Washington Post columnist Robert Samuelson tells us that he can't find evidence of large-scale job loss due to offshoring, therefore it must not be there. He cites a study from the Institute for International Economics (IIE) that examined the 1 million jobs reportedly lost in large-scale layoffs in 2004-05. According to Samuelson, the study found that in just 4 percent of the cases was offshoring listed as the reason for the layoffs. This is truly bizarre. The other reasons given for layoffs were factors like "contract completed," "downsizing," and "financial difficulty." I'm not sure how Samuelson or the author of this study thinks the economy works, but this analysis hardly counts as evidence that offshoring is not causing job loss. Suppose the company that laid off workers because its contract was completed didn't get a second contract because it lost business to a company that depended on imported goods. Isn't this job loss due to offshoring? Suppose a company is downsizing because it is losing business to imports. Isn't this job loss due to offshoring? Suppose a company is in financial difficulty because it is being outcompeted by foreign producers. Isn't this job loss due to offshoring? There is a reasonable debate about the plusses and minuses of increased trade over the last quarter century, but to argue that many people have not lost jobs and suffered pay cuts due to trade seems ridiculous on its face. I realize that there are powerful interest groups that don't want to have a serious public debate on trade and they can pay for lots of studies to obscure the issue. (If these folks had been around in Medieval Europe, they would have paid the economist equivalents of the day to write studies showing that the Bubonic Plague was rare and harmless.) But when imports account for 16 percent of GDP, it's ridiculous to argue that trade doesn't have a substantial impact on the domestic labor market.
--Dean Baker
