Vasilios D. Kosteas* Cleveland State University Jooyoun Park Kent State University

Transcription

1 Occupation Changes for Displaced Manufacturing Workers Vasilios D. Kosteas* Cleveland State University Jooyoun Park Kent State University Abstract Using data from the Trade Adjustment Assistance (TAA) program s Trade Act Participant Report (TAPR) and the US Census Displaced Workers Surveys, we illustrate the patterns of occupation changes for workers displaced from manufacturing sector jobs. Specifically, we provide information on the difference in offshorability between workers pre and postdisplacement occupations. We find significant variation in these changes while many workers move from one highly offshorable occupation to another. JEL classification: F13, F16 Key words: offshorability, occupational change, displacement 1

2 Introduction Foreign competition, along with technological advancement, has slowly decreased demand for low-skilled production tasks in the U.S. over the second half of the 20 th century. Due to the rapid improvement in information technology and the resulting rise in the practice of offshoring, this threat is no longer limited to production workers. Blinder (2009) estimated between 22% and 29% of all U.S. jobs are or will be potentially offshorable within a decade or two. Intensification of such a threat results in higher adjustment costs for those who are displaced from the offshorable sector as their existing skill sets become obsolete in the U.S. While much research on the labor market impacts of offshoring has focused on wage effects (David et al, 2016; Hummels et al., 2014), recent studies have examined the occupation switching behavior of displaced workers (Liu and Trefler, 2011; Baumgarten et al., 2013; Ebenstein et al., 2014). However, we still know very little about the types of jobs in which these displaced workers are reemployed. This study examines the pattern of occupation changes of those who are displaced from manufacturing sector jobs. First, we show the discrepancy between training choices among the participants of the Trade Adjustment Assistance (TAA) program and realized occupation of reemployment. Second, we investigate the rate at which displaced workers switch occupations and whether they tend to switch to less offshorable occupations using the Displaced Worker Surveys (DWS). Offshorability Index We adopt the offshorability index introduced by Jensen and Kletzer (2010). The index combines information from O*Net 1 on the tasks performed in each occupation based on the idea that movable jobs are those with little face-to-face customer contact, high information content, and the work process is internet-enabled and or telecommutable (Jensen and Kletzer, 2010). 2 Their approach is in contrast to Blinder (2009) and Blinder and Krueger (2009) who argue for the use of worker-level survey data to develop measures of offshorability since there may be significant within-occupation variation. However, 1 O*Net is a portal of occupational information managed by the U.S. Department of Labor. It provides job description, task contents, skill requirement, employment projection, and etc. 2 See Appendix A for a list of the tasks used to construct the index. 2

3 much of the observed within-occupation variation in reported offshorability may be due to the subjectivity of the responses. The O*Net task variables are constructed from large scale surveys which helps to minimize any measurement error arising from individual reporting error or biases. Appendix table A2 presents the ten most and least offshorable occupations according to our metric. The list conforms to the notion that jobs which require either face-to-face interaction (barbers, hairdressers) or for the worker to be in a specific location (home appliance and other types of repairers) are not offshorable. By contrast, service sector jobs which can be performed from a distance, such as data entry keyers and financial examiners, are highly offshorable. Worker Data We use two sources of worker level data. First, we use the Trade Act Participant Report (TAPR) to motivate this study 3. The TAPR contains data on participants in the Trade Adjustment Assistance (TAA) program. The TAA program is a dislocated worker program designed to reduce adjustment costs for people whose employment is adversely affected by various forms of foreign competition. TAA provides reemployment-related services, most importantly occupational skills training and income support during training. TAPR reports pre-participation information (individual characteristics and previous employment), service delivery (training types and occupations), and post-exit outcomes (reemployment occupations and earnings). This dataset is particularly useful in motivating this study because we can see their choices of training occupations as well as their reemployment occupations. For the main analysis, we use the Displaced Worker Surveys (DWS), a supplement to the Current Population Surveys (CPS) conducted in January of even-numbered years. Using the waves of the DWS, we present information on occupation changes and show the distribution of changes in 3 TAPR is not suitable for the main analysis because it only reports the industry, not the occupation, of participants previous employment. This makes the analysis of occupation switching not feasible. 3

4 offshorability between pre and post-displacement occupations for displaced workers. 4 Specifically, we match information on occupation level tasks data from O*NET to each individual s occupation for the job from which she was displaced as well as for the occupation of her current employment. We map the 900- plus occupations listed in O*NET into the 400-plus occupations in the census classification which is used by the DWS. Analysis Table 1 shows the occupations that are most frequently observed as occupations of training and reemployment among TAA participants. Panel (a) shows that none of the ten most popular training occupations are production-related. 5 Four are traditional office jobs and three are in medical fields. Driving and Construction-related jobs are typically non-offshorable occupations. This implies that there is an attempt by trade-displaced workers to move away from their previous production-related occupations. Panel (b), however, shows that despite this effort, many end up returning to productionrelated jobs. As a result, these workers remain vulnerable to foreign competition. Among the top 30 training occupations, only three are production-related, accounting for 4.29% of the sample, while there are 13 general office work (25.86%) and 6 health-related occupations (13.84%) on the list. Among the top 30 reemployment occupations, 10 are production occupations (15.64% of the sample), 5 general office work (8.09%), and only 3 are health-related (2.54%). Table 2 presents information on occupation changes for the full sample, and separately for workers displaced from manufacturing sector jobs, and those displaced specifically from production jobs. The full sample contains 13,325 observations for individuals who experienced a job displacement in the past three years and were re-employed by the time of the interview. Over 61% of workers displaced at some point in the previous two years find employment by the time of the survey. For those employed in 4 The Minnesota Population Center maintains the Integrated Public Use Microsamples Current Population Surveys (IPUMS CPS) project in an effort to make CPS data publicly available and compatible with other data sources (Ruggles et al. 2015). 5 Census Occupation Codes from 7700 to

