Since 2001, the nation has lost more than 2.5 million manufacturing jobs and more than 850,000 professional service and information sector jobs. No one knows for sure how many of these jobs have been lost due to increased import competition and shifts in production abroad, since no comprehensive official data are collected. Various independent estimates indicate the number of white-collar jobs lost to shipping work overseas over the past few years is in the hundreds of thousands and millions are at risk in the next five to ten years. But the number of jobs lost need not be overwhelming in order to concern policymakers: increased overseas outsourcing also undermines wages and working conditions in those jobs left behind and threatens the long-term health of the economy.

How Many Jobs Have We Lost?

• More than 3 million manufacturing jobs have disappeared since 1998, and the Economic Policy Institute estimates 59 percent—or 1.78 million—of these jobs have been lost due to the explosion in the U.S. manufacturing trade deficit over the period.

• Goldman Sachs estimates 400,000–600,000 professional services and information sector jobs moved overseas in the past few years, accounting for about half of the total net job loss in the sector over the period. A Deloitte Research survey found one-third of all major financial institutions are already sending work offshore, with 75 percent reporting they would do so within the next 24 months. A U.C. Berkeley study found 25,000 to 30,000 new outsourcing-related jobs advertised in India by U.S. firms in just one month in 2003.

• One service sector hard hit by job losses is information technology, especially software. The pro-outsourcing consulting firm Global Insight estimates we lost 104,000 information technology jobs to offshore outsourcing between 2000 and 2003, more than a quarter of the 372,000 jobs lost in the sector overall during the period. The Economic Policy Institute found employment in U.S. software-producing industries fell by 128,000 jobs from 2000 to early 2004, while about 100,000 new jobs producing software for export to the U.S. were created in India over the same period of time.

• States are outsourcing public sector jobs as well, though most state governments do not know exactly how many. At least forty states contract out administration of electronic benefit cards for the food stamps program offshore. In one audit, the state of Washington found 36 out of 41 agencies were contracting out work overseas. A recent study by INPUT Research projects outsourcing of state and local government technology contracts will grow from $10 billion last year to $23 billion in 2008.

• From November 2002 to January 2004, the U.S. Department of Labor certified 246,398 workers who lost their jobs due to trade for Trade Adjustment Assistance (TAA). This is in addition to the estimated 1,112,775 workers who were certified for TAA between 1994 and the end of 2002. These figures are very under-inclusive: they only count workers who know about the TAA program, apply for it, and qualify under the program’s strict eligibility requirements. The numbers do not include most service sector workers or workers who have lost their jobs due to shifts in production to China—neither group is eligible for TAA. Nor do they include workers erroneously denied TAA certification by the Labor Department.

• The Economic Policy Institute estimates that between 1993 and 2000, our lopsided trade policies, reflected in the explosive increase in the U.S. trade deficit, cost Americans a net 3 million jobs and job opportunities. The growth in the NAFTA trade deficit alone is associated with nearly 900,000 lost jobs and job opportunities through 2002.

How Many Jobs Will Be Lost?

• Forrester Research Inc. predicts U.S. employers will move 3.4 million white-collar jobs and $136 billion in wages overseas by 2015. The outplacement firm Challenger, Gray and Christmas estimates the number of service-sector jobs moving overseas each year will hit 588,000 by 2005. A University of California at Berkeley report finds 14 million jobs are at risk of being sent offshore, and predicts job losses will exceed the Forrester study’s projections.

• Gartner Inc., a high-tech forecasting firm, estimates 10 percent of computer services and software jobs will be moved overseas by the end of this year, while a study by Meta group projects 40 percent of corporate tech operations will move offshore by 2008.

• A survey by Deloitte Research found the world’s 100 largest financial services firms expect to shift $356 billion worth of operations and about two million jobs to low-wage countries over the next five years. Another Deloitte survey of 42 global telecom operators projects 275,000 jobs in the sector will be sent off-shore by 2008.

What Are the Broader Impacts?

• Economic theory predicts increased trade will lower wages for lesser-skilled occupations, and thus increase income inequality. Though economists’ estimates vary, increased trade is likely responsible for about 20 percent of the recent increase in income inequality in the U.S. This translates into a decrease in real wages for the majority of American workers—roughly a 6 percent loss for the two-thirds of workers who lack a college degree.

• Recent wage trends confirm what economic theory would predict. Real wages have stagnated since 1973, even though productivity has grown rapidly. For the majority of the American workforce, real wages have stagnated since 1973 and have actually fallen in the last year. Since real wages are adjusted for inflation, they take into account any benefits workers enjoy from lower costs resulting from increased imports.

• The Economic Policy Institute reports wages in the industries in which jobs are being created are, on average, 21 percent lower than wages in those industries in which jobs are disappearing. In addition, expanding industries are less likely to provide workers with health insurance than industries cutting jobs. EPI also found jobs losses are hitting higher-paid software occupations even harder than other software jobs.

• Increased employer mobility also hurts workers by decreasing their bargaining power. As it becomes easier for companies to move work overseas, employers use the threat of sending work overseas to squelch union organizing drives and win concessions at the bargaining table.

• Trade-related job loss does not just hurt individual workers and their families. Entire communities are affected negatively as tax revenues fall, dependency on public assistance increases, and incomes stagnate. And as the off-shoring and job loss spreads to sectors with higher technology and skills that drive innovation and productivity, it puts the long-term competitiveness of the American economy at risk.