Latest EPI Report – Growing U.S. trade deficit with China cost more than 2.7 million jobs between 2001 and 2011

August 23, 2012 by

Excerpt from the Latest Report of the Economic Policy Institute on Job Loss From US Trade With  China

Read the Full Report on the EPI Website

Report | Trade and Globalization

The China toll

Growing U.S. trade deficit with China cost more than 2.7 million jobs between 2001 and 2011, with job losses in every state

By Robert E. Scott | August 23, 2012

Briefing Paper #345

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Press release

Briefing Paper: Growing U.S. trade deficit with China cost 2.8 million jobs between 2001 and 2010

Since China entered the World Trade Organization in 2001, the extraordinary growth of trade between China and the United States has had a dramatic effect on U.S. workers and the domestic economy, though in neither case has this effect been beneficial. The United States is piling up foreign debt and losing export capacity, and the growing trade deficit with China has been a prime contributor to the crisis in U.S. manufacturing employment. Between 2001 and 2011, the trade deficit with China eliminated or displaced more than 2.7 million U.S. jobs, over 2.1 million of which (76.9 percent) were in manufacturing. These lost manufacturing jobs account for more than half of all U.S. manufacturing jobs lost or displaced between 2001 and 2011.

Supplemental Table A: Jobs displaced due to U.S. trade deficits with China, by congressional district, 2001–2011 (ranked by share of jobs displaced) [PDF] [Excel]

Supplemental Table B: Jobs displaced due to U.S. trade deficits with China, by congressional district, 2001–2011 (sorted by state and congressional district) [PDF] [Excel]

Supplemental Table C: U.S. trade with China, by industry, 2001–2011 [PDF] [Excel]

The more than 2.7 million jobs lost or displaced in all sectors include 662,100 jobs from 2008 to 2011 alone—even though imports from China and the rest of the world plunged in 2009. (Imports from China have since recovered and surpassed their peak of 2008.) The growing trade deficit with China has cost jobs in all 50 states and the District of Columbia and Puerto Rico, as well as in each congressional district.

Among specific industries, the trade deficit in the computer and electronic products industry grew the most, and 1,064,800 jobs were displaced, 38.8 percent of the 2001–2011 total. As a result, many of the hardest-hit congressional districts were in California, Texas, Oregon, Massachusetts, Colorado, and Minnesota, where jobs in that industry are concentrated. Some districts in North Carolina, Georgia, and Alabama were also especially hard-hit by job displacement in a variety of manufacturing industries, including computers and electronic products, textiles and apparel, and furniture.

But the jobs impact of the China trade deficit is not restricted to job loss and displacement. Competition with low-wage workers from less-developed countries such as China has driven down wages for workers in U.S. manufacturing and reduced the wages and bargaining power of similar, non-college-educated workers throughout the economy. The affected population includes essentially all workers with less than a four-year college degree—roughly 70 percent of the workforce, or about 100 million workers (U.S. Census Bureau 2012b).

Put another way, for a typical full-time median-wage earner, earnings losses due to globalization totaled approximately $1,400 per year as of 2006 (Bivens 2008a). For a typical household with two earners, the annual cost is more than $2,500. China is the most important source of downward wage pressure from trade with less-developed countries because it pays very low wages and because its products make up such a large portion of U.S. imports (China was responsible for 55.3 percent of U.S. non-oil imports from less-developed countries in 2011).

These conclusions about the jobs impact of trade with China arise from the following specific findings of this study:

