Insourced Jobs Pay More

Prof. Matthew Slaughter's paper, "Insourcing: Making Jobs Work for America," which we linked in our last post, comes with an interesting premise: insourced jobs pay more.

"The real annual compensation of workers at insourcing companies has risen steadily for many years. Additionally, subsidiaries pay higher average compensation than do domestic US ifrms, a premium that has also risen steadily," Slaughter says in the study.

Earlier this year, Bruce Bartlett of the National Center for Policy Analysis (NCPA) produced an article which supports this data. It attempted to present solid statistics on the number of jobs leaving the States, as well as the number of jobs being created within US shores.

Bartlett's analysis was based on a graph drafted by the OFII:

• For the past 15 years, corporations have moved jobs to the United States at a faster rate than jobs have left, for an 82 percent increase in insourced jobs compared to a 23 percent increase in outsourced jobs.
• Manufacturing jobs have been insourced at an even faster pace than service jobs, more than doubling over the period (though beginning from a smaller base).
• Jobs insourced to the United States increased from 4.9 million in 1991 to 6.4 million in 2001.

Insourced jobs pay 16.5 percent more than the average domestic job, and one-third of them are in the manufacturing sector. These include plants that assemble German and Japanese automobiles and produce pharmaceuticals.

In addition, North Carolina State University economics professor Michael Walden said in an interview with The Hill that "while insourcing has grown at a faster rate than outsourcing over the past 15 years, it has grown at a slower rate since 1994, when the North American Free trade Agreement and the Global Agreement on Tariffs and Trade were signed."

Slaughter cautions that soon, the United States may no longer be the #1 insourcing destination. Aggressive marketing and improvement in skills training efforts are required to ensure the US' place at the top.

There may be no exact figures for the number of jobs outsourced and insourced, but one thing's for sure: insourcing is creating the vital offsetting factor needed to cushion the impact of outsourcing on the workers of a developed country.

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