THERE'S BEEN A LOT of scary talk in recent years about the coming destruction of white-collar work as jobs "move" offshore. Now that we've had more than two years of fairly solid job gains, has any of that talk proved true? And where, precisely, have all those gains come from anyway?
The broad story is that a greater share of "transportable" service work definitely has lost out to foreign competition. Apart from engineering, however, the main effect of "offshoring" has been to cap the growth of these professions, not cause outright declines. White-collar employment in general has accounted for an increasing share of total employment. The main casualty of foreign competition has been, as always, factory work.
But before we elaborate further, it's worth looking at the November employment report, released Friday, to see what it can tell us about the bigger-picture trend in jobs. By showing a rise in payroll employment of 215,000 and an unchanged unemployment rate of 5%, the report lent further confirmation to the trends that first appeared in early '04: Employment increases that are fairly modest by the standards of the late-1990s have been enough to lower the unemployment rate by nearly half a percentage point per year.
So if, as seems likely, these trends persist through '06, the labor markets will get increasingly tight as the rate of joblessness moves squarely into the mid-4% region -- a prospect that seems underappreciated by the bond market.
Now back to our questions. Bureau of Labor Statistics Commissioner Kathleen P. Utgoff happily informed us that the November data showed "over-the-month gains in a wide array of industries." Could she say the same about the past few years? Not quite. But if the past few years have not been happy for some, they look like they've been happy for most.
Let's look at the numbers as they stood in the third quarter of 2005, the most recent period for which data are available, compared with a fairly tough base period -- 2000, the peak year of the previous boom, when the unemployment rate was at a 30-year low. For example, if management jobs are supposed to be in peril, you wouldn't know it from the figures. With a total of 20.5 million folks currently employed as manager in the U.S., this category of employment has added nearly a million jobs since 2000. Then, as now, about one out of seven jobs in the U.S. is classified as managerial.
The professions, which exclude managerial jobs, did even better -- although here there is evidence that transportable services lost out to foreign labor. At 28.5 million, professions as a whole gained 1.8 million since 2000. Not surprisingly, the biggest gainer was health care, which added 1 million, to 6.9 million.
But while there are still many more people in the U.S. working as engineers than as lawyers, the gap between the two fields continues to narrow. In fact, the loss in the one neatly matches the gain in the other. At 1.7 million workers, legal occupations added 300,000 since 2000; at 2.5 million, engineering jobs declined by 300,000.
On the other hand, the hard sciences added 200,000 jobs over this same period, to 1.1 million. And probably the fastest-growing managerial job category in the U.S. is computer and information systems. With nearly 400,000 people holding this type of job in '05, computer-related work in general, at 3.6 million, eked out small gains. Over the past 10 years, the number of computer-related jobs in the U.S. has more than doubled.
At 9.2 million, factory jobs fell by 2.2 million since the year 2000. While it's hard to sort out how much of it was due to rising productivity, foreign competition was probably the main factor involved.
But blue-collar work is hardly going extinct. The decline in factory employment was more than offset by increases in construction (+1.9 million), installation and repair (+0.5 million), and transportation and trucking (+200,000).
In fact, BLS data recently marked a first: There are now more construction workers in the U.S. than factory workers (9.4 million versus 9.2 million).
Perhaps the most shocking statistic: There are now 30,000 economists in the U.S., 9,000 more than in 2000 -- an increase of 30% in less than five years. And yet gross domestic product grew by less than half that rate. Time to downsize?