  • Most of the jobs lost or displaced by trade with China between 2001 and 2011 were in manufacturing industries (more than 2.1 million jobs, or 76.9 percent).
  • Within manufacturing, rapidly growing imports of computer and electronic products (including computers, parts, semiconductors, and audio-video equipment) accounted for 54.9 percent of the $217.5 billion increase in the U.S. trade deficit with China between 2001 and 2011. The growth of this deficit contributed to the elimination of 1,064,800 U.S. jobs in computer and electronic products in this period. Indeed, in 2011, the total U.S. trade deficit with China was $301.6 billion—$139.3 billion of which was in computer and electronic products.
  • Global trade in advanced technology products—often discussed as a source of comparative advantage for the United States—is instead dominated by China. This broad category of high-end technology products includes the more advanced elements of the computer and electronic products industry as well as other sectors such as biotechnology, life sciences, aerospace, and nuclear technology. In 2011, the United States had a $109.4 billion deficit in advanced technology products with China, which was responsible for 36.3 percent of the total U.S.-China trade deficit. In contrast, the United States had a $9.7 billion surplus in advanced technology products with the rest of the world in 2011.
  • Other industrial sectors hit hard by growing trade deficits with China between 2001 and 2011 include apparel and accessories (211,200 jobs), textile mills and textile product mills (106,200), fabricated metal products (120,600), furniture and fixtures (80,700), plastics and rubber products (57,600), motor vehicles and parts (19,800), and miscellaneous manufactured goods (111,800). Several service sectors were also hit hard by indirect job losses, including administrative, support, and waste management services (160,600) and professional, scientific, and technical services (145,000).
  • The more than 2.7 million U.S. jobs lost or displaced by the trade deficit with China between 2001 and 2011 were distributed among all 50 states, the District of Columbia, and Puerto Rico, with the biggest net losses occurring in California (474,700 jobs), Texas (239,600), New York (158,800), Illinois (113,700), North Carolina (110,300), Florida (106,100), Pennsylvania (101,200), Ohio (95,900), Massachusetts (92,700), and Georgia (87,300).
  • Jobs displaced due to growing deficits with China equaled or exceeded 2.2 percent of total employment in the 12 hardest-hit states: New Hampshire (20,400 jobs lost or displaced, equal to 2.94 percent of total state employment), California (474,700, 2.87 percent), Massachusetts (92,700, 2.86 percent), Oregon (50,200, 2.85 percent), North Carolina (110,300, 2.67 percent), Minnesota (72,300, 2.66 percent), Idaho (18,200, 2.65 percent), Vermont (8,000, 2.43 percent), Colorado (57,800, 2.38 percent), Texas (239,600, 2.26 percent), Rhode Island (11,800, 2.24 percent), and Alabama (43,900, 2.20 percent).
  • The hardest-hit congressional districts were concentrated in states that were heavily exposed to growing China trade deficits in computer and electronic products and other industries such as furniture, textiles, apparel, and durable goods manufacturing. The three hardest-hit congressional districts were all located in Silicon Valley in California, including the 15th (Santa Clara County, which lost 44,700 jobs, equal to 13.77 percent of all jobs in the district), the 14th (Palo Alto and nearby cities, 32,700 jobs, 10.20 percent), and the 16th (San Jose and other parts of Santa Clara County, 29,000 jobs, 9.55 percent). Of the top 20 hardest-hit districts, seven were in California (in rank order, the 15th, 14th, 16th, 13th, 31st, 34th, and 50th), four were in Texas (31st, 10th, 25th, and 3rd), two were in North Carolina (4th and 10th), two were in Massachusetts (5th and 3rd), and one each in Oregon (1st), Georgia (9th), Colorado (4th), Minnesota (1st), and Alabama (5th). Each of these districts lost at least 11,400 jobs, or more than 3.7 percent of its total jobs.

The job displacement estimates in this study are conservative. They include only the direct and indirect jobs displaced by trade, and exclude jobs in domestic wholesale and retail trade or advertising; they also exclude re-spending employment.1 However, during the Great Recession of 2007–2009, and continuing through 2011, jobs displaced by China trade reduced wages and spending, which led to further job losses.

Read the Full Report on the EPI Website

© 2012 Economic Policy Institute


Filed Under: Facts, Trade, United States Tagged With: , , , ,

Labor Market Policy in the Great Recession: Some Lessons from Denmark and Germany | Reports

May 28, 2011 by

Labor Market Policy in the Great Recession: Some Lessons from Denmark and Germany

Center for Economic Policy Research, CEPR
John Schmitt, May 2011

Read the original press release on the CEPR site.

