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Does the US Steal Jobs?

Posted by Alan Beaulieu on Nov 24, 2020 1:10:47 PM

The phrase “stolen jobs” is understood to mean that another country, most often China, has taken US jobs via US outsourcing to that country. While China is often accused of stealing American jobs, the reality is that US firms chose to move some part of their operations to China (or elsewhere) because it made good financial sense, perhaps due to lower costs, proximity to the customer, or government incentives.

I want to look at it the other way. Does the US steal jobs from other countries? The answer is no, because the jobs are not stolen. But there is a very large segment of our working population that is a direct result of Foreign Direct Investment in the US (FDIUS). FDIUS occurs when foreign parent firms establish affiliates in the US, either directly or by purchasing control of a company that is already in the US. They choose to come to the US for a whole host of reasons. I would encourage you to view the webinar that Brian and I presented on this subject.

The reality is that as of the end of 2018, 7.8 million jobs were insourced into the US, which accounted for 6.2% of Total Private Sector Employment at the end of 2018. This occurred because we are a desirable destination, and these companies made the business decision to relocate some of their operations to the US. There are significant benefits that accrue to the US because of this: increased skilled labor, increased tax receipts, and increased consumerism for goods ranging from food to clothes to autos to housing. This does not include the business-to-business benefits that are derived from the increased commercial activity or the softer cultural benefits that may accrue. Insourcing is a financial win for the US, and we did not steal jobs – people chose to come to the US because of all that we offer. Many industries and states benefit from insourcing.

Jobs by Industry

Industry Millions of Jobs
Manufacturing 2.83
Retail 0.86
Wholesale Trade 0.71
Accommodation/Food Services 0.66
Administration/Support/Waste Mgt 0.64
Professional/Scientific/Technical Services 0.42
Finance and Insurance 0.40
Information 0.35
Transportation/Warehousing 0.33
Construction 0.11
Other 0.50

 

Jobs by Location

Region Millions of Jobs
New England 0.47
Mideast 1.30
Great Lakes 1.33
Plains 0.48
Southeast 1.95
Southwest 0.86
Rocky Mountains 0.21
Far West 1.17

 

Insourced jobs are spread across the country and into a large number of industry segments. Without them, 2018 Total Nonfarm Job Openings would theoretically have expanded from 7.1 million to 14.9 million, making an incredibly tight labor market even more burdensome for US businesses.

Action items

  • Implement long-term strategies that view the US as a global destination and a long-term growth economy.
  • Be mindful of labor retention methods. Average compensation of insourced jobs was $82,643, compared to the US Total Private Workforce average earnings of $52,300. Insourced manufacturing jobs paid $92,078 on average, compared to the US average of $59,500. Business leaders and HR departments must be aware of these significant gaps.
  • Examine your supply chain to determine if you can reduce supply chain disruption by switching to a domestic source.

 

Alan Beaulieu
President

Topics: From the President's Desk