Job Shortage or Labor Shortage?

Growth in offshore jobs does not necessarily hurt domestic employment. In manufacturing, offshore competition came into play more than 20 years ago. In many cases the growth of foreign competition has created new manufacturing jobs in the United States. One expert sees the problem from a different angle, positing that there are plenty of manufacturing jobs, just not enough qualified workers to fill them.

The first casualty of any economic downturn is usually employment. May 2003 jobless figures peaked at 6.8 percent, the highest in over a decade. The obvious question is whether the numbers reflect the economy, or whether other longer-term factors are at work, such as migration of jobs offshore.

Many offshore outsourcing firms continue to record double-digit growth. These are the companies that fill white-collar, back-office jobs--and that sends up a red flag.

A closer look, however, reveals that the growth in offshore jobs does not necessarily amount to a zero-sum game when it comes to domestic employment. Go to the manufacturing sector, where offshore competition emerged in full force more than 20 years ago. Since that time, the manufacturing environment has become highly global. Even if a company serves the domestic market, chances are foreign companies are involved, either in competition or as a source of subassemblies or parts.

And in many cases, the growth of foreign competition has created new manufacturing jobs in the United States. For proof, drive the I-85 corridor in the Carolinas, home to many recent foreign industrial transplants.

Economic cycles, rather than foreign competition, have driven changes in manufacturing employment. According to the U.S. Bureau of Labor Statistics, manufacturing employment grew by 700,000 jobs between 1991 and 2001. However, the current recession took a huge toll, with more than 2 million manufacturing jobs disappearing between 2001 and 2002 alone.

"If we were in employment mode, we would have more people to select from than three or four years ago," notes Mike McQuillen, plant human resources manager for Butler Manufacturing's prefabricated buildings division.

Light at the End of the Tunnel

Workplace trends consultant Roger Herman sees a different angle. He notes that the sucking sound you hear may be that of open positions going unfilled. He cited federal statistics predicting 167 million jobs by the end of the decade, but only 157 million Americans to fill them.

In the manufacturing sector, part of the problem has been that, in an era of high employment, factory jobs were considered less desirable than white-collar occupations. Herman acknowledges that in the current downturn, job losses tend to dominate the headlines, making the prospect of labor shortages difficult to believe.

The problem is that layoffs tend to be announced, but hiring is not," Herman says. Nonetheless, he admits that in manufacturing, the employment situation is "fluid" at the moment.

The notion of job shortages brings back memories of the 1990s, when unemployment rates hovering in the 3 percent range caused companies to rely on immigrants or, for skilled positions, to recruit noncitizens on special H1-B employment visas. This was the scenario for companies ranging from retail and fast food restaurants to high-tech and back-office firms. However, the tightened immigration laws following September 11, 2001, will likely mean that the flow of foreign workers into the United States will seriously slow. For instance, if Congress fails to act, the number of H1-B employment visas will decline from current annual levels of 195,000 to only 65,000 in 2004.

Herman adds that decreasing U.S. birthrates will compound the job situation.

"We have already had a 15 percent drop from the Baby Boomers to the Generation Xers," Herman says. "In 2010, the peak age of the Baby Boomers will be approximately 50 years. By this time, there will be a relative shortage of workers in the younger ages of 30 to 45."

Nonetheless, in manufacturing, many jobs continue to be sent offshore, especially in assembly. Herman maintains, however, that higher-skilled, custom manufacturing jobs have remained in the United States. "These high-touch jobs just can't be sent overseas," he says.

The Move Offshore

Offshore job migration is nothing new in manufacturing, but in white-collar fields, it's another story. Forrester Research predicts that more than 3 million U.S. jobs will move offshore by 2015. Computing positions have drawn the brunt of the spotlight because of their high pay scales.

However, according to the Forrester study, the largest block of jobs to move overseas will be in the office-support categories such as call centers. When you call a toll-free support line today, chances are, your call is already being routed to India or the Philippines.

According to management consultant Bart Perkins, interest in offshore outsourcing is very high in corporate IT departments. Having informally surveyed 400 IT leaders at the most recent Computerworld Premier 100 conference, he found that 72 percent had not yet begun offshore development. Nonetheless, most respondents planned to do so within two years.

Perkins believes that the move offshore, like manufacturing, does not necessarily amount to a zero-sum game for IT professionals, as long as they are willing to move up higher in the food chain, taking on more design, architecture, and management responsibilities.

"There will be plenty of need for IT professionals," he says, "but I think there will also be a need for a lot of retraining."