New BLS Job Projections Reflect Growing Impact of Offshoring on US Workers; Professionals, High-Tech Employees Are the Big Losers

6/4/2004

From: Jamie Horwitz, 202-879-4447, jhorwitz@aft.org or Pamela Wilson, 202-638-6684, pwilson@dpeaflcio.org

WASHINGTON, June 4 -- Recently revised downward projections for white-collar job growth for 2002-2012, released by the federal Bureau of Labor Statistics (BLS), contrast sharply with earlier government estimates, revealing the harmful impact of shipping jobs offshore, according to an analysis by the Department for Professional Employees, AFL-CIO (DPE).

Over the next decade, the greatest job growth will be in low- paid service jobs, BLS says. Seven of the 10 occupations expected to gain the most ground are low-wage occupations that do not require a college degree. This is a major shift from earlier estimates that projected rapid growth for white-collar, high-tech positions.

DPE President Paul Almeida called the changes "seismic and potentially devastating to millions of white-collar workers looking for work and an army of college graduates who have spent billions preparing to seek professional employment."

The BLS data include two key job inventories regarding future employment -- one projecting numerical growth, the other speed of growth. The latest figures show that the largest number of jobs will be created for low-paid, low-skill workers, such as retail salespeople, food preparers, waiters and waitresses, cashiers, janitors, nursing aides, orderlies and attendants. Forecasts for the other category-the most rapidly growing occupations-show a similar pattern, namely that growth will be most pronounced among low-paid medical service workers -- physical therapist assistants and aides, medical assistants, home health aides, medical records and health information technicians.

The only information technology, IT, jobs to appear in the new BLS top seven are network systems and data communications analysts. This is a major shift. Just two years ago, the 2000- 2010 BLS projections indicated exactly the opposite: that the seven most rapidly growing occupations would be in IT. But in the latest BLS numbers, only the one IT occupation remains in the top seven. Jobs for computer support specialists, software engineers, database administrators and others in high tech have vanished. As a result, instead of an average of 152,800 high tech, white-collar jobs being added annually to the economy, the seven most rapidly growing professional/technical occupations are projected to add only 10,600 IT jobs annually between 2002 and 2012 -- an astounding 70 percent decline.

"The changing job projections show that outsourcing has reduced the nation's ability to create high-skill, well- compensated jobs that are the backbone of our middle class. Government and business economists promised that high tech and knowledge jobs would replace the manufacturing jobs that were offshored -- but now they are being exported, too. This is dramatically changing the nature of employment in our country," said Almeida. "The figures are hard to deny."

Other labor statistics appear to support the bleak long-term outlook for professionals. U.S. Department of Labor unemployment figures for 2000-2003 show a 95 percent increase in unemployment among workers with college degrees, compared to a 40 percent increase among those with a high school diploma or less. Worse, long-term unemployment for those with college degrees rose by nearly 300 percent over the same period. The Economic Policy Institute (EPI) recently reported that the unemployment level of college graduates now surpasses that of high school dropouts. "Such a large and enduring increase in unemployment among those with college degrees is unusual, even in a recession," said EPI economist Jared Bernstein.

At the same time that BLS is lowering its projections for skilled jobs in the United States, other private-sector research paints a dire picture:

-- The McKinsey Global Institute and others are predicting 30 to 40 percent annual market growth in offshore outsourcing over the next five years. In 2002, offshoring was a $32 billion to $35 billion industry. Offshoring as an industry is expected to be worth more than $100 billion by 2008.

-- In 2002, Forrester Research had predicted that over 15 years, 3.3 million white-collar jobs accounting for $136 billion in wages would move overseas. In May 2004, Forrester increased its estimate of how many U.S. service jobs will go offshore in the near term. Long-term, it believes its previous projections are still accurate. High-tech jobs appear to be most vulnerable to this trend.

-- Gartner Inc., a high-tech forecasting firm, estimates that 10 percent of computer services and software jobs will be moved overseas by the end of this year.

-- A survey by Deloitte Research found that the world's 100 largest financial services firms expect to shift $356 billion worth of operations and about 2 million jobs to low-wage countries over the next five years. The study also revealed that one-third of all major financial institutions in the world already are outsourcing offshore, with 75 percent reporting that they will be doing so within the next 24 months.

-- A recent study by INPUT Research, a market research firm in Reston, Va., projects that outsourcing of state and local government technology contracts will grow from $10 billion last year to $23 billion in 2008.

-- A report published by the University of California at Berkeley projects that some 14 million jobs are at risk of being outsourced overseas, and that job losses will likely exceed what the Forrester study reports.

"I'm amazed by the supposed experts who say these trends are insignificant and that the economy will outgrow this job loss," said Almeida. "This is different than a downturn in the business cycle or the one-time job shift that generally results from NAFTA or other trade agreements: This is a permanent transfer of highly desirable jobs for well-educated people."

The August 2003 issue of a Federal Reserve Bank publication, Current Issues in Economics and Finances, examined the patterns of layoffs and job creation for the past six recessions. In the downturn beginning in March 2001 and ending in November of the same year, it is reported that 79 percent of the job losses were structural or permanent and only 21 percent cyclical. This is a substantial increase in permanent job losses compared to the previous five recessions.

"The increasing exodus of highly skilled jobs overseas-similar to the disappearance of factory jobs-means diminished opportunities for those who spent years preparing for high-tech and knowledge jobs, and for our society," added Almeida, an electrical engineer who was formerly president of the International Federation of Professional and Technical Engineers. "And yet the Bush administration has no policy other than to be a cheerleader for outsourcing."

The Department for Professional Employees is an organization of 25 AFL-CIO unions that collectively represent more than 4 million white-collar workers. DPE serves as a voice for professional, technical and other highly skilled white-collar workers within the labor movement. White-collar workers comprise almost 50 percent of the more than 13 million AFL-CIO members.