Globalization (2007)

A New "New Economy"? The Potential Ramifications for the U.S. of the Growth of Services Offshoring

William Skipper, Ph.D.
State University of New York at Cortland
Department of Sociology/Anthropology
Cornish Hall
SUNY @ Cortland
PO Box 2000
Cortland, NY 13045
Phone: (607) 753-2471

Using a 2006 essay by economist Alan S. Blinder as a jumping off point, this paper explores the possible economic, political and broader social ramifications of a significant growth in the "offshoring" of service jobs from the United States. It emphasizes the importance of the trend, the likelihood of its expansion and growth, its complexity, and its potential to bring about important changes in American life.

Key words: globalization, economy, work, services, services offshoring, offshore outsourcing, United States, Blinder

In a thought-provoking essay in the March/April 2006 issue of Foreign Affairs, Alan S. Blinder (2006), Gordon S. Rentschler Professor of Economics at Princeton University, proposed that the "offshoring" (or "offshore outsourcing") of services from developed to developing nations may well mark the beginning of a "third Industrial Revolution": "a massive transition" triggered by a dramatic expansion in the scope of tradable services, "the eventual dimensions of which may be staggering". While Blinder is very careful to emphasize that he himself does not believe that even a substantial growth in services offshoring (which he expects) will be cataclysmic for developed nations, "[this] third Industrial Revolution will require," he writes, "vast and unsettling adjustments in the way Americans and residents of other developed countries work, live, and educate their children".

Blinder argues that the offshoring of services (made possible, of course, by advancements in information and communications technologies) marks an important change in international trade. His central theoretical point is that the critical distinction today is not between goods production and service provision, or even between highly skilled and less-skilled service jobs, but, rather, between what he refers to as "impersonally delivered" and "personally delivered" services. "Impersonally delivered" services are those that are capable of being provided "with little or no degradation in quality" from a distance (i.e., electronically); and "personally delivered" services are those that cannot. "Personally delivered" services require, for one reason or another, the physical presence of the provider. "Impersonally delivered" services can, in theory, be provided from anywhere.

Importantly, Blinder points out that each of these categories includes highly skilled, well compensated ("good") jobs, as well as considerably less skilled, relatively poorly compensated ("bad") jobs. As a for instance, the "impersonal" category would include both software engineers and call-center workers; the "personal" category would include both janitors and psychotherapists. What is crucial is that, "good" or "bad", all jobs that provide services that can be "impersonally" delivered are, in a technical sense, potentially at risk for offshoring.

Blinder's essay goes on to discuss some of the possible economic, political and social ramifications of a substantial growth in services offshoring for developed nations, the U.S. in particular. Leaving aside for the time being the specifics of Blinder's position, the overall thrust of the essay lends important support to the argument a growing number of people are making that services offshoring from the U.S. needs to be taken very seriously by policy makers. It also makes a few basic things about the phenomenon clearer.

For one, the number of service jobs offshored from the U.S. to lower wage countries, while to date quite small (probably more than 600,000 but less than a million - of a total workforce of about 150 million) will very likely grow. It is important to recognize that the future growth of services offshoring will be contingent upon a sizeable number of inter-related variables. These include, among others, things such as (of course) the continued profitability of the practice, enabling or restrictive policies and regulations imposed by the governments of the nations involved, and so on. [For a fuller discussion of these see Skipper 2006.] However, given the very large number of service jobs that even today could be offshored, the substantial cost savings that doing so can provide corporations, the abundant supply of workers in developing nations well qualified to do them, and, among other things, the likelihood of future technological advances which would expand the number of services that can be satisfactorily delivered "impersonally", substantial growth in services offshoring is, if not inevitable, very likely.

