Declining advantages for U.S. companies from offshoring

Three economic and financial experts forecast an improvement in U.S. employment as the continuing globalization of national economies continues to lift overseas wages, blunting the advantages U.S. companies derive from offshoring.

Bob Baur, chief global economist of Principal Global Investors, Jim McCaughan, chief executive officer of Principal Global Investors, and Drake University law professor Hunter Clark credited open borders and the increased international trade with lifting hundreds of millions of people out of poverty in emerging nations like China and India, enriching those who benefit from lower labor costs, providing cheaper consumer goods and creating new markets for them. But they acknowledged that the process has also undermined wages and employment in developed nations like the United States.

“Overall, globalization has been a tremendous force for good,” McCaughan said during a panel discussion of globalization at Drake University on Tuesday. He noted that globalization is sometimes blamed for job losses due to new technology. “It’s all about costs. It’s about doing things where they’re most efficient.”

Baur said some companies have already begun moving factories and call centers back to developed nations, like the United States and United Kingdom, in a process called “onshoring.” He cited the Symington’s food company, which makes Ragu spaghetti sauce, as an example. It’s moving its noodle-making operations back to Britain from China because the costs of operating in the two nations have evened out.

“Globalization is still going on and it’s something that’s going to be going on for a long time,” Baur said, noting that wages in China and India have tripled in the past decade. “The pendulum is beginning to swing back now, which is why we’re seeing some onshoring.”

Chosen excerpts by Job Market Monitor

via Reversal seen in flow of jobs overseas | The Des Moines Register | desmoinesregister.com.