Our last post made reference to the Bureau of Labor Statistics report on “off shoring.”  This has certainly been a hot topic as we see jobs go overseas because of globalization.  However the Bureau of Labor Statistics report also shows certain types of jobs are more susceptible to being offshored.  In this entry, we first analyze the relationship between these jobs and average salaries.  Then, relying on data from Michigan’s Labor Market Information site, we look at how concentrated Michigan is in each of these occupations and where we are headed.  This will give us a sense of how well positioned we are as more jobs continue to go overseas.

Comparing susceptibility of service jobs moving overseas and the average annual wage of those jobs, results in somewhat positive news about these potential job losses.  There is a moderately strong (-.465), and very significant (<.001) negative correlation between mean annual wages and the BLS susceptibility score.  This implies that the jobs most likely to be sent overseas, according to BLS, are not the highest paying jobs.  Jobs with low susceptibility scores tend to be higher paid, on average.   The Susceptibility Score was measured by BLS by sending a survey to 160 economists who were to rate jobs by these four categories on a 1-4 scale (with 4 being highest): inputs and outputs that can travel easily across long distances, such as electronically over the Internet; work that requires little interaction with other types of workers; work that requires little knowledge of the social or cultural idiosyn­crasies of the target market; and work that is routine in nature.  Those scoring at higher levels are thought to be more susceptible to offshoring (4-16 scale). 

Utilizing Michigan’s Labor Market Information data, we were interested in matching up Michigan’s anticipated change in occupation between 2006 and 2016 and comparing that to the BLS susceptibility score.  This gives us a proxy for how likely Michigan’s industries will be hit by potential offshoring.  If this relationship was positive, then we would understand that many of the future jobs we anticipate having are at great risk for being lost. 

In fact, there is again a moderately negative (-.349) and significant (<.001) correlation between the direction Michigan appears to be heading in terms of jobs and the susceptibility of those jobs to being at risk of moving overseas.  This may be due to the fact that Michigan’s predictions take into account the Bureau of Labor Statistics data. Therefore, it will be more interesting to see wages of those jobs that are likely to have the largest decline in Michigan. 

If we examine jobs for which susceptibility scores have been calculated what we see is that the top 10 jobs most likely to be lost in Michigan are relatively low paying and highly susceptible to being transferred overseas, according to Michigan Labor Market Information.  The average salary and of these 10 jobs is $33,877; whereas, the average salary of all the jobs listed by the Bureau of Labor Statistics is $62,299.  This difference of $28,422 is positive for Michigan.

So what are the jobs that are expected to come to Michigan by 2016? Interestingly, according to Michigan Labor Market Information, those jobs that are expected to be the most likely to come here (largest % increase from 2006-2016), are expected to yield an average salary of $65,870.  This salary exceeds the average nationally of those likely to be sent overseas ($62,299).  Assuming this picture is accurate, it could mean that there will be an increase of higher paying jobs and a decrease of lower paying jobs in Michigan which would equate to a Michigan with more higher-skilled jobs.