This huge analysis of the current outsourcing crisis ran on the front page
of today's Wall Street Journal.  It gives a full perspective, which many
might appreciate given the recent discussions.  One of the hottest jobs that
is also blind friendly:  massage therapy.

Kelly

The Wall Street Journal

April 2, 2004

    The Future of Jobs: New Ones Arise, Wage Gap Widens

Outsourcing, Technology Cut Need for Rote Workers;

Brainpower Is in Demand

Hot Area: Massage Therapy

    By DAVID WESSEL
Staff Reporter of THE WALL STREET JOURNAL

April 2, 2004; Page A1

    Much of the American anxiety about outsourcing to India and China can
be boiled down to this simple question: Will there be good jobs left for
our kids?

    It's easy to see why there is so much concern. Tens of millions of
increasingly skilled Chinese and Indian workers are joining the global
economy at a moment when technology can dispatch white-collar work overseas
almost instantly -- from call centers to sophisticated design projects, the
very jobs that discouraged U.S. factory workers hoped their children would
get.

    PREDICTIONS VS. REALITY

The good news: The U.S. almost certainly isn't going to run out of
jobs, even though history shows that it's impossible to predict what new
jobs will replace those that are destroyed. The bad news: Outsourcing
overseas and technology could widen the gap between the wages of
well-paying brainpower jobs and poorly paid hands-on jobs.

    Jobs that can be reduced to a series of rules are likely to go --
either to workers abroad or to computers. The jobs that stay in the U.S. or
that are newly created in the decade ahead are likely to demand the more
complex skill of recognizing patterns or require human contact.

    The 25%-plus unemployment rates of the Great Depression are extremely
unlikely to return as long as the U.S. has a capable Federal Reserve that
can move interest rates, a president and Congress that will cut taxes and
increase spending when the economy slides and a widely used currency that
falls when necessary to make exports more attractive. After all, the
"jobless recovery" of the early 1990s was followed by a stretch of the
lowest unemployment in a generation.

    Each generation considers its own time to be unique. Today's popular
demon is foreign competition. Forty years ago, it was automation. In March
1964, three dozen liberal luminaries wrote Lyndon Johnson that "the
combination of the computer and the automated self-regulating machine" was
creating "almost unlimited productivity capacity which requires
progressively less human labor." Without massive government spending, they
warned, the U.S. would suffer mass joblessness and poverty.

    Since then, the U.S. economy has added 72 million jobs, an increase of
125%. Compared to a counterpart of the same age and schooling, the typical
full-time male worker's wages have risen by 18% after adjusting for
inflation; for women, wages are up 37%. Today's unemployment rate is almost
exactly where it was in 1964. Computers in the factory and in the office
have replaced humans. But jobs lost were replaced by jobs unimagined in
1964.

    Bound to Disappear

    More jobs are bound to disappear. "If you can describe a job precisely,
or write rules for doing it, it's unlikely to survive. Either we'll program
a computer to do it, or we'll teach a foreigner to do it," says Frank Levy,
a Massachusetts Institute of Technology economist. If a worker can respond
to a baffled U.S. computer user by reading a script from a computer screen,
that job will go to India. If voice-recognition software can field a
magazine-subscription request, that job will go to a computer.

    "Outsourcing accelerates what technology was already doing," Mr. Levy
adds. "Take call centers. Eight, 10 years down the line, we could do a lot
more with voice-recognition software. But with outsourcing you can do away
with those jobs now."

    New jobs surely will emerge to replace those lost. That's happened with
every past breakthrough in technology and trade. "In 1940," observes chief
White House economist Greg Mankiw, "no one could have predicted that some
grandchildren of farmers would become Web-site designers and CAT-scan
operators. But they did, and at much higher wages and incomes."

    This time, two different kinds of jobs are likely to flourish amid
outsourcing and computerization.

    One sort requires physical contact -- nursing-home aides, janitors,
gardeners, dentists. Foreign-born workers may do them, but they'll have to
move to the U.S. A 2000 survey found that the average starting salary of
graduates of community-college dental-hygiene programs was $41,900.
[prizing education]

    A hot program at many community colleges these days is massage therapy.
Springfield Technical Community College in western Massachusetts gets
nearly 50 applications each year for the 20 slots in its six-year-old
program, nearly all of them from women. Graduates earn an associate's
degree and haven't had any trouble finding work, says Bernadette Della
Bitta Nicholson, who runs the program. About a third go to work for local
spas, which give therapists half of the $80-an-hour charge for a massage.
Another third find work at local health-care facilities and the remainder
go into business for themselves.

