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The Cost of Trade with China

North Carolina lost a net of 79,800 jobs to China from 2001 to 2007. In absolute terms, North Carolina lost more jobs, on net, than all but seven states. Every non-farm economic sector shed jobs with the greatest drops occurring in manufacturing and professional/ scientific/ technical services.

These findings come from a new report, Two Million and Counting: Growing China Trade Deficits Mean Job Losses in Every State , by economist Robert E. Scott of the Economic Policy Institute. The study estimates that the national trade gap with China displaced 2.3 million American workers between 2001 and 2007, resulting in lost wages of $19.4 billion alone in 2007. Even workers who were not displaced by trade earned less due to the downward wage pressures resulting from trade with low-cost China.

Specifically, the national trade deficit with China cost North Carolina, on net, 79,800 jobs between 2001 and 2007 – an amount equal to 2.1 percent of total state employment. When measured as a share of employment, only nine states lost more jobs.

The trade deficit with China has caused net job losses in every non-farm sector of the North Carolina economy. Manufacturing posted the largest drop in absolute terms (-59,867). While manufacturing legacy sub-sectors like textiles (-14,336), apparel (-11372), and furniture (-7,761) reported sizable losses, so did newer fields like computer and electronics manufacturing (-8,064). Next to manufacturing, the most-impacted sector was professional/scientific/technical services (-3,343).

The industrial trends show that China is aggressively moving away from low-wage, low-value-added industries in favor of more advanced technology products. Put differently, China no longer wants to compete for the textile jobs found in communities like Hickory; it wants to compete for the high-skill jobs in RTP. That helps explains why college-educated workers – a group previously thought to be immune to trade-related job losses – have been disproportionately affected by trade in recent years.

Responding to the impact of unbalanced trade requires action from North Carolina's federal and state leaders. On the federal level, officials need to take three major steps. First, they must push the Chinese government to end many of the policies and barriers that prevent truly fair trade, such as the suppression of labor rights and improper subsidies. Second, Congress should strengthen the social insurance systems designed to help displaced workers by, for instance, re-authorizing and modernizing the Trade Adjustment Assistance program. Finally, Congress must stop under-investing in vital workforce programs that help American workers hone the skills needed to compete.

State leaders, meanwhile, are well-positioned to help the workers, families and communities upended by unbalanced and unfair trade. To help individuals forced into lower-paying jobs, the state should expand access to vital work support programs such as child-care subsidies and children's health insurance. Similarly, state policies could improve the quality of existing jobs by strengthening employment standards. Finally, the state could enrich the skills of current and future workers by better investing in North Carolina's model system of community colleges.

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