How to smooth job transition to offset overseas outsourcing

"Policymakers have to refocus their energies away from trying to stop outsourcing to finding ways to help those affected."

Entrepreneurial activity and fluidity in the labor force--meaning the free movement of workers among industries as demand rises and falls--were critical to economic expansion and job growth following the last recession. The difference is that this recovery is coinciding with the growth of offshore outsourcing. The number of service sector jobs moving overseas is expected to reach 588,000 by 2005, up from 100,000 in 2000. This makes start-ups and industry switching even more important in supporting a recovery, but they seem to be missing this time around.

The era of playing it safe has passed. with so many industries moving jobs overseas, some of the displaced workers in America will have no choice but to consider an industry change if they want to find employment. As certain kinds of jobs dry up here, there is no reason to think that our talented workforce will not redeploy its skills in new directions and endeavors. The challenge is making sure that individuals are able to make a quick transition into areas where skilled people are in demand.

Policymakers have to refocus their energies away from trying to stop outsourcing to finding ways to help those affected. Companies always go where labor is least costly. At the same time, employers have a vested interest in keeping the job engine humming here at home, since an unemployed labor force means there is no one to buy the products they produce.

Here are some suggestions on ways to facilitate smoother and faster job transitions to offset the losses from offshore outsourcing:

Strengthen community colleges. These institutions long have been key in retraining and updating the skills of American workers. However, for the types of highly skilled, technology-laden positions that will represent the bulk of new job creation in the future, community colleges may fall short. With the backing of government and corporate dollars, however, these institutions may be able to increase students" exposure to the latest technology and attract the top teaching talent.

Making continuing education more affordable. Lifelong learning will be critical to the new economic order, but for many, finding the time and money to advance one's education seems out of reach. To lessen the burden, employers may have to find ways to reimburse workers who choose to update their skills while staying on the job. Those who are jobless should be able to get more help from state and Federal governments.

Encourage entrepreneurism. Governments and universities should be working together to cultivate innovation and business creation. The State of New York, for example, has invested $620,000,000 of a planned $1,000,000,000 to create a network of research and development incubators. The program aims to produce leading-edge technology centers through collaboration between the state's university system and private industry.

Stay up to date. Individuals must take some responsibility in making sure that their skills are keeping pace with changing technology. They should take every opportunity offered by employers to participate in training programs and should seek government loans or grant money to return to school.

Refocus education. Part of the reason American companies so willingly seek workers overseas is that the education systems in China, India, Russia, and South Korea place heavy emphasis on math and science. India alone produces 100,000200,000 information technology and engineering graduates per year.

Reconfigure unemployment insurance. Earmark a portion of unemployment insurance for continuing education. Too often, cash payments merely serve as a disincentive to reenter the workforce. Special funds for the purpose of retraining would help ease the cost burden of education and move people toward the occupations most in need.

John A. Challenger, chief executive officer of Challenger, Gray & Christmas, Inc., a Chicago-based international outplacement firm, was a member of the labor and human resource committee of the Federal Reserve Bank of Chicago from 1999 to 2002.

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