This paper reviews the recent labor-market performance of 21 rich countries, with a focus on Denmark and Germany. Denmark, which was widely seen as one of the world’s most successful labor markets before the downturn, has struggled in recent years. Germany, however, has outperformed the rest of the world’s rich countries since 2007, despite earlier labor-market difficulties. Labor-market institutions seem to explain the different developments in the two economies. Danish institutions – which include extensive opportunities for education, training, and placement of unemployed workers – appear to perform well when the economy is at or near full employment, but have not been effective during the downturn. German labor-market institutions, which emphasize job security by keeping workers connected to their current employers, may have drawbacks when the economy is operating at or near full employment, but have performed well in the Great Recession. The paper also discusses lessons for U.S. labor-market policy.

Read the full report in pdf form.
Report – PDF pdf
Press Release

Labor-2011-05-fig1

Labor Market Policy in the Great Recession: Some Lessons from Denmark and Germany | Reports.


Filed Under: Economic Crisis, Economic Policy, Europe, Facts

Were not broke nor will we be

May 28, 2011 by

By Lawrence Mishel

Economic Policy Institute
May 19, 2011

Policy choices will determine whether rising national income leads to a prosperous middle class

Many policymakers and pundits claim “we’re broke”1 and “can’t afford”2 public investments and policies that support workers. These claims are meant to justify efforts to scale back government programs and public sector workers’ wages and benefits. The “we’re broke” theme also implies that America’s working families should be satisfied with the status quo in terms of wages that have been stagnant for 30 years.

Despite the rhetoric, it is clear that “we” as a nation are not broke. While the recession has led to job loss and shrinking incomes in recent years, the economy has produced substantial gains in average incomes and wealth over the last three decades, and economists agree that we can expect comparable growth over the next three decades as well. Between 1980 and 2010, income per capita grew 66.4%, and wealth per capita grew 73.2%. Over the next 30 years, per capita income is projected to grow by a comparable 60.6%. In other words, “we” are much richer as a nation than we used to be and can expect those riches to rise substantially in the future.

So who is the we in the “we’re broke” mantra? The recession has certainly been a rough patch of road for many families, but the output produced by corporations in the private sector has already recovered to pre-recession levels, and these firms’ profits were 21.7% higher overall, driven largely by the 60% jump in pre-tax profits enjoyed by firms in the financial sector.

Read Briefing Paper

Were not broke nor will we be.


Filed Under: Budget, Economic Policy, Economy, Facts, United States

Heading South: U.S.-Mexico trade and job displacement after NAFTA

May 7, 2011 by

Heading South: U.S.-Mexico trade and job displacement after NAFTA
Robert E. Scott
May 3, 2011

* Supplemental Table A: Jobs displaced due to trade deficits with Mexico, by congressional district, 2010

* Supplemental Table B: Jobs displaced due to trade deficits with Mexico, by congressional district, 2010 [Read Briefing Paper

As of 2010, U.S. trade deficits with Mexico totaling $97.2 billion had displaced 682,900 U.S. jobs. Of those jobs, 116,400 are likely economy-wide job losses because they were displaced between 2007 and 2010, when the U.S. labor market was severely depressed.

Prominent economists and U.S. government officials predicted that the North American Free Trade Agreement (NAFTA) would lead to growing trade surpluses with Mexico and that hundreds of thousands of jobs would be gained (Hufbauer and Schott 1993; President Clinton 1993). The evidence shows that the predicted surpluses in the wake of NAFTA’s enactment in 1994 did not materialize, for reasons outlined in this briefing paper. However, congressional leaders and administration officials now make nearly identical claims about export growth and job creation under the proposed U.S.-Korea Free Trade Agreement (KORUS FTA).

Abstract promises about increased jobs and exports misrepresent the real overall effects of trade on the U.S. economy. Trade both creates and destroys jobs. While exports tend to support domestic employment, imports lead to job displacement: As imports are substituted for domestically produced goods, production that supports domestic jobs falls, displacing existing jobs and preventing new job creation.

