Deepening Divides in Jobless Recovery

Foreign outsourcing, otherwise known as off-shoring, has become a matter of intense public debate and great concern in the United States presidential contest, especially in light of the large job losses experienced by U.S. workers since George Bush became president. Yet, there is a lack of good data on foreign outsourcing since the early 1990s. This paper presents updated measures of foreign outsourcing for the recent period. Its main findings are that the share of foreign-sourced goods in total manufactured inputs almost doubled – from 12.4% to 22.1%– in U.S. manufacturing between 1987 and 2002. Since the early 1990s, outsourcing has accelerated in key industries and has been associated with a loss of employment. In particular, for the period from 1997 to 2002, there has been a strong association between manufacturing job losses and foreign outsourcing.