Such a prediction is backed up by a number of studies and expert opinion. For instance, John C. Garner (2004) of the U.S. Federal Reserve estimated that about 14 million U.S. service jobs were already "at risk of offshoring" in 2000. McKinsey Global Institute MGI), perhaps the most highly respected consultancy firm on the issue (and one that is not likely to overstate the threat) says that about 11% of American service jobs (which would be about 16.5 million) are currently at risk for offshoring. Blinder, however, thinks these numbers are low. In his essay in Foreign Affairs, he makes an admittedly very rough estimate that between 28 and 42 million U.S. service jobs may soon be "susceptible" to offshoring, in that they will fit the definition of providing "impersonally" deliverable services.

More to the point, there is a good deal of consensus among economists and business analysts that the number of service jobs that will actually move offshore in the near future will grow significantly. John C. McCarthy (2004) of the technology consulting firm, Forrester Research, believes that the rate of service job migration from the U.S., which he puts at 200-300,000 jobs per year currently, will rise to about 340,000 jobs per year from 2010 to 2015. This would constitute a cumulative (gross) loss of more than 4 million American jobs between 2000 and 2015. Other estimates are even higher. Andrew Tilton (2003) of Goldman Sachs believes that a total of up to six million service jobs may be offshored from the U.S. by 2013. To put this number in perspective, Lori Kletzer (2005), a senior fellow at the Institute for International Economics, has estimated that about 7.5 million American manufacturing jobs were lost due to offshoring in the more than twenty year period between 1979 and 2001. In short, while the future is never fully knowable (perhaps particularly in the case of globalization trends), it would be foolish to assume that services offshoring will not grow substantially or that growth of the magnitude indicated by these studies would not bring important consequences for the U.S. and other developed nations.

A perhaps more important point which Blinder's essay makes is that services offshoring is not, as he puts it, simply "business as usual". Rather, it looks very much like the beginning of a quite dramatic shift in the configuration of global trade and labor markets. A qualitative change is evident. A growing number of the service jobs being offshored from the U.S. are quite different from those that have left the country over the last three decades. Not only are many of them very "good" highly skilled jobs, many of them are exactly the jobs (in, for instance, engineering and information technology) that were supposed to replace the manufacturing jobs lost during the first wave of offshoring from the 1970s through the 1990s. And if the offshoring of services of this kind continues to grow, the dynamic of this second wave of global job migration will be quite different than the first. So too will its particular economic impacts, the politics surrounding it, and its broader social ramifications.

Over the long term the repercussions for the U.S. of this shift to a new "New Economy" would be not only distinctive in many ways, but very complex, as well. Economically it will be, as Blinder's essay makes abundantly clear, considerably more complex than, for instance, simply a reapportionment of the mix of "good" and "bad" jobs. This will certainly occur, and it is significant; but what will occur at the same time is, in essence, a re-definition of "good" jobs and "bad". And much of that re-definition will hinge precisely on whether a job can or cannot be done more or less equally well from a distance. If it can, and doing so will reduce costs substantially, then, all other things being equal, it probably will be. Consequently, although in a far from straight-forward calculus, the answer to the question, "Can this job be done remotely?" will affect, among other things, the availability, security, and level of compensation of that job. Very simplistically put: some "bad" jobs will become "good", and some "good" ones "bad". And from there the social and political ramifications will ripple outward from the more or less strictly economic and wash back in a reciprocal, complex interaction. Though the term may be somewhat hyperbolic, the long term growth of services offshoring may well result in something like a "revolution".

It is extremely difficult to predict -- probably impossible -- (and perhaps foolhardy to attempt to predict) just exactly what such a change would bring to pass. Yet, it would be even more foolhardy, as Blinder (2005) himself advised the U.S. Congress in September 2005, not to prepare as well as possible for the eventuality when so many signs foretell its coming and the stakes are potentially so high. It seems a reasonable thing, therefore, to try to at least outline how a substantial growth in services offshoring might impact American society. Blinder does some of this in his essay. What follows will add to, comment, and expand upon it.

