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Article Title: "Offshoring Is No Crisis, Just 4,633 Lost In Q1, New BLS Data Show "
Author: CHRISTINA WISE
Section: Business & The Economy Date: 6/11/2004
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A Labor Department report out Thursday showed offshoring accounted for just 1.9% of the 239,361 U.S. workers who lost their jobs in mass layoffs in the first quarter.
In all, there were 1,204 mass layoffs from January to March, affecting 239,361 workers. Of these, 34 layoffs involving 4,633 people were due to overseas relocation of jobs; 79 layoffs hitting 9,985 people stemmed from the relocation of jobs within the U.S.
Concerns about the offshoring of U.S. jobs have received substantial print and TV media coverage in recent months. Democratic presidential contender John Kerry has railed against "Benedict Arnold" corporations.
"What the survey suggests is that at the height of concerns over offshoring, there were only 4,633 jobs shipped overseas," said Doug Porter, senior economist for Toronto-based BMO Nesbitt Burns. "When you consider the size of the labor market, it is really a drop in the bucket."
He added, "All through that debate we were trying to make the argument that the whole debate was overwrought and that offshoring was not a threat to the U.S. economy."
Of the total mass layoffs, 1.9% of lost jobs were due to overseas relocations. Excluding seasonal layoffs, 2.5% lost their jobs due to offshoring, while 5.5% stemmed from relocations within the U.S.
Meanwhile, the U.S. economy added 595,000 net new jobs in the first quarter and 1.2 million through May.
The Midwest was the hardest hit region of the U.S., accounting for 430 of the 1,204 mass layoffs in the first quarter. The West saw 313 mass layoffs, the South 246 and the Northeast 215.
Manufacturers had 386 mass layoff announcements in the quarter, followed by construction firms with 229 and retailers with 132.
The Labor Department plans to release similar reports in future quarters. The survey covers layoffs of at least 50 people at companies with 50 or more employees.
"It doesn't seem to be as bad as the talk was," said Gary Thayer, chief economist at A.G. Edwards. "Judging from the concern about offshoring and the discussions of it, you would have thought it was a much bigger percentage of the total than this report suggests."
There could be two reasons for that, he said: "One is that this is only a sample of one quarter and it could have been much bigger in other quarters. The other one is what I call the blue car theory. You buy a blue car and all of a sudden you start noticing all the other blue cars on the road and you think everyone has a blue car."
The same theory may be at play among workers who've seen their jobs eliminated due to offshoring.
"This shows a lot of jobs went overseas, but as a percentage of the total mass layoffs it was less than 2%," Thayer said of the data. "Some were due to companies trying to find lower cost wages, but it looks like a lot of it was due to companies in financial difficulty."
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