Researchers: 40% of All U.S. Jobs Could be 'Offshored'
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As many as two in five jobs in the United States could be "offshored" over the next decade or two, according to a working paper being circulated by Harvard Business School researchers. |
In a 2007 working paper, Princeton economist and former Federal Reserve Board Vice Chairman Alan Blinder assessed the "offshorability" of 800-plus occupations and estimated that between 22 percent and 29 percent of all U.S. jobs could potentially be offshored. Blinder wrote that he makes no estimate on the number of jobs actually will be offshored, adding:
Since my rankings are subjective, two alternatives are presented--one is entirely objective, the other is an independent subjective ranking. It is found that there is little or no correlation between an occupation's "offshorability" and the skill level of its workers (as measured either by educational attainment or wages) However, it appears that, controlling for education, the most highly offshorable occupations were already paying significantly lower wages in 2004.
Under the guidance of Harvard business professor Jan Rivkin and researcher Troy Smith, members of Harvard Business School's MBA Class of 2009 attempted to replicate Blinder's study. Overall, according to the Harvard working paper, the MBA students' assessments of offshorability matched Blinder's well.
The students estimated that between 21 percent and 42 percent of U.S. jobs are potentially offshorable. Echoing Blinder, the student data suggested a positive correlation between offshorability and education. The student data also revealed a positive or inverted-U relationship between offshorability and wage level, where Blinder found no correlation. While Blinder found a slight wage penalty for the most offshorable jobs, the student data exhibited no evidence of wage depreciation from job contestability due to offshoring.
Just because it's theoretically possible to offshore some 40 percent of U.S. jobs, none of the researchers contend that percentage of positions will disappear from American payrolls.