Growing trade deficits almost always result in growing trade-related job displacement. Like NAFTA, the KORUS FTA will likely result in growing trade deficits and hence U.S. job displacement, not economy-wide job growth.

Read Briefing Paper

For the full paper and statistical tables follow the link below:

Heading South: U.S.-Mexico trade and job displacement after NAFTA.


Filed Under: Americas, Economy, Facts, Trade

IMF Performance in the Run-Up to the Financial and Economic Crisis

April 14, 2011 by

IMF Performance in the Run-Up to the Financial and Economic Crisis:
IMF Surveillance in 2004-07

January 10, 2011

Report

Full Text of Main Report (Also available in Chinese, French and Spanish)

Sections

1. I. Executive Summary | Introduction
2. II. Evaluation Framework
3. III. IMF Messages in the Run-Up to the Crisis
4. IV. Why Did the IMF Fail to Give Clear Warning?
5. V. Toward More Effective Surveillance
6. VI. Annexes
1. 1. Timeline of Relevant Events
2. 2. Factors that Contributed to the Crisis According to IMF Staff
3. 3. Country Coverage
4. 4. Early Analysis and Diagnosis of Factors Leading to the Crisis
5. 5. Weaknesses in FSAPs in Advanced Economies
6. 6. Conclusions/Recommendations from Previous Reports and Evaluations
7. 7. How Did Country Authorities View the IMF’s Performance?
8. 8. Area Department Survey of Staff
7. VII. Abbreviations and References

Statement by the Managing Director on IEO Evaluation

Staff Response to IEO Evaluation

Chairman’s Summing Up of the Executive Board Discussion

Background Papers

1. I. Summary of Views of the Advisory Group
Series Number: BP/10/01
2. II. Multilateral Surveillance
Series Number: BP/10/02
Author: Angana Banerji
3. III. Bilateral Surveillance in Selected IMF Member Countries
Series Number: BP/10/03
Author: Nancy Wagner
4. IV. Bilateral Surveillance of the United States
Series Number: BP/10/04
Author: Sanjay Dhar
5. V. Bilateral Surveillance of the United Kingdom
Series Number: BP/10/05
Author: David Peretz
6. VI. Bilateral Surveillance in Switzerland
Series Number: BP/10/06
Author: Biagio Bossone with the collaboration of Roberta Marra

Press Release

IEO releases report on IMF Performance in the Run-Up to the Financial and Economic Crisis: IMF Surveillance in 2004-07

Press Release Webcast (18mb ASF video file)

IMF Performance in the Run-Up to the Financial and Economic Crisis.


Filed Under: Economic Crisis, Facts

ILO report warns weak jobs recovery to continue through 2011 – youth employment a world priority

April 13, 2011 by

With global unemployment, as officially measured, at record highs for the third straight year since the start of the economic crisis, the International Labour Office (ILO) warned in its annual employment trends survey that weak recovery in jobs is likely to continue in 2011, especially in developed economies.

Press release | January 24, 2011

GENEVA (ILO News) – With global unemployment, as officially measured, at record highs for the third straight year since the start of the economic crisis, the International Labour Office (ILO) warned in its annual employment trends survey that weak recovery in jobs is likely to continue in 2011, especially in developed economies.

Global Employment Trends 2011: The challenge of a jobs recovery, points to a highly differentiated recovery in labour markets, with persistently high levels of unemployment as well as growing discouragement in developed countries, and with employment growth and continued high levels of vulnerable employment and working poverty in developing regions. These trends stand in stark contrast to the recovery seen in several key macroeconomic indicators: global GDP, private consumption, investment, and international trade and equity markets have all recovered in 2010, surpassing pre-crisis levels.

“In spite of a highly differentiated recovery in labour markets across the world the tremendous human costs of the recession are still with us” said ILO Director-General Juan Somavia. As the World Economic Forum gets underway in Davos, Mr. Somavia highlighted: “There is one common challenge: we need to rethink our standard macroeconomic policy mixes and make quality job creation and decent work a central target of macroeconomic policies, alongside high growth, low inflation and balanced public budgets. We must not forget that for people the quality of work defines the quality of a society.”

