Cary,
1. "The unemployment rate is not pertinent to the discussion. If a former $100K engineer is working at Best Buy for $25K or has stopped actively looking for a job, then the unemployment rate is unaffected."
Unemployment rate is one indicator as to what the job situation is. Another one could be hourly wage rate. On a national level hourly earnings have also steadily increased as shown by
ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb2.txt
I think the overall job situation is not reflective of $100K engineer being replaced by a $25K job. This is not to deny the fact that there have been a few isolated dislocations of people in workplace. One other factor to note is that software salary reduction is primarily a deflation of IT "bubble". In 1999/20 there were software consultants sometime pulling in $150-250/hour as wage rates and those rates were not sustainable. Here, is a timely article relevant to our debate here:
money.cnn.com
2. By "commoditization", I mean that technology has more widely spread and matured to the point that "excess" profit can not be made by companies, similarly, workers' wage rate would regress toward the "mean". The Indian CEO sending his son to Cornell is reflctive of --
a. India not having enough universities to provide quality education and everybody competeing for few coveted slots.
b. US universities loosening their enterance requirements to get more foreign students as they do not ask for financial aid. I know of cases when US Ivy league universities have admitted 1300 SAT students from India while rejecting 1500+ SAT score candidates from US. This is due to qouta system for "foreign students".
3. I agree with you that role of "US as major consumer is projected to decline as much more populous countries...". It is declining on a relative basis but in absolute terms US production and consumption has gone up. IMHO, a better way to look at would be to try to imagine US standards of living with or without outsourcing. I don't see how US absolute standards have declined due to outsourcing, however, other countries may have come closer to US standards of living.
4. I was referring to Chinese purchase of US bonds and treasury security because they had to re-deploy the dollars they earned by expoting to US during the past few years. This has made Fed's job of keeping interest rates low easier. Without Chinese buying US bonds, the mortgage rates may not have dipped to such historically low levels.
I, personnaly, can't predict what new field will generate the jobs needed to employ the dislocated workers but some industries where US has substantial edge like space industry, biotechnology, genetics may provide the job engine to continue its high-wage status. |
