Offshoring U.S. jobs.

Byline: The Register-Guard

Offshoring - the shift of American jobs to lower-paid workers overseas - has become the economic equivalent of shark attacks or SARS in the current political climate. No one is safe. The reaction has been predictable: Offshoring is bad, it's spreading and something needs to be done about it.

Indeed, something is being done about it. According to the National Foundation for American Policy, more than 30 bills have been introduced in more than 20 states and in Congress seeking to regulate or slow offshoring. One is sponsored by the presumptive Democratic presidential nominee, Sen. John Kerry.

But proposing election-year protectionist legislation under the pretext that it will save U.S. jobs is disingenuous and wrongheaded. It exaggerates the real impact of offshoring on U.S. employment. Ultimately, such posturing could achieve the opposite of what it intends by increasing costs to American consumers and diverting political energy from more appropriate job-creation and worker-protection strategies.

Clearly, Americans are troubled by an economic recovery that's being sustained by wringing higher productivity out of fewer workers at the expense of job growth. In the wake of stubbornly high unemployment and a media blitz about U.S. companies slashing payrolls as they ship work to lower-paid contract employees in India or China, politicians are falling all over themselves to "protect American jobs."

Apparently, elected officials feel greater urgency to protect the higher-paying, white-collar jobs imperiled by the current manifestation of global free trade than they did when blue-collar, manufacturing jobs were at stake.

That must mean lawmakers believe the situation today is materially different from the one that led them to support the North American Free Trade Agreement and similar trade pacts.

Part of the rationale for NAFTA, which boosted competition in manufactured products by lowering trade barriers, was that everyone benefits when U.S. firms shift employment abroad. The new jobs raise the standard of living in the foreign country. The labor cost savings return to the United States in the form of lower prices for consumers and higher dividends for shareholders. This increased spending power stimulates creation of new jobs, thereby boosting overall employment. As a bonus, inflation is kept in check.

Actually, the economic principles at work right now are exactly the same as those that led to the earlier loss of manufacturing jobs to offshoring. Software code writing or call center jobs boost the standard of living for Indian workers and help the Indian economy. Meanwhile, American capital and labor are freed up for higher-value tasks.

The current spate of offshoring has gained traction as a national issue largely because of the attention generated by a heated presidential campaign. But while initial reaction has focused on shortsighted protectionist responses, two issues remain insufficiently addressed: No immediate source of comparable jobs has emerged to replace the ones now at risk to offshoring, and the government has not created an adequate safety net for displaced workers caught in the transition.

Conventional wisdom until now has been that the loss of U.S. manufacturing jobs to free trade has been offset by gains in service jobs. Those service jobs were thought to be more secure, because they initially demanded proximity to the customer and were therefore not as susceptible to offshoring.

Obviously, that's no longer the case, and old assumptions about what's tradable need revision.

Now, any work that can be done on and transmitted by computers is vulnerable. Already, high-paid health care, accounting and engineering professionals have seen competition emerge from their highly educated, English-speaking counterparts in India and China.

But how big a problem is this, really? Even at their peak in 2001, the number of all trade-related layoffs represented 0.6 percent of overall American unemployment. Economists estimate that about 3.5 million U.S. jobs will be outsourced overseas between now and 2015.

That might sound like a lot, but it's peanuts compared with the number of U.S. jobs that are normally eliminated in a single year. In 1999, some 33 million jobs were destroyed.

Job destruction occurs all the time, but unless it's in recession, the U.S. economy typically creates more jobs than it destroys. In 1999, 36 million jobs were created for a net gain of 3 million. During the 1990s, 24 million more U.S. jobs were created than were lost.

Offshoring, in one form or another, has been going on around the world for centuries. It creates winners and losers, though in theory, winners will outnumber losers over time. But the trauma of the transitional phases could be lessened for workers if politicians let their knee-jerk protectionist spasms pass and concentrated instead on what workers really need.

Workers don't need silly laws requiring call center employees to say where they're calling from. Instead, workers need a strong and flexible public education system that's equipped to prepare them for emerging demands in the workplace. They need adequately funded community colleges to deliver the retraining programs laid-off workers will use to qualify for new jobs. They need access to affordable health care during their training and subsequent job search. And they need a federal government with a job-creation strategy that does more than cut taxes for the nation's wealthiest citizens.

Those are the issues American workers should be asking candidates to address this election year. Failure to do so represents a much greater long-term threat to displaced workers than the inevitable - and unstoppable - competition from abroad.