Talent

The Numbers Deficit

Dec. 21, 2004

Hard data on offshoring are hard to come by.

For workers like John Fern, for the AFL-CIO, for the National Association of Manufacturers (NAM) and the Business Roundtable and for President George Bush and the men who want to replace him in the White House, there are few issues as emotional as the offshoring of U.S. jobs. And with good reason. "Improving one's skills is a necessary but no longer sufficient condition for economic success," contended a late-May report from the Washington, D.C.-based Progressive Policy Institute (PPI). "Working Americans wonder whether any job will be safe in the fiercely competitive global marketplace." Yet amongst widespread anxiety is an absence of reliable numbers. "It is unclear how many jobs have been lost to offshoring," May's PPI report stated. Forecasting, too, is difficult and projections are subject to withering challenges. For example, "squirrely predictions" is the term John Castellani, president of the Business Roundtable, used in April to describe a Forrester Research estimate that 3.3 million U.S. white-collar jobs would go overseas by 2015 and International Data Corp.'s estimate that nearly 25% of U.S. white-collar tech jobs would move offshore by 2007. "While accurate numbers are hard to come by, most economists estimate that about 100,000 white-collar jobs . . . have gone overseas in each of the past three years -- for a total of about 300,000 jobs so far. Given the 138 million-plus Americans with jobs today, that is not an alarming number," said Castellani, whose group encompasses the CEOs of America's 150 largest corporations, companies with $3.7 trillion in annual sales and 10 million workers. Whether the numbers are alarming or not, the situation is not as simple as Castellani's comments or Forrester's revised numbers -- it's now projecting 3.4 million U.S. white-collar jobs will migrate overseas during the next decade -- make it seem. For example, at California software producer QAD, cost, not the lack of available skilled workers, is now the major reason more than half the company's jobs are offshore. The "burden cost" of a software developer in the U.S. is $138,000 annually, while for an Indian software developer with equivalent skills and capabilities, her company's "burden cost" is about $35,000 per year, explains QAD president and founder Pamela Lopker. But not so for Michael Mallia, CEO of AFCO Systems Inc., a privately held, Farmingdale, N.Y., maker of high-tech equipment enclosures. "A lot of people look at the direct labor of manufacturing as the most expensive thing that's associated with manufacturing," he notes. It's a myth, he contends. "In a technology-oriented, automated type of factory, you'll find that the direct labor is a very small percentage of the overall cost," he insists. His challenge: finding people with skills. And it's not Mallia's challenge alone. "We are headed for the most severe shortage of skilled labor that this country has ever seen, warns futurist Roger Herman, CEO of the Herman Group, Greensboro, N.C.

About the Author

John McClenahen | Former Senior Editor, IndustryWeek

John S. McClenahen, is an occasional essayist on the Web site of IndustryWeek, the executive management publication from which he retired in 2006. He began his journalism career as a broadcast journalist at Westinghouse Broadcasting’s KYW in Cleveland, Ohio. In May 1967, he joined Penton Media Inc. in Cleveland and in September 1967 was transferred to Washington, DC, the base from which for nearly 40 years he wrote primarily about national and international economics and politics, and corporate social responsibility.

      McClenahen, a native of Ohio now residing in Maryland, is an award-winning writer and photographer. He is the author of three books of poetry, most recently An Unexpected Poet (2013), and several books of photographs, including Black, White, and Shades of Grey (2014). He also is the author of a children’s book, Henry at His Beach (2014).

      His photograph “Provincetown: Fog Rising 2004” was selected for the Smithsonian Institution’s 2011 juried exhibition Artists at Work and displayed in the S. Dillon Ripley Center at the Smithsonian Institution in Washington, D.C., from June until October 2011. Five of his photographs are in the collection of St. Lawrence University and displayed on campus in Canton, New York.

      John McClenahen’s essay “Incorporating America: Whitman in Context” was designated one of the five best works published in The Journal of Graduate Liberal Studies during the twelve-year editorship of R. Barry Leavis of Rollins College. John McClenahen’s several journalism prizes include the coveted Jesse H. Neal Award. He also is the author of the commemorative poem “Upon 50 Years,” celebrating the fiftieth anniversary of the founding of Wolfson College Cambridge, and appearing in “The Wolfson Review.”

      John McClenahen received a B.A. (English with a minor in government) from St. Lawrence University, an M.A., (English) from Western Reserve University, and a Master of Arts in Liberal Studies from Georgetown University, where he also pursued doctoral studies. At St. Lawrence University, he was elected to academic honor societies in English and government and to Omicron Delta Kappa, the University’s highest undergraduate honor. John McClenahen was a participant in the 32nd Annual Wharton Seminars for Journalists at the Wharton School at the University of Pennsylvania in Philadelphia. During the Easter Term of the 1986 academic year, John McClenahen was the first American to hold a prestigious Press Fellowship at Wolfson College, Cambridge, in the United Kingdom.

      John McClenahen has served on the Editorial Board of Confluence: The Journal of Graduate Liberal Studies and was co-founder and first editor of Liberal Studies at Georgetown. He has been a volunteer researcher on the William Steinway Diary Project at the Smithsonian Institution, Washington, D.C., and has been an assistant professorial lecturer at The George Washington University in Washington, D.C.