Over the last four or five years, a variety of issues have arisen surrounding the offshoring of service jobs from the U.S. For one, the U.S. government and others have recognized services offshoring as a potential threat to national security. Dependence upon the digital transmission of information is a problem in and of itself. Transmission of that information into foreign nations for processing adds to it. And if that information is in one way or another sensitive the risk is even higher. Concerns have arisen, therefore, about the impact of services offshoring on the security of the national defense system and of critical national infrastructure (especially communications). Similarly, there is also concern about the degree to which services offshoring poses a threat to consumer privacy when, for instance, medical and financial records are moving digitally across the globe. The growth of services offshoring will, in other words, as Blinder mentions, bring changes to the way governments, corporations, and individuals manage data.

It may be overly optimistic, but such data security issues can probably be adequately dealt with in the long term technologically and/or appropriate regulations and oversight, and simple cautiousness. However, the question of whether and how information services can, without a loss of quality, be offshored - which the security issue raises - will influence whether or not they will be offshored. Whether or not to move a given job or operation overseas is, after all, the result of a wide-ranging cost and benefit analysis, and data security problems are part of that equation. In other words, the issue of data security has broader economic and political roots and implications.

Most of the other issues surrounding services offshoring are either, in and of themselves, economic, or more directly linked to economic outcomes. And nearly all of those are ultimately dependent upon the more or less specific eventual magnitude of the trend. For that reason a good deal of the debate thus far has been about numbers: how many jobs of which kinds have moved and will move over how many years? From there the discussion develops into questions concerning what, from such estimates, we might expect the effects of a particular rate and level of job movement to be. This discussion has developed into a fairly vigorous debate among economists about the overall impact services offshoring may eventually have on the American economy and the American standard of living. Some argue that it will be, in the end, a positive development; others see little cause for concern (at least at the present time), and others see it quite differently.

The argument for services offshoring as, in the long run, a positive development for the U.S. economy rests on by now very familiar reasoning: By lowering the cost of service provision, offshoring will eventually lower costs to consumers; a good thing in itself which will also stimulate further economic growth. In addition, the increased corporate profitability to which offshoring services will contribute will also stimulate economic vitality and, so, job creation. Those in this camp also frequently point out that jobs are "inshored" to, as well as offshored from the U.S., and that the country may well see net jobs gains, not losses, from the globalization of service provision. More generally, from this perspective the globalization of service provision will in time contribute to a more vibrant world economy and, so, again, economic growth and an enhanced overalllstandard of living in the U.S. This is, of course, neo-liberalism.

On the other hand, aside from questioning the certainty of such an optimistic scenario, others are seriously worried about the possibility that the growth of services offshoring will weaken the American economy and stifle future growth. Among their concerns are its potential to add appreciably to the already huge U.S. balance of payments deficit, which could, in turn, have serious negative ramifications for the American economy through its impacts on things such as international investment flows, interest rates, and the strength of the U.S. dollar (Palley 2006). Blinder (2006) believes, for instance, that the growth of services offshoring may result over time in a noticeable erosion of America's position as the world's economic leader. (Although he also believes that European nations may have an even harder time dealing with its effects than the U.S.)

Many on this side of the debate are also worried that services offshoring will raise unemployment rates, depress wage and benefit levels, and exacerbate the existing inequality of the U.S.'s income distribution. A good number of them argue that it is essentially inevitable that expanding a labor market in the way that services offshoring does will depress wage and benefit levels, at least over the short term - say, two to three decades. The only real question for them is, how much? The answer to that question may be: considerably. Blinder's essay quotes Indian economists to the effect that it will take a few decades for that country to add another 300 million skilled workers to India and China's workforce. He then points out in response that "a few decades" is just the time frame about which we should be concerned and that 300 million additional workers in competition for high end service jobs is twice the current total workforce of the United States (Blinder 2006). It is hard to imagine then that this kind of labor market expansion would have no negative effect on American wages, salaries and benefits. Lending support to the need for concern in this regard, Joseph E. Stiglitz of Columbia University, a Nobel Prize-winning economist and former chief economist at the World Bank, has been quoted in the New York Times as saying that "What worries me is that [services offshoring] could have an enormous effect on wages, and that could have a wrenching impact on society" (Lohr 2005).

