Job Loss From International Trade Widespread and Mounting
The federal Trade Adjustment Assistance (TAA) program certifies laid-off workers to determine eligibility for assistance. A new report from Policy Matters Ohio uses adminstrative data from that program to assess the scope and cause of Ohio job loss from international trade (i.e., from import competition or moving production overseas). The report confirms that the problem is widespread (affecting 53 of Ohio's 88 counties) and growing (13,432 workers were certified in 2006, the highest annual total in the 12 years of available data).
Prepared by Research Analyst Jon Honeck, the report cautions that the TAA data provides only a "minium estimate" of trade-related job loss because of inadequacies in the TAA program (it is underfunded and investigation of petitions is deficient). However, even as a minimum estimate, the figures are very troubling. As summarized in the press release, between August 2004 and December 2006:
* The TAA program certified petitions from 150 Ohio workplaces covering 18,977 Ohio workers.Once manufacturing jobs are lost, the workers are unlikely to find new employment at equivalent pay. National statistics show that just 65% of such workers laid off from 2003 to 2005 found new jobs by January 2006, and a third of those took a pay cut of 20% or more.
* Over half of the job losses occurred because Ohio employers shifted production to foreign facilities or replaced Ohio-made products with foreign imports. Traditional import competition, in which companies lose market share to foreign-made products, accounted for 37 percent of the job losses.
* Ohio companies were most likely to shift production to Canada or Mexico. Shifts in production to these two countries combined led to 4,964 Ohio workers losing their jobs.
* The TAA program certified workers in 53 Ohio counties. Twenty-nine counties had two or more workplaces certified, led by Cuyahoga County with 12. More than 3,000 workers in Montgomery and Trumbull counties, and more than 1,000 in Franklin and Hamilton were certