Bush: Outsourcing Does Hurt U.S.

WASHINGTON – You lost your job.

It's probably one of the most dreaded things you'll ever hear from your boss.

Then you find out that your white-collar position moved to the other side of the globe — to India. President Bush says he feels your pain and that education — not trade protectionism — is the answer to deal with the increasing globalized world in which we live and work.

Bush discussed the politically sensitive issue in New Delhi on Friday, wrapping up a three-day stay in India. The country's rapid growth has created anxiety among Americans, especially as they have seen call center jobs, back-office administrative work, software programming and other white collar jobs move there.

"It's painful for those who lose jobs," Bush said. "But the fundamental question is, how does a government or society react to that. And it's basically one of two ways. One is to say, losing jobs is painful, therefore, let's throw up protectionist walls. And the other is to say, losing jobs is painful, so let's make sure people are educated so they can find — fill the jobs of the 21st century," he said.

Last year, 11,375 U.S. workers were laid off because their jobs were moved overseas, according to the Bureau of Labor Statistics. In many of those cases, Mexico and China were cited as the place where the jobs were going, a bureau official said.

In 2004, 16,197 workers were laid off because their job was moved overseas. The figures don't capture all layoffs — only the bigger ones, the official said.

For American companies seeking to compete on a global scale, India is a magnet — especially for white-collar, service-sector employees — because of the lure of lower-wage, highly educated workers who also are fluent in English, experts say.

India's outsourcing industry alone is expected to bring in $22 billion in revenue this fiscal year, much of that generated by U.S. companies.

Blue-collar factory jobs in the United States, meanwhile, have been more likely to be moved to China or Mexico, experts say.

Although many Indians live on less than $2 a day, the country's middle class has swelled to more than 300 million — which represents an attractive market for U.S. companies to sell their goods and services.

The United States should see this rapidly growing nation as a land of opportunity instead of a threat, Bush said. America's best response to globalization is not to erect economic barriers to protect workers, but educate them to make sure they can compete on any stage, Bush said.

Economists and other experts agree that education — especially in math and science — is a critical way for workers to stay competitive.

"The United States has a lot of catching up to do," said Jacob Kirkegaard, an economist at the Institute for International Economics.

In 2004, China graduated about 500,000 engineers, India, 200,000 and the United States, 70,000, according to a report called "Rising Above the Gathering Storm" issued last fall by an advisory panel of the National Academies.

The report also found that 12th graders in America performed below the international average on a test of general knowledge in math and science.

Even with an emphasis on education, workers' can't be guaranteed that their jobs will stay in this country, some economists said.

Moreover, U.S. workers also face the challenge of trying to figure out what the jobs landscape will look like in the future.

"Any attempt to forecast what skills will be needed 10 years from now is just folly," said Josh Bivens, economist at the Economic Policy Institute, a liberal leaning group. "If 10 years ago someone told you financial analysts were a job that was going to be exposed to intense global competition, a lot of people probably would not believe it but that definitely seems to be a possibility today."

Thus there's much risk on the shoulders of individual workers, he said.

Global competition — while painful to people who lose jobs — has economics benefits, economists said.

As the global market grows, there are opportunities for U.S. companies to create new jobs.

The addition of millions of lower-wage workers from China, India and Eastern Europe has helped to hold down labor costs and thus make inflation lower than it otherwise would be in the United States and elsewhere.

For Americans, that has meant the Federal Reserve hasn't had to be more aggressive in raising interest rates to keep inflation in check.

Depending on the job, an Indian worker's wage will be 10 percent to 15 percent lower than what he or she would make for the same job in the United States, said Kirkegaard. "But they are not going to remain that cheap for very long," he said. "That's something that companies have to factor into their equation when they are thinking about whether they should outsource a particular task."