    The other sort of jobs destined to remain here are high-end jobs. Some
require exchanging information in ways that e-mail and teleconferencing
don't handle well. Think about teaching first grade or selling a mansion to
a multimillionaire or conceiving new forms of software. Others demand such
intimate knowledge of the U.S. that it's hard to see foreigners doing them
from afar. Think about marketing to American teenagers or lobbying
Congress.

    Precisely identifying jobs that will replace those now disappearing is
impossible. The Bureau of Labor Statistics, as good as anyone at this
exercise, shows just how difficult it is.

    In 1988, the agency predicted that the number of gas-station attendants
would rise from 308,000 to 331,000 in 2000. When 2000 arrived, there were
only 140,000. "Most gas stations are now self-service only," BLS economists
Andrew Alpert and Jill Auyer explained in a candid retrospective the agency
published. The BLS didn't see that coming.

    In 1988, the BLS also projected travel agents would be among the 20
fastest-growing occupations, their ranks growing by 54% by 2000. Wrong
again. The number of travel agents fell by 6.2%. Government prognosticators
foresaw an increase in travel -- but not the explosion of online booking.

    Of 20 occupations that the BLS predicted in 1988 would suffer the
greatest losses between 1988 and 2000, half actually grew. The agency
predicted that the number of assemblers in electrical and electronic
factories would drop by 173,000, a 44% decrease. Twelve years later, there
were 45,000 more, an 11% increase. Neither outsourcing nor robots made as
much of a dent as the BLS expected.

    In trying to discern persistent trends, Mr. Levy distinguishes between
jobs that require workers to follow rules and those that require them to
recognize patterns. The first -- whether in manufacturing or services --
are vulnerable to technology and outsourcing. The second are less
vulnerable.

    Consider income-tax preparation. "The tax system is based on rules ...
built into software like TaxCut and Turbo Tax," Mr. Levy and Harvard
economist Richard Murnane write in "The Division of Labor," a forthcoming
book. "While the preparation of complex tax returns requires expert human
judgment, many other tax returns do not. ... So it is not surprising that
the preparation of routine income tax returns is beginning to move
offshore." Ernst & Young LLC is sending some simple tax-return processing
work to India, and a handful of U.S. companies have sprung up to help
smaller accounting firms do the same.

    In contrast, other jobs rely on the human ability to recognize patterns
-- the truck driver turning left across traffic, for instance, or the
seasoned physician diagnosing an unusual disease. The doctor may rely on
X-rays read by a radiologist in India or blood tests processed
automatically, but diagnosing disease remains a complex human endeavor.
Such jobs are proving much harder to computerize than high-tech prophets
anticipated. They also are much harder to supervise from afar and thus more
resistant to outsourcing abroad.

    Community colleges, publicly funded two-year colleges, excel at
sniffing out jobs for which local employers are hiring -- and then training
for them. "Some of this stuff isn't very scientific. It's just paying
attention," says Andrew Scibelli, president of Springfield Technical
Community College. "When my former wife was having our child 15 years ago
and had an ultrasound, I was talking to the sonographer and asked where she
got her training. 'I didn't. I'm an X-ray tech. The doctors and the folks
who make the equipment showed me how to do this,' she said." Mr. Scibelli
went back to his office and asked his staff to look into a training
program, talked to local employers, got the OK of the state bureaucracy and
started a program.

    Today, the program, started in 1994, draws more than 100 applicants
each semester but accepts only 10, most of whom take about three years to
complete the prerequisites, the coursework required for certification and
clinical rotations. Graduates start at between $20 and $28 an hour.

    These days community colleges are baffled by conflicting forecasts
about the job outlook. "There is an incredible angst about the jobless
recovery and yet there's no change in the forecast that 10 years out there
will be this incredible skills shortage," says Albert Lorenzo, president of
Macomb Community College outside Detroit. "All of us are trying to
reconcile this."

    Wider Gap

    One unpleasant possibility, acknowledged even by those firmly in the
trade-is-good camp, is that jobs will proliferate at both ends of the
barbell -- and fewer in the middle. The result would be an ever-wider gap
between well-paying jobs and poorly paid jobs. That, too, has happened
before, as recently as the 1980s when unionized skilled manufacturing jobs
evaporated.

    The overall pace of wage increases in the U.S. generally tracks growth
in productivity, the amount of goods and services produced for each hour of
work. But in any economy, wages for workers in high demand rise and wages
for others lag or even fall.

    For the past couple of decades, the forces of economic change have
favored workers with education and skills. Though unemployment among
college graduates has risen lately, the jobless rate among workers with a
four-year college degree remains only 3%, well below 5.5% for high-school
graduates and 8.5% for high-school dropouts.

    Not every American worker whose job is now threatened is going to
become a high-level software architect. What if there are only a handful of
safe jobs like that left? Will everyone else's wages relentlessly fall
until they meet those of Indians and Chinese in some new global
equilibrium?