What about unemployment? In his essay Blinder (2006) emphasizes that he does not believe that the growth of services offshoring will result in "massive unemployment" in the U.S. In fact, it is difficult to find an economist who says that it will, or a study that supports such a dire scenario. Yet, again, the question revolves around magnitudes, because there is support for the position that, just as it did in the 1970s and ‘80s when U.S. manufacturing jobs were lost to lower wage overseas sites, offshoring services will contribute to higher unemployment levels in the U.S.; perhaps not "massive", perhaps not permanent, but measurable, and noticeable to and painful to some degree for all American job holders and job seekers. In fact, some say that it has already had an effect on U.S. employment levels. Kletzer's research (2005), for instance, quite convincingly argues that services offshoring has been responsible to a significant degree for recent lackluster U.S. job growth; specifically during the so-called "jobless recovery" following the 2001 recession. At the very least, concern about, and continued research into the specific effects of services offshoring on national employment and unemployment rates is warranted.

The effects of a substantial growth in services offshoring on the U.S.'s income distribution is harder to predict. There are, for one thing, a great many other very changeable contributing factors to consider: tax policies, levels of transfer payments, etc. For another, leaving the neoliberal arguments aside, services offshoring is directly affecting workers in a wide swath of income levels, and that swath seems destined to broaden upwards. This makes the results of the arithmetic less immediately clear. For instance, while we might reasonably expect that the highest income decile or so would be relatively unscathed or even to gain from offshoring (due to higher profits), precisely where in the "middle" levels the bulk of the income losses would appear is not obvious. There is, therefore, a wide variety of opinion, but just as in the case of wage and unemployment levels a number of economists are basically arguing that the loss of hundreds of thousands, if not millions, of very well compensated jobs (such as those in engineering and IT and IT-enabled services) would, in the absence of comparably compensated replacements (a key question), will contribute to the further hollowing out of the American middle class. The question, again, is how much?

Policymakers have begun to consider these questions and weigh these positions. In its 2005 report on services offshoring the U.S. Government Accountability Office (GAO 2005) looked at four broad areas of likely impact. Three of these were specifically economic: the effect on the average U.S. standard of living, on overall employment levels, and on income distribution. [The fourth had to do with national security and consumer privacy.] The report's conclusions in these areas were carefully qualified, but they nonetheless leaned obviously toward the position that services offshoring is not a significant threat to the well-being of the U.S. economy as a whole at this point in time. Indeed, the report concluded that, while it is it is possible that "under certain scenarios" it could be harmful, it is likely that services offshoring "will benefit U.S. living standards in the long run" . Likewise, it concluded that, in the long run, "offshoring will have little effect on overall U.S. employment levels". Finally, in terms of the impact of services offshoring on income distributions, the report simply states that some economists believe that it will increase income inequality, and others do not. More than anything such conclusions lend credence to Blinder's assertion that "rich countries … seem completely unprepared for [what he believes is] the coming industrial transformation" (Blinder 2006).

Narrowing the focus, many who otherwise see no serious overall threat to the American economy from services offshoring admit that there will be temporary ‘disruptions" due to it. Even the GAO report is in agreement on this point: "pockets of workers" will lose jobs; which seems reassuringly innocuous (especially if you are not one of those in such a pocket). On the other hand, for those directly affected, and for the rest of the population if these "pockets" turn out to be rather large and, in one way or another, important, such a conclusion is less reassuring. Ron Hira (2003) of The Institute of Electrical and Electronics Engineers – USA, for example, claims that the offshoring of engineering jobs (primarily to India and China), although still in its infancy, has nonetheless already contributed significantly to an unemployment rate among engineers considerably higher than that for the American workforce as a whole. More specifically, Hira believes that as many as 473,000 jobs in Computer Science, 348,000 jobs in Business Operations, 288,000 jobs in Management, and, among tens of thousands of others, 184,000 jobs in Architecture are likely to move from the U.S. to lower wage countries by 2015 (Hira 2003:4). These are sizeable and significant "pockets".

