The BLS monthly grim reaper report for February

From yesterday's Bureau of Labor Statistics (BLS) report on February's mass layoffs:

In February, employers took 1,280 mass layoff actions, seasonally adjusted, as measured by new filings for unemployment insurance benefits during the month, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Each action involved at least 50 persons from a single establishment; the number of workers involved totaled 143,977, on a seasonally adjusted basis. The number of mass layoff events increased by 43 from January, and the number of associated initial claims rose by 17,609. During February, 419 mass layoff events were reported in the manufacturing sector, seasonally adjusted, resulting in 64,072 initial claims. Compared with the prior month, mass layoff activity in manufacturing increased by 30 events and by 12,931 initial claims.
...
The industry with the highest number of initial claims was temporary help services (with 5,581), followed by automobile manufacturing (5,561), and motorcycle, bicycle, and parts manufacturing (3,043). Together, these three industries accounted for 16 percent of all initial claims due to mass layoffs during the month.
...
Construction accounted for 22 percent of mass layoff events and 15 percent of initial claims in February, largely from specialty trade contractors. Administrative and waste services comprised 12 percent of events and 11 percent of initial claims filed over the month, with the majority of layoffs in temporary help services. Eight percent of all mass layoff events and 7 percent of related initial claims filed were from retail trade, primarily from general merchandise stores. Transportation and warehousing made up 4 percent of events and 5 percent of associated initial claims, primarily from the school and employee bus transportation industry.
...
Among the states, California recorded the highest number of initial claims filed due to mass layoff events in February (19,809), followed by Pennsylvania (10,928), Michigan (6,507), Wisconsin (6,035), and Illinois (4,684). These five states accounted for 58 percent of all mass layoff events and 55 percent of all associated initial claims for unemployment insurance.

In short: another 143,977 jobs waving bye-bye.

Another heart warming story of jobs going to India

The official line from the US government and the vast majority of American Business leaders is "outsourcing is good for America." The number of games played to provide evidentiary support for such a notion is truly mind boggling (a subject for another post), but reality keeps raising its ugly little head and whispering "psst, buddy, there go some more jobs."

What's really fascinating is how the business press does back flips to spin a story of jobs going to India rather than the US into a classic feelgood story. Kafka and Orwell could not do a better job of absurdity reported via new speak.

Take this little gem from the Chicago Tribune on how using Indian labor to start a new Information Technology (IT) venture just made the whole startup even more special, spiced up with a few other heartwarming anecdotes about how other white collar jobs, including legal research and basic legal services, are now drifting India-ward (emphasis added):

For starters, firms turn to India
Companies find edge by using full-time outsourced workers

By Ann Meyer
Special to the Tribune
Published March 5, 2007


Entrepreneur Bill Lederer is no stranger to dot-coms, but his latest venture has taken him to a new place--India.

Lederer, the founder of Art.com a decade ago and an investor in several other early dot-coms, is rolling out CompleteLandlord.com and RentSlicer.com, two niche sites that aim to deliver comprehensive listings, legal forms and other information for landlords, property investors and renters. Both are part of Lederer's Socrates Media, financed by Lederer and other local investors.

But this time Lederer is relying on a wholly owned subsidiary in India to keep costs low and service high. The strategy will help make the company profitable sooner, he said.

"If we had gone to do this in only Chicago, it would have cost us considerably more," Lederer said. "We are able to do it faster, cheaper, better."
...
The company's subsidiary in Hyderabad is doing more than IT work. It's involved in accounting, marketing support, editorial, creative services and a customer call center, Lederer said.

"Everything we do in Chicago, they do in India," he said, though strategic decisions and new-product development are concentrated in Chicago.

Lederer started Socrates after acquiring a paper-legal-forms company, Made E-Z, in 2003. He brought it online in 2005 in a brick-to-click model, where landlords' in-store purchases of legal forms were supplemented with services from Socrates.

In December, CompleteLandlord.com launched as a separate Web site. And Lederer is taking a similar approach with RentSlicer.com, which will offer comprehensive listings and information for renters when it is launched next month.
...
Socrates employs 50 workers in India and 15 in Chicago. It started setting up its India team by hiring managers with experience working with American companies, said Bruce Masterson, Socrates' chief operating officer, who formerly ran Reuters North America.
...
CVM Solutions, an Oakbrook Terrace-based provider of supplier diversity data and technology, first outsourced its IT work to a provider in India but later formed a wholly owned subsidiary as its needs grew, said Rajesh Voddiraju, president, technology solutions. Now the company employs 36 people in India, while 46 work in Oakbrook Terrace, he said.

"Having a low-cost arm has helped us grow," he said, noting that the company saves about 70 percent in costs from the India operation.

Legal-services firm Mindcrest, with a headquarters of four in Chicago, wouldn't be in business without a wholly owned subsidiary operating in Mumbai and Pune, India, which employs about 150 Indian workers, most of them lawyers with knowledge of American law, said Ganesh Natarajan, the Chicago attorney who founded the company six years ago with three partners.

Natarajan, who is from Mumbai, saw legal services in India as a natural fit because India is a common-law country and its lawyers are used to researching case law, he said.
...
Mindcrest does not give legal advice but provides basic legal services, such as reviewing documents, drafting contracts and doing research, at savings of 50 percent to 90 percent from U.S. rates, Natarajan said. Most of the firm's clients are law firms, consulting firms and corporations with their own in-house counsel who use Mindcrest to save time and money, he said.

A positive experience using a similar legal services firm, QuisLex, based in New York but with 100 employees in India, gave Socrates the confidence to pursue Indian labor for other aspects of the start-up, Masterson said.

I think we have seen the future, and it doesn't work if you live in America.

And ask yourself, would the trusty old US government bother tracking down these jobs which originated in India, but clearly would have been in the US in decades past, and include them in its very suspect analysis of jobs lost to outsourcing?

I think not. I really, really think not.

The "Blame the Unions" con

I've now had at least ten members of the public tell me that the reason that blue collar jobs got shipped overseas is that the unions created outrageous wage and benefit structures. "If only the unions hadn't gotten greedy," these gullible folks insist, "the jobs would still be here."

This is always followed by some variation on this line of thought: "Why should the companies pay union members $17 an hour, when they can get the same work done for less overseas?"

I guess that makes superficial sense if you don't know any details about the wages being paid in the countries to which these jobs were shipped. But if you actually think, rather than parroting what Rush Limppaw, or Shill O'Reilly, or Sean Vannity say...

The illogic of this theory can be demonstrated by asking a simply and very obvious question: If union wages caused jobs to be shipped overseas to cheaper labor, how low would wages have to be in the U.S. to convince employers to keep the jobs here?

The people who spout this theory to me seem to assume that if only the unions would have accepted a "more reasonable" wage like $10 an hour, the jobs would still be here. Which is, of course, nonsense.

If the overseas labor cost is $.50 an hour, it wouldn't take a genius employer long to realize that this is only 1/20 of a $10 per hour rate here. Even if you lowered wages to $5 per hour here, that would still be ten times higher than they would have to pay overseas.

The whole theory is crap. If employers can get their labor overseas for $.50 an hour, American workers would have to accept something very close to that...say $.75 per hour...to prevent the jobs from fleeing overseas.

And I wonder how many of my misinformed friends have tried living in the U.S. on $.75 per hour. Let's see, $.75 per hour, times 40 hours, equals $30 per week. Yeah, that could work if you walked everywhere, went naked, lived in a cardboard box on public land, never, ever got sick.....