De-mythifying the Heritage Foundation's 10 Jobs Myths

Written by Hal Pawluk
Published April 05, 2004
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"Off-shoring jobs" is a better description because it doesn't mask what is really happening.

# Heritage Myth #6: Outsourcing is a one-way street.
Fact: Outsourcing works both ways.

First, we need to know what they're talking about: "The number of jobs coming from other countries to the U.S. (jobs “insourced”) is growing at a faster rate than jobs lost overseas."

They base that statement on a source that's a bit difficult to pin down, but claims: "Over the last 15 years, manufacturing "insourced" jobs grew by 82% - at an annual rate of 5.5%; and manufacturing "outsourced" jobs grew by 23% - at an annual rate of 1.5%."

One problem with this is that it covers the last 15 years, and totally submerges what has happened with off-shored jobs during the more recent, and more relevant, four years since the economy started tanking.

Then, making comparisons using percentages isn't always informative, and can be used to mask what is really happening. There could be an order of magnitude difference between insourcing and off-shoring numbers (maybe not, but I couldn't find the data). [Increasing a base of 100 to 182 is an "increase of 82%"; increasing a base of 1000 to 1230 is "only an increase of 23%" but it is nearly triple the first quantity.]

And, digging a bit deeper, I found that most of those insourced jobs were with manufacturers who opened plants in the U.S. to be closer to their markets.

That is profoundly different from off-shoring jobs to overseas factories, then shipping the products back here.

In the first case, we get the benefits of the jobs. In the second, the benefits go to the countries where the jobs were sent.

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De-mythifying the Heritage Foundation's 10 Jobs Myths
Published: April 05, 2004
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Section: Politics
Writer: Hal Pawluk
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Comments

#1 — April 5, 2004 @ 12:35PM — Mark Saleski [URL]

the heritage list is definitely a case of statistics smoodging and bad logic.

another symptom of the sad state of our political discourse.

#2 — April 5, 2004 @ 12:45PM — bhw [URL]

Does anyone know if someone whose unemployment benefits have run out, but who is still looking for work, is counted in the unemployment rate?

Generally speaking, who is and isn't counted as unemployed for this computation?

#3 — April 5, 2004 @ 12:48PM — Mac Diva [URL]

Uh, oh. This entry has been researched and contains empirical information, not some clueless clown's personal opinion. Don't be surprised if you are accused of "making up facts," Hal-:).

I am unclear on why the Heritage Foundation would come up with these myths. Is it their position that outsourcing is good because whatever American business does is good? Or, do they believe outsourcing is good in and of itself?

#4 — April 5, 2004 @ 14:22PM — The Dude

Unemployment doesn't matter to the Dude here. I live in California, where Gov. Arnold Schwarzenegger had promised every citizen a fantastic job. So my future is looking bright! Oh, I hope he didn't mean a fantastic hand-job.

#5 — April 5, 2004 @ 15:33PM — Hal Pawluk [URL]

"Does anyone know if someone whose unemployment benefits have run out, but who is still looking for work, is counted in the unemployment rate"

There's really no way of knowing.

The unemployment numbers are derived from a sample of 60,000 households. If the people whose benefits ran out aren't in any of those households, they have no effect on the unemployment numbers one way or the other.

For a person to count as "unemployed" they have to be out of work, and available and looking for work (and in one of the surveyed households). Some of those whose benefits ran out will look for work, some won't.

The unemployment stat is derived as part of the government's monthly Current Population Survey, so it is not all that accurate.

The employment part of this survey, for instance, indicates that gobs of jobs have been created in the last few years. The equivalent "Establishment" survey tells us something closer to the truth. The difference is because while the "Population" survey covers a sample of about 70,000 workers then makes projections, the "Establishment" survey covers businesses with 40,000,000 employees and produces much more accurate projections.

It's not a science.

#6 — April 5, 2004 @ 16:03PM — Hal Pawluk [URL]

"I am unclear on why the Heritage Foundation would come up with these myths."

To protect George W. Bush, and their reputation (smirk, smirk).

They brag about Bush's economic and foreign policies being "from the Heritage Foundation's playbook" so everything that's happening has to be for the best.

The deeper reason is big business and rich, direct investors in the stock market. This includes a lot of very rich politicians (most of the 535 on the Hill) and members of the think tanks and political organizations we keep hearing from.

The neocons claim they came up with the concept of "the investor class" (or at least for pushing it to the fore, link not handy at the moment but available if subpoenaed :-). The claim is that around 60% of the US population is in this class, and that things like tax cuts for the rich are "good for the investor class" (my House Rep David Dreier told me exactly that).

What they don't tell you is that while 60% may be peripherally involved in the stock market through IRAs and mutual funds, the benefits largely go to direct investors in the stock market. That's only about 20% of the population, a number that has hardly changed over the last 50 years, when it was about 18%.

It's a con. (I'll probably blog something more on this at some point.)

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