It is also reasonable to speculate that those regions and communities with particularly heavy concentrations of their workforce engaged in providing offshoreable -- impersonally" deliverable -- services (IT and IT-enabled service workers, for example) are also likely to feel significant negative effects if the movement overseas of these kinds of jobs grows substantially. In addition to locally elevated unemployment rates and downward pressure on local wages and benefits, things such as increased rates of bankruptcy filings, mortgage and other loan defaults, increased demands for economic assistance, and loss of tax base (and everything which follows from that) are well within the realm of possibility. Even out-migrations are not inconceivable. In other words, service job losses have the potential to impact particular regions and communities in some of the same ways that the manufacturing job loss that began in the 1970s created the "Rustbelt" of the Northeast and Midwest. Again, such a scenario is in no way certain; and the rate and the magnitude of the migration of service jobs offshore, as well as the kinds of jobs that actually move will be crucial in determining not only whether it will come to pass, but the character and seriousness of the impact if it does. Yet, there is a very real possibility that particular regions of the U.S. would feel the effects of this transition to the new "New Economy" more forcefully than others. And if that happens, the fallout is unlikely to remain strictly local.

The debate over the economic consequences of services offshoring will continue. The ideological divide that it naturally raises and the fact that services offshoring is a still new, complex and rapidly evolving trend both guarantee that. Indeed, if services offshoring from the U.S. substantially grows in magnitude and expands in its occupational reach it is quite likely to become, as the loss of manufacturing jobs became, an increasingly prominent focus of political debate on the national as well as the state and local levels. [In the past year, for example, five states have passed, and twenty more have introduced or are considering legislation restricting the offshoring of governmental services (National Congress of State Legislatures 2006).]

As it develops, many of the players and basic issues involved will be the same as the last time around when the problem was manufacturing job loss. Many unions, for instance, are becoming quite vocal in their concerns about the growth of services offshoring's potential effects on the well-being of their members and American workers generally [see, for instance, AFL-CIO's "Exporting America".] On the other side most multinational corporations are justifying the practice, citing its necessity, lauding its benefits and downplaying its harms. But this time around outsourcing consulting firms and their organizations (e.g., International Association of Outsourcing Professionals) are also presenting their (positive) take on the situation; while, at the same time professional organizations (especially in the IT sector) whose members are directly feeling the pinch of the trend are making their voices heard for the opposition [see, for instance, Policy Statement of American Engineering Association 2006]. There are, in other words, links and similarities between those who began debating the basic issue of offshoring thirty years ago and those involved today, but the cast of characters has changed somewhat and so then will the play itself.

The basic issue, of course, is the same: free trade policies and practices. Simply stated, proposals for protectionist measures will likely find more receptive ears. Although, Blinder himself warns in his Foreign Affairs essay about the danger of taking concerns about the effects of offshoring to mean that the U.S. should take measures to try to stem the globalization of service provision, whether it will or not is not in his hands. The decision will be made in the political arena, and it will in some sense be made "on the fly" as the trend develops. In addition, at least currently, solid basic facts (about, for instance, simply the number of jobs that are migrating) are hard to find, and expert opinion is very divided. Add to that the emotion the issue raises in those whose livelihoods are threatened and the financial stakes involved for corporations, and it is easy to see that a substantial growth in services offshoring will make the debate over free trade and globalization perhaps even more heated than the earlier one (in part because there was an earlier one).

In the shorter term, proposals for mitigation of the direct effects of service job loss will become more common and more forceful; and, perhaps, given the current ascendancy of the Democratic party in the U.S. Congress, more likely to be heeded. Many, economists (Kletzer 2005; Mahoney, et al. 2006; Blinder 2006) and others (Hira 2006) have been calling for the creation of federal government programs to provide temporary economic assistance to workers displaced by services offshoring similar to those provided to some manufacturing workers hit by the first offshoring wave in the '70s, '80s and '90s. Similarly, job retraining and continuing education assistance for affected service workers are also being proposed. Blinder's essay points out that the U.S. must be prepared to provide the perhaps large numbers of service workers displaced by offshoring with an adequate social safety net overall in order to smooth the economic transition he expects: adequate unemployment benefits, access to health care, etc. Due to their less radical nature these kinds of actions in response to services offshoring would seem to have better political legs than broader protectionist agendas, but the current huge federal budget deficit and growing national debt would make even their implementation difficult to accomplish.