5 manufacturing (production) jobs, 58.7% (55.8%) are employed by the time of the survey. Thus, workers displaced from manufacturing jobs, and in particular production jobs, are less likely to find new employment. Of those who are reemployed, smaller percentages of workers displaced from manufacturing (23.1%) and production (21.6%) jobs find work in the same occupation from which they were displaced compared to the sample as a whole (29.8%). These percentages are quite remarkable given our occupation coding contains over 400 distinct occupations. Moreover, 39.3% (39.5%) of manufacturing (production) workers who find work are reemployed in the manufacturing sector (production occupations). Table 3 presents statistics on occupational changes for workers in the DWS. The median offshorability index for the pre-displacement occupation of employment is 54.8, with a standard deviation of While workers previously employed in the manufacturing sector are more likely to switch occupations, those occupation switchers exhibit similar patterns in terms of the change in offshorability to the sample as a whole. The same is true for workers displaced from production occupations. The median change in offshorability is -0.4 for the full sample, for manufacturing workers (based on occupation of displacement), and -1.3 for workers displaced from production occupations. For both groups, a significant fraction of the sample finds work in an occupation with a higher offshorability index compared to the occupation from which they were displaced. Overall, these statistics show a wide set of experiences for displaced manufacturing workers. Conclusions Contrary to popular perception, it is not the case that workers displaced from jobs in highly offshorable occupations move, en masse to jobs in less offshorable occupations. The present analysis shows that the picture is actually more complex. A substantial fraction of workers actually find new employment in the same, narrowly defined occupation. While the majority of workers displaced from manufacturing sector jobs who are reemployed by the time of the DWS switch occupations, nearly 40% are still employed in manufacturing. Instead of seeking a move to jobs insulated from outsourcing, we see that nearly half of 5

6 the workers change occupations move to jobs with a higher score on the offshorability index. The fact that many workers displaced from highly offshorable jobs wind up reemployed in similarly offshorable occupations raises the question of whether these workers are subject to repeated job displacement as a result of foreign competition, with potentially compounding effects on long-term income flows. More research is needed to understand the potential for such cases and measure the economic losses sustained by these individuals. 6

7 References Baumgarten, D., Geishecker, I., & Görg, H. (2013) "Offshoring, tasks, and the skill-wage pattern," European Economic Review, vol. 61(C), pp Blinder, Alan S., (2009) How Many US Jobs Might be Offshorable? World Economics, Vol. 10 (2), Blinder, Alan S. and Alan B. Krueger, (2009) Alternative Measures of Offshorability: A survey Approach. NBER Working Paper No David, H., Dorn, D., & Hanson, G. H. (2016) The china shock: Learning from labor market adjustment to large changes in trade, National Bureau of Economic Research Working Paper Series W21906 Ebenstein, A., Harrison, A., McMillan, M., & Phillips, S. (2014). Estimating the impact of trade and offshoring on American workers using the current population surveys, Review of Economics and Statistics, 96(4), Hummels, D., Jorgensen, R., Munch, J., & Xiang, C., (2014), The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data, American Economic Review 104(6): Jensen, Bradford and Lori Kletzer, (2010) Measuring Tradable Services and the Task Content of Offshorable Services Jobs, in Labor in the New Economy, edited by Katharine G. Abraham & James R. Spletzer & Michael Harper, pp Ruggles, Steven, Katie Genadek, Ronald Goeken, Josiah Grover, & Matthew Sobek. (2015) Integrated Public Use Microdata Series: Version 6.0 [Machine-readable database], Minneapolis: University of Minnesota 7

8 Table 1: Most Frequent Training/Reemployment Occupations (TAPR) OCC Code Occupation titles (a) 10 most frequently observed training occupations 9130 Driver/sales workers and truck drivers 3650 Medical assistants and other healthcare support 5700 Secretaries and administrative assistants 5860 Office clerks, general 6760 Misc. construction and related workers 5800 Computer operators 3500 Licensed practical and licensed vocational nurses 3510 Medical records and health information technicians 1550 Engineering technicians, except drafters 5120 Bookkeeping, accounting, and auditing clerks (b) 10 most frequently observed reemployment occupations 9130 Driver/sales workers and truck drivers 8950 Helpers--production workers 3650 Medical assistants and other healthcare support 5700 Secretaries and administrative assistants 6760 Misc. construction and related workers 8740 Inspectors, testers, sorters, samplers, and weighers 8320 Sewing machine operators 5860 Office clerks, general 9620 Laborers and freight, stock, and material movers, hand 8030 Machinists 8

9 Table 2: Most popular destination occupations for displaced workers Currently Employed Same Occupation Same Category (i) Sample Obs. Obs. Share Obs. Share Obs. Share Full sample 21,699 13, % 3, % Manufacturing workers (ii) 4,287 2, % % % Production workers (iii) 2,533 1, % % % (i) This refers to the entire manufacturing sector and the category of production workers for manufacturing and production workers, respectively. (ii) workers who were previously employed in manufacturing sector regardless of occupations (iii) workers who previously held production occupations (Census occupation codes ). 9

10 Table 3: Occupational changes for displaced workers in the DWS Variable 10th% 25th% Median 75th% 90th% Obs. Offshorability of displaced job ,882 Change in offshorability for: Full sample ,236 Manufacturing sector workers (i) ,605 Production workers (ii) ,530 (i) workers who were previously employed in manufacturing sector regardless of occupations (ii) workers who previously held production occupations (Census occupation codes ). 10