million jobs, or 29 percent, of US jobs are potentially offshorable within the next couple of decades — that is, capable of being outsourced to workers in other countries.
Blinder’s analysis helped shatter the myth that only low-paying, low-skill jobs — “the jobs US workers don’t want anyway” — are ripe for plucking by other countries. In fact, a case can be made that medium-wage workers, i.e., the American middle class, are most at risk. And many high-paying, high-skill careers such as microbiologist and financial analyst make Blinder’s most vulnerable list.
(One takeaway: If you want to keep your job, become engaged in personally-delivered services, jobs that require your physical presence. Think janitors, surgeons, and wedding photographers.)
Study Contested
The report ignited a political and academic firestorm. It seemed to contradict the argument by many that free trade, while costing some workers their livelihoods, ultimately benefits the US economy. But could the country lose almost a third of its jobs without suffering severe economic impact? Critics countered that Blinder’s one-person ranking of offshorable jobs was too subjective to be taken seriously.
Enter Harvard Business School, where research associate Troy Smith and professor Jan Rivkin attempted to recreate and verify (or not) Blinder’s study using a team of 900 MBA students. Would the students agree with Blinder’s ranking and number of most vulnerable jobs?
The results are now in, and at a high level confirm Blinder’s work, report Smith and Rivkin. In so doing, they underscore that offshoring is a significant issue worthy of attention from government policy makers and academics.
(BTW, Blinder is not what you would call a rabid protectionist. A Democrat, he is a former Federal Reserve Board vice chairman who has advised a number of presidential candidates. He thinks free trade is mostly beneficial to the US, but argues that lawmakers are underestimating the potential magnitude of the offshoring trend and that they should encourage creation of jobs and skills that are harder to perform overseas.)
In this election year, the topic is likely to become a hot-button issue as the fall approaches. Where do you come out on all this? Should government take a more protectionist stance? Are current retraining efforts enough?
The Business Perspective
Aside from political ramifications, Smith and Rivkin recognize that offshoring provides many competitive benefits to companies seeking to allocate their resources in the most cost effective and productive ways. But perhaps we are thinking of jobs and offshoring too narrowly, they suggest; that even more efficiences can be gained by deconstructing job tasks into component parts that can outsourced piecemeal to various geographies.
“It is this opportunity to rethink the fundamental grouping of tasks, not just to adjust the geographic array of historical bundles, that makes offshoring so powerful from the perspective of a business leader,” write Smith and Rivkin. “The possibility of grouping tasks in novel ways gives businesspeople a breathtakingly broad menu of new options for taking advantage of differences across borders.”