One last political issue tied to services offshoring is worth mentioning here: immigration policy and practice. This was an important part of the earlier debate and has, of course, for many reasons, continued to be a prominent feature of the national political discourse. However, the growth of services offshoring should both intensify and alter it somewhat. There is, for instance, growing opposition among labor unions, professional organizations, and others to policies (particularly H1-B visas) that encourage the immigration of highly skilled foreign workers to the U.S. [see, for instance, AEA "Policy Statement" 2006]. To many, such a policy seems not only to make matters worse but to add insult to injury in light of the loss of U.S. service jobs to those very same nations.

So, despite the connections and similarities, the debate about this new variety of offshoring may well evolve somewhat differently than it did in the 1970s and 1980s. There is one further reason for this. It is interesting to speculate on the ramifications of the fact that many of those directly affected by services offshoring occupy a rather different social location than those hit by manufacturing job loss. Blinder makes the same basic point in his essay. For instance, many are (or were?) relatively more affluent than those displaced from manufacturing jobs. They are also, as a category, relatively better educated, and perhaps more likely to be politically active. They may also be more conservative in their economic ideology; perhaps more likely to be Republicans than Democrats. Services offshoring could in time create strange political bedfellows. What is certain, though, is that if it grows to the levels many believe that it will, services offshoring will become part of the national political debate, and the results of that debate, although unpredictable in its specifics, will, in turn, reverberate in some fashion on the phenomenon itself and its economic and social fallout. Nothing about this is simple; and that's important to remember.

What of the possible, longer term, more broadly social consequences of a growth in services offshoring? Blinder's essay briefly discusses two: education, and the character and qualities of future forms of work after the "third industrial revolution". These topics are, perhaps obviously, connected to one another. They are both fascinating to speculate upon, and extremely important, as well. They are also both, again obviously, closely tied to the economic and political dynamics discussed earlier, as contributors to them and as products of how they eventually work themselves out. A third topic, also related to these and to the bigger picture in the same kinds of ways is the impact of services offshoring on the U.S.'s position as a technological leader in the world.

The movement of significant numbers of high-end IT and other engineering and research and development positions to developing nations is a matter of considerable concern. Most of the global leaders in the information technology sector – the Microsofts and the IBMs – are establishing offshore sites for chip and software design and other research and development projects, or, alternatively outsourcing portions of such projects to independent foreign providers. That is, it is no longer only standardized IT services that are being offshored to India, China and elsewhere. Rather, a growing amount of the product design and basic research in the field is being done outside of the U.S. (and Europe and Japan). Moreover, this trend is not confined to the information technology sector. American firms are utilizing offshore labor to explore, design and develop new techniques and products in biotechnology and other fields, as well. The implications of future growth in this aspect of services offshoring flow wide and deep, including, as the government is well aware, for defense and national security. More fundamentally, a la Friedman‘s (2005) "flat world" hypothesis the loss by the United States of leadership in science and technology has the potential to place it in a dependent relationship to those who do take the lead. The fact that Indian firms like Tata Consultancy Services and Infosys Technologies are hiring more and more U.S. college grads might be seen as a sign of this (Lewis 2006). One thing which isn't often mentioned in this regard is that even if the U.S. were to remain, as Blinder seems to see as a possibility, a world leader in creative work and "pure" research, the distinct advantages that hands-on problem solving and application – so important to the success of such research -- would be in other hands. Suffice it to say that such a scenario coming to pass would have troublesome long term consequences for the U.S., economically and otherwise.