Despite a sharp rebound in economic growth for many countries, official global unemployment stood at 205 million in 2010, essentially unchanged from 2009, and 27.6 million more than on the eve of the global economic crisis in 2007. The ILO projects a global unemployment rate of 6.1 per cent, equivalent to 203.3 million unemployed, through 2011.

The report shows that 55 per cent of the increase in global unemployment between 2007 and 2010 occurred in the Developed Economies and European Union (EU) region, while the region only accounts for 15 per cent of the world’s labour force. In several economies in the developing world, such as Brazil, Kazakhstan, Sri Lanka, Thailand and Uruguay, unemployment rates have actually fallen below their pre-crisis levels.

The report notes that globally, an estimated 1.53 billion workers were in vulnerable employment in 2009, corresponding to a vulnerable employment rate of 50.1 per cent.1 The incidence of vulnerable employment has remained broadly unchanged since 2008, in sharp contrast to the steady and significant average decline in the years preceding the crisis.

The report also finds there were 630 million workers (20.7 per cent of all workers in the world) living with their families at the extreme US$ 1.25 a day level in 2009. This corresponds to an additional 40 million working poor, 1.6 percentage points higher than projected on the basis of pre-crisis trends.

Worldwide, 78 million young people were unemployed in 2010, well above the pre-crisis level of 73.5 million in 2007, but down from 80 million in 2009. The unemployment rate among youth aged 15-24 stood at 12.6 per cent in 2010, 2.6 times the adult rate of unemployment. However, the ILO also warned that among 56 countries with available data, there were 1.7 million fewer youth in the labour market than expected based on pre-crisis trends, and that such discouraged workers are not counted among the unemployed because they are not actively seeking work.

“Youth employment is a world priority” stated Mr. Somavia. “The weak recovery in decent work reinforces a persistent inability of the world economy to secure a future for all youth. This undermines families, social cohesion and the credibility of policies” he added.

The study points out that the delayed labour market recovery is seen not only in the lag between output growth and employment growth, but also in productivity gains poorly reflected in real wage growth in many countries. “This can threaten future recovery prospects, as there are strong linkages between growth in real wages, consumption and future investments” the report says.

Among other key findings:

* Total global employment in industry declined in 2009, which is a major divergence from the historical annual growth rate of 3.4 per cent over the period from 2002 to 2007. In the Developed Economies and European Union region, employment in industry plummeted by 9.5 million between 2007 and 2009, while in the developing regions industrial employment grew, though at a much reduced pace.
* Global employment in agriculture grew in 2009, which represented a divergence versus historical trends and reflected that the lower-productivity agricultural sector often serves as a buffer for workers who lose jobs in manufacturing and services.
* Increasing food prices around the world represent a growing threat. For non-agricultural sectors, continued sharp increases in food prices could lead to employment losses if inflation is passed on to other areas of the economy.

In South-East Asia and the Pacific, unemployment rates did not increase on average during the crisis, however the number of workers in vulnerable employment rose to 173.7 million in 2009, a 5.4 million increase since 2007. South Asia has the highest rate of vulnerable employment in the world, at 78.5 per cent of total employment in 2009. In East Asia youth unemployment remains a major challenge at 8.3 per cent in 2010, 2.5 times the adult rate.

In Latin America and the Caribbean, the rapid recovery has led to strong job growth; however, vulnerable employment has increased.

In sub-Saharan Africa, more than three-quarters of workers are in vulnerable employment while around four out of five workers are living with their families on less than US$ 2 per person per day, and in North Africa an alarming 23.6 per cent of economically active young people were unemployed in 2010, according to the report.

In Central and South-Eastern Europe and CIS region unemployment declined to 9.6 per cent, having peaked in 2009 at 10.4 per cent, the highest regional rate in the world.2

The report also warns that in developed economies a “narrow” focus on reducing fiscal deficits without addressing the challenge of job creation will further weaken employment prospects in 2011 for the unemployed, for those who have dropped out of the labour force due to discouragement and for the new entrants into the labour market.

