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March 14, 2004

2.7 Million Lost Jobs? Blame Productivity, Not Outsourcing

The new issue of Business Week (March 22, 2004) has several articles on outsourcing, the jobless recovery, productivity growth and politics. Kevin Horan writes:

"The real culprit in this jobless recovery is productivity, not outsourcing. Unlike most previous business cycles, productivity has continued to grow at a fast pace right through the downturn and into recovery. One percentage point of productivity growth can eliminate up to 1.3 million jobs a year. With productivity growing at an annual rate of 3% to 3 1/2% rather than the expected 2% to 2 1/2%, the reason for the jobs shortfall becomes clear: Companies are using information technology to cut costs-and that means less labor is needed. Of the 2.7 million jobs lost over the past three years, only 300,000 have been from outsourcing, according to Forrester Research Inc." (p.37)

But the propoganda lives on...

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