Gale Summerfield is the director of the U. of I.'s Women and Gender in Global Perspectives Program and a professor of human and community development. Her research focuses on gender, development and globalization issues, including strategies to improve conditions during economic and financial crises. She was interviewed by News Bureau editor Melissa Mitchell.
As reported recently in the Wall Street Journal, U.S. manufacturing jobs aren't the only ones going overseas in record numbers. The report references former Federal Reserve Board vice chairman and Princeton University economist Alan Blinder's position that "offshoring" of information-technology and communications jobs to countries with lower labor costs could ultimately result in the loss of 30 to 40 million U.S. jobs, giving rise to what he calls "the next Industrial Revolution." What does he mean by this?
Blinder is talking about the sweeping changes taking place in the global labor market as new technologies allow us to trade many services that were once thought to be the secure jobs in this economy. Some of these jobs are in high-end computing services that require university education and pay well. Many are lower-end information technology-enabled services such as data-entry, clerical services, accounting and call center work.
This means change - with winners and losers. So far, fewer than a million I.T. jobs have been offshored, but Blinder and other analysts believe this is the tip of the iceberg. It is unlikely, however, that 30-50 million jobs will actually be offshored. Instead they will be subject to potential competition from lower-wage countries. and that is likely to reduce wages in tradable service jobs that remain here. Everyday, new technologies allow different services to be outsourced, from certain healthcare jobs to animation work. The evolving technology also affects the way education is offered.
Where are the offshored I.T. jobs going, and who is doing them?
India and China are the leaders in providing I.T. services. India is focusing more on call centers and China is stressing hardware more at this time; however, both are looking at opportunities for expanding the services they trade. Most African countries have been left out of the main I.T. loop, but cell phones are taking off there and new services are being offered via cell phone. The Middle East, Latin America, and Central and Eastern Europe are all seeking ways to create regional and global trade networks for services. Over a million new jobs have been created in tradable I.T. services in India and China, and women hold a substantial share of these jobs (about 35 to 40 percent).
How are workers - and their country's economies - being impacted by all this job-shifting?
Clearly, those areas that provide the tradable services gain from the new jobs while job loss is a key concern in the U.S. and other high-income countries. Consumers overall benefit from lower prices, and companies profiting from the service trade are often multinational. The new information and communication technologies are driving these shifts. Experience has demonstrated that governments are not particularly successful at trying to micro-manage trade. They have an important role to play, however, in creating better social safety nets designed to cover women and men in developing as well as more developed economies. Increasing human security during transitions can provide substantial improvements in well-being for everyone involved.
Can we take actions now that will reduce the human costs associated with dramatic shifts in the global labor market?
Definitely, and that is one the key points that Blinder is making. We don't need to become isolationists or anti-trade, but we need to improve the social safety net. Lael Brainard at Brookings, for example, suggests that for about $25 per worker we could create an insurance program that would greatly reduce the pain of transition. I would like to stress that we need to look at the world as a whole and not only at the country we live in. What is happening to poverty in the many countries involved in these processes? Are women and men losing or getting jobs? Most of the specialists discussing this issue completely ignore the gender aspects; however, women hold more than half of the tradable service jobs at the lower end of the I.T. scale in the U.S.