The report underlines the importance of measures that can help boost employment generation and jump-start a sustainable jobs recovery, stressing that improved labour market outcomes would support a broader macroeconomic recovery and could help offset the adverse effects of fiscal consolidation.

“Rebalancing the global economy so that growth is both strong and sustainable requires more than adjustments to currencies and financial regimes,” Mr. Somavia said. “Promoting entrepreneurship, investments in the real economy, inclusive labour markets and income-led growth are the means to get growth moving while measures to expand social protection and improve the quality of jobs will ensure more sustainable outcomes.” “This is a win-win situation for both enterprises and workers while enhancing the credibility of public policies” he added.

Interviews can be scheduled via the ILO Department of Communication and Public Information on +4122/799-7912 or communication@ilo.org.

Broadcasters can access a video news release, coverage of the press conference and interviews with the authors by contacting the ILO Radio and TV Unit on +4122/799-7935 or emailing TV_radio@ilo.org.

1 Workers in vulnerable employment, defined as the sum of own-account workers and contributing family workers, are less likely to have formal work arrangements, and are therefore more likely to lack elements associated with decent employment such as adequate social security and recourse to effective social dialogue mechanisms.

2 Please refer to the “key findings” section of the report for a more comprehensive summary of regional trends.

Read the original press release  on the ILO website by following the lnk below:

ILO report warns weak jobs recovery to continue through 2011 – youth employment a world priority.


Filed Under: Economic Crisis, Economic Policy, Facts

Global Employment Trends 2011: The challenge of a jobs recovery

April 13, 2011 by

Global Employment Trends 2011: The challenge of a jobs recovery
The annual Global Employment Trends (GET) report provides the latest global and regional estimates of employment and unemployment, employment by sector, vulnerable employment, labour productivity and working poverty, while also analysing country-level issues and trends in the labour market. Taking into account macroeconomic trends and forecasts, the GET includes a short-term outlook for labour markets around the world.

Type: Publication
Date issued: January 1, 2011
Reference: 978-92-2-124545-2(print)[ISBN],978-92-2-124546-9(web)[ISBN]
Prices: CHF 50; USD 48; GBP 30; EUR 33.
Support medium: Paperback
Download: English [pdf 2169KB]

This report is the first to take stock of the labour market situation during the recovery from the global economic crisis. It incorporates the most recent labour market information available to explore the state of the labour market globally and regionally.

For more detailed information on the ILO report follow the link below:

Global Employment Trends 2011: The challenge of a jobs recovery.


Filed Under: Economic Crisis, Economic Policy, Economy, Facts

The China trade toll: Widespread wage suppression, 2 million jobs lost in the U.S.

March 1, 2011 by

The China trade toll: Widespread wage suppression, 2 million jobs lost in the U.S.
Robert E. Scott
July 28, 2008

The growth of U.S. trade with China since China entered the World Trade Organization in 2001 has had a devastating effect on U.S. workers and the domestic economy. Between 2001 and 2007 2.3 million jobs were lost or displaced, including 366,000 in 2007 alone. New demographic research shows that, even when re-employed in non-traded industries, the 2.3 million workers displaced by the increase in China trade deficits in this period have lost an average $8,146 per worker/year. In 2007, these losses totalled $19.4 billion.1

The impacts of the China trade deficit are not limited to its direct effects on the jobs and wages of those displaced. It is also critical to recognize that the indirect impact of trade on other workers is significant as well. Trade with less-developed countries has reduced the bargaining power of all workers in the U.S. economy who resemble the import-displaced in terms of education, credentials, and skills. Annual earnings for all workers without a four-year college degree are roughly $1,400 lower today because of this competition, and this group constitutes a large majority of the entire U.S. workforce (roughly 100 million workers or about 70% of all workers, Bivens (2008a)). China, with nearly 40% of our non-oil imports from less-developed countries, is a chief contributor to this wage pressure.

The China trade toll: Widespread wage suppression, 2 million jobs lost in the U.S..


Filed Under: Facts, Trade, United States