    Beginning in the 1980s and extending into the 1990s, demand for
educated workers grew far faster than the increased supply, pushing their
wages far above those of lesser-skilled workers. Wages of men over age 25
with a four-year college degree are now typically 41% higher than wages of
similar men with a high-school diploma, according to an analysis of
government data by the Economic Policy Institute, a Washington think tank.
Twenty-five years ago, the differential was just 21%. For women, the
premium for a college diploma has grown to 46% from 25%

    In the late 1990s boom, wages at the very top continued to climb faster
than everyone else's. But wages at the bottom moved closer to the middle
class, pushed up by an unemployment rate so low that "help wanted" became
the universal slogan of American businesses and by increases in the minimum
wage. When the economy deteriorated in 2000 and unemployment rose, wages at
the bottom fell while wages at the very top kept climbing. The premium
employers pay for a college diploma remains high, though it hasn't grown
lately.

    Will technology, trade and outsourcing further widen the wage gap
between the best- and worst-paid workers?

    Right now, the economic winds seem to be blowing that way. "America's
long-term problem isn't too few jobs," Robert Reich, the former Clinton
administration labor secretary now at Brandeis University, wrote in a Wall
Street Journal opinion article last December. "It's the widening income
gap. The long-term solution is to spur upward mobility by getting more
Americans a good education, including access to college. There will be
plenty of good jobs to go around. But too few of our citizens are being
prepared for them."

    Without a major change in policy, such as an increase in the minimum
wage or restraints on immigration, or a seismic shift in the economy, such
as a surge in unions or limits on imports, the economic forces widening the
gap between wages of winners and losers appear strong.

    A lot depends on what happens to the latest victims of change, the
white-collar analogs of the steelworkers, auto workers and other
blue-collar workers pushed aside by trade and technology in the 1980s and
1990s. Some were forced to compete for poorly paid jobs with unskilled
workers, including recent immigrants, pushing wages at the bottom down.
Others, often with government aid, got skills needed to move up a notch.

    "Rather than thinking of a career ladder," says Mr. Lorenzo, the
Michigan community-college president, "we've started to refer to it as rock
climbing. It's no longer a rung-by-rung clear linear progression." Some
auto mechanics never mastered the repair of cars as manufacturers stuffed
them with computer chips; others learned how to diagnose the computerized
auto engine as well as the faulty fuel pump and prospered.

    Today, the sophistication of computers and spread of overseas
outsourcing threaten many of the jobs that replaced old factory jobs.

    So there is another fork in the road. The low road takes these
middle-skilled workers into competition for jobs washing, baby-sitting,
serving and nursing the elite educated well-paid classes -- pushing down
wages at the bottom. The high road takes them to jobs more skilled than
those they lost, the jobs that Chinese and Indians may do someday, but not
yet.

    Those who bet on the high road inevitably call for better educating
American workers so they have skills to stay one step ahead of jobs that
computers and foreign workers do. It is clear that to be a successful
middle-skilled worker in the U.S. takes increasingly more schooling.

    But education is a slow escalator. Harvard University President
Lawrence Summers calls it "the ultimate act of faith in the future."

    "There are two kinds of lies that politicians tell about outsourcing,"
says Mr. Levy, the MIT economist. "One is that we can turn it all back. But
even if you cut off all trade, technology can do the same things to
workers. The other is that education is all that matters. That's true, of
course, but only in the long run."

    In the time spans over which economic progress is best measured -- in
generations -- educating U.S. workers is the most appealing remedy for an
economy that regularly pushes workers out of jobs they were trained to do.
Without better elementary and high schools, wider access to college and
more training of mature workers, the gap between those with well-paying and
poorly paid jobs is certain to grow.

    Over the next five or 10 years, though, better high schools, more
college-student aid and more pervasive workplace training don't seem
sufficient to stop outsourcing, trade, improving technology and relentless
cost-cutting from widening that gap.

    Predictions vs. Reality

    Occupations expected to lose the most jobs between 1988 and 2000, in
thousands

    Table with 3 columns and 13 rows
ESTIMATE
ACTUAL

Farmers
-266
-194

Farm workers
-153
-157

Electrical, electronic assemblers
-103
9

Garment-sewing-machine operators
-89
-324

Hand packers, packagers
-75
384


Precision assemblers, electrical and electronic equipt.
-71
35

Word processors, typists
-61
-503

Precision inspectors, testers, and graders
-42
18

Court reporters, medical transcriptionists, stenographers
-36
-55


Packaging- and filling-machine operators
-33
99

Machine feeders
-31
-35


Textile-machine operators
-30
-55
table end

    Source: Bureau of Labor Statistics

    Write to David Wessel at
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