Offshoring and You: Why Economic Statistics Matter

The week's BusinessWeek cover story headline, "The Real Cost of Offshoring," promises a tale nearly as juicy and exciting as an offer to see Paris Hilton relaxing in her new digs -- will they call it the Slammer Hilton? -- courtesy of the LA County sheriff. Well, OK, maybe not. That's why they call economics "the dismal science."

But we should all pay attention anyway. BW's offshoring piece is, in fact, about a study of an arcane portion of the economic statistics underpinning the calculation of the US gross domestic product (GDP). Ho-hum? Think again. Susan Houseman, senior economist at W.E. Upjohn Institute for Employment Research, has been looking into the impact offshoring has on the calculation of manufacturing productivity statistics, and by extension, US productivity as a whole.

In case you don't read the political policy wonks, rising productivity is a cornerstone of US economic policy and one of the most closely watched economic statistics by Wall Street and Washington. Dr. Houseman's paper "Outsourcing, Offshoring, and Productivity Measurement in U.S. Manufacturing" suggests the impact "mismeasurement and cost savings from outsourcing and offshoring have had on measured productivity growth in manufacturing...is significant." This means the last 10 years of economic policy assumptions and decisions affecting broad areas of the US economy -- like jobs and trade -- might be based on faulty numbers. Oops.

In his blog "Economics Unbound,"  cover story author and BusinessWeek chief economist Michael Mandel describes the issue this way: "Cost gains and productivity improvements in the global supply chain are being credited to the US economy -- in effect, creating 'phantom GDP.' In reality, both domestic GDP and domestic productivity have been growing slower than the official statistics show, and manufacturing is in much worse shape."

Yes, economics matter. And for some resources to help keep your career from being washed offshore, check out:

• "Offshore-Proof Your Career"
• "Ride the Offshoring Wave or Get Washed Away"
• "Where the (Few) Manufacturing Jobs Are"
• From the Monster Blog: "Global Layoffs: Not Just About IT Anymore"
• From the Monster Blog: "Offshoring, Literally"

Related Blog

Careers: You vs. Offshoring   
 

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