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Saturday, March 13, 2004Economic growth is very strong, but America isn't generating enough jobs. Many blame outsourcing. The truth is a lot more complicated The real culprit in this jobless recovery is productivity, not offshoring. 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. People rightly fear that jobs in high tech and services will disappear just as manufacturing jobs did. Perhaps so. But odds are it will be productivity rather than outsourcing that does them in.
America has been at economic inflection points many times in the past. These periods of high job anxiety were eventually followed by years of surging job creation. The faith Americans have in innovation, risk-taking, education, and hard work has been sustained again and again by strong economic performance.
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