NCPA - National Center for Policy Analysis

Is Outsourcing Skewing Labor Figures?

November 10, 1997

The answer may lie in the recent growth of outsourcing.

  • Many factory layoffs have really been outsourcings -- in which workers returned as vendors or contractors.
  • The Labor Department classifies temporary workers and many vendors as service-sector employees -- rather than lumping them into the manufacturing category.
  • Executives at the temporary-personnel firm, Manpower, Inc., estimate that they send out more than 100,000 blue-collar workers to manufacturing jobs each week.
  • A 1995 Labor Department study found that perhaps one-third of all temporaries work for manufacturers.

Government figures indicate there are somewhere between 400,000 and 840,000 temporary workers in factories this year.

These numbers indicate that manufacturers are generating lots of jobs. And at least part of the reason for the service sector's dismal productivity growth in recent years -- and manufacturers' impressive productivity performance -- is that the government is overcounting service workers and undercounting manufacturing workers.


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