This threat has, as is well known, spawned numerous calls (occasionally rather shrill calls, sometimes accompanied by overblown or unsubstantiated claims) for a thorough re-evaluation and reform of the U.S. educational system, especially higher education, and especially math and science education. Doubtless such re-evaluation and reform is called for; when would it not be? But in this "race to the top" the stock answer has been more and better, but mostly more, education. Blinder's essay makes an excellent point in this regard: if what the U.S. will need more than anything as it moves into the future is, as he believes it is, a creative workforce, and if, as he also believes, our educational system doesn't do creativity very well, then more education isn't the answer in the long run. What will be needed is different education, for different kinds of work.

What will the world of work be like in the U.S. and other developed nations if Blinder's "third industrial revolution" is real and brings the kinds of consequences he imagines and that have been discussed here? Blinder is probably right when he resists painting an apocalyptic picture and says that, just as after industrialization we still had farmers, and just as after de-industrialization we still had manufacturing, after this revolution we will likely still have workers providing "impersonally" delivered services. Moreover, he says that many, not all, but many of the jobs which should grow relative to these -- in "personal" services -- are already "good" jobs, and many of those that aren't so "good" will become better, at least in terms of their level of compensation. Yet, two very difficult questions are essentially left unanswered: What is likely to be the mix of these, how many of each will be available? And exactly what new types of "good" jobs will evolve to replace those "good" jobs that will have left? Perhaps it is unfair to ask; no one has a reliable crystal ball. But what will work look like after the revolution comes?

Surely job security will be further eroded, both the reality and the perception; but beyond that it is nearly impossible to say. A November 2004 article in the Washington Post on the causes and effects of high unemployment rates in the IT sector described the situation of highly trained American IT workers who were forced to relocate or to commute long distances in search of employment in their field; contingent employment at that (Schneider 2004). Wandering for work, part time work, and short-term contracting, already a fairly common feature of employment in many occupational sectors (including the IT sector) may expand into others where it is currently less common: architecture, the law, and accountancy and other business process services. Broadly speaking, this trend has already impacted the white collar U.S. workforce simply by creating the perception, if not yet the full reality, that there is no job that is safe from the dangers of globalization. Especially since the publication in February 2003 of the Business Week cover story, "Is Your Job Next?" (Engardio, et al. 2003) well educated, successful white collar workers, who never before seriously considered the possibility that they might share the fate of steel and auto and other manufacturing workers who saw their livelihood leave for foreign shores, have begun to seriously consider it. Job insecurity itself has impacts on workers and their society; but even the perception of job insecurity has impacts on a workforce. Ask any business manager or human relations specialist. And those impacts are rarely positive, for productivity, for employer-employee relations, or for, in the long run, profitability.

And for those who actually lose those jobs, or cannot land one, and for more and more American workers, whether directly affected by services offshoring or not, the question they will begin to ask, that they are already beginning to ask, is a very basic one: "What's next? For myself, for my children, what's next? What kind of employment - "good" employment - can my society now offer me?" They will ask it of themselves certainly, but they will also ask it of their government, of corporate America, and particularly of those who argue that the trend that they have felt sweep through their lives is simply part of an inevitable evolution of post-industrialism and ultimately to their benefit, if only they are patient. And it is an extremely difficult question to answer; no one really knows.

It is not absolutely certain that services offshoring will grow to levels that will dramatically impact American society. The trend is too new, too dependent on essentially unpredictable variables and contingencies for certainty. On the other hand, logic, well conducted studies, and expert opinion tell us that the likelihood that it will grow is quite high. Only a fool would ignore the possibility. And some things are certain: One is that, as Blinder's essay emphasizes, services offshoring is not "business as usual" but something in many ways historically new; in and of itself and in terms of the consequences its growth may engender. Another is that it is quite complex: complex in its economics, complex in the politics surrounding it, complex in its broader social context, and very complex in terms of the reciprocal interrelationship among those three spheres. A final certainty: If services offshoring from the United States does grow as many expect it to, its consequences will to some degree reverberate throughout the society. For that reason, and this is the main motivation behind Blinder's essay and this paper, scholars and policy makers must pay close attention to it as it develops and, in order to be prepared for those consequences, should they come, think together now, long and hard, about how the society should address them.


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