I did here one positive reason for outsourcing and that was for start-up businesses. It allows a better cost advantage until it can support hiring domestic workers. Seems to work best when used by people living here with their roots, language and contacts in the outsource country.
March jobs are certainely good news but we've got a long way to go. Here's some analysis from the
Economic Policy Institute. I know, I know, they're funded by labor and government, but I don't think what they are saying is wrong. It just sobers the outlook and says we have a long way to go.
http://www.epinet.org/content.cfm/webfeatures_econindicators_jobspict
April 2, 2004
Payrolls up sharply, though labor slack remains
The Bureau of Labor Statistics (BLS) reported today that the nation's payrolls grew sharply last month, by 308,000, for the largest one-month jump in four years. With upward revisions to the payroll numbers for January (revised up 62,000) and February (up 25,000), payrolls have expanded by 513,000 since December and by 759,000 since August 2003.
Even with these gains, payrolls remain 323,000 below their level at the start of the recovery in November 2001, and two million below their pre-recession peak in March of that year. And while the pace of job growth has accelerated since last fall, the average monthly gain has been 108,000 since payroll growth turned positive. At this point in the early 1990s recovery, job growth averaged 220,000.
Along with the strong overall job growth, another positive sign is the broad-based distribution of job growth among industries. The service sector?including government, which accounts for 83% of total payroll employment?added 230,000 jobs in March, the largest monthly gain for that sector since May 2000. Retail trade also had a strong month, up 47,000 jobs, with some portion of these gains due to returning strikers. Note, however, that food store employment was up by 12,800, so the return of striking grocery workers does not discount the job gains in retail.
The 71,000 gain in construction, however, was likely partially weather related. Averaging over the past two months, construction employment is up by 25,000, a slight acceleration in the positive trend for that sector. Jobs in information services fell slightly (-1,000), suggesting the while tech firms are laying off fewer workers than in past months, they have yet to engage in significant job creation.
Employment in the nation's factories was unchanged in March, but this represents the first month since August 2000 that manufacturing jobs did not decline. Still, manufacturing employment remains three million jobs down from its 2000 peak. As a share of total employment, manufacturing has fallen from 13.1% to 11%, a sharp rate of decline in historical terms.
The unemployment rate, derived from a survey of households, ticked up slightly, from 5.6% to 5.7%. Much has been made of the divergence between the two surveys used to measure employment?the payroll and household surveys?and employment in the household survey actually fell slightly last month. But this was driven largely by a decline of 304,000 in the ranks of the self-employed, who are excluded from the payroll survey. Though this value can be volatile on a monthly basis, it may represent a shift out of involuntary self-employment as the labor market expands.
After falling by over 700,000 December through February, the labor force expanded by 179,000 in March, and the number of unemployed grew by 182,000. This dynamic is emblematic of the challenge in lowering the unemployment rate when the labor force is growing. The economy must create enough jobs to both re-employ those laid off during the recession and weak jobs recovery that followed, as well as to absorb those coming into the job market as the population expands over time.
The household survey also reveals a few other indicators that labor demand is still a problem. The share of the long-term unemployed?those who have been jobless for at least half a year?jumped up a percentage point to 23.9%, the highest level since July 1983, when the unemployment rate was 9.3%. There was also a 296,000 increase in the number of so-called involuntary part-time workers, i.e., those who would prefer full-time work. This change helped push up the BLS's comprehensive measure of underemployment?which adds discouraged workers and involuntary part-timers to the traditional group of unemployed?to 9.9%, up 0.3 percentage points from last month.
The increase in part-time work may be reflected in the payroll numbers, which showed a 0.1% decrease in average weekly hours last month. In fact, even with the large net increase of employment last month, the number of total hours worked in the labor market actually fell slightly, meaning more workers are working fewer hours than last month.
Despite the sharp gain in jobs, there is still considerable slack in the labor market. Average hourly pay, for example, continues to grow at about the rate of inflation, increasing at an annual rate of 1.8% over the past quarter. The increase in long-term unemployment, involuntary part-time work, and what may be a shift out of self-employment to the wage-and-salaried sector, all serve as reminders that over 150,000 jobs per month must be created to begin to absorb the available labor supply. If last month's trend in payroll jobs continues, the economy will begin to achieve that goal in coming months.
By EPI senior economist Jared Bernstein
with research assistance by Yulia Fungard.
