Obsolescence, outsourcing, and job loss

Outsourcing is far more common than we think. We all do it, especially if the less rigorous definitions of "out" are used. It basically means finding labor and/or talent cheaper somewhere else. One worker is let go because the employer no longer wants to pay his price for work, and the worker can't, or won't, lower his price enough.

Another reason an employee's skills might not be needed any longer is that the employer no longer needs them in order to do what he needs or wants to do. The position itself may have become obsolete.

We think of job obsolescence in terms of changing technology which wipes out whole classes of jobs, and there certainly is a lot of that. Any number of people have had their jobs become obsolete when technological advances have made them unnecessary.

This is really another form of "outsourcing". Instead of shipping a job off to another person someplace else, the employer ships a job off to improved technology. The appearance is different, but the reason is the same. Instead of finding himself underbid by an Elbonian worker, the employee is underbid by a robot or computer. (Or even a steam shovel, taking the place of dozens of ditch diggers.)

We ourselves have "fired" people when their jobs became obsolete. For example, we might quit hiring a baby-sitter when our kids grow up enough to be able to look after themselves (or finally graduate from school and get thrown out of the house.) If we're cutting expenses, we may "fire" the more expensive markets and restaurants, and "outsource" to less expensive ones. As our finances improve, we "fire" the low-end suppliers and "outsource" to higher-end sources.

This isn't the hardship for markets and restaurants that it is for an employee, because we're not the sole source of income for the markets and restaurants. (And if by some chance, we are, we'll effectively fire them because they'll no longer be in business!)

So the bottom line is, in both types of job loss, we're looking at changes in employment that occur because an employer can get the same service elsewhere, for less. The erstwhile employee's defenses are either to find some way to force the employer to pay more and keep him on the payroll, or to find someone else who does want his services, or to pick up a new skill set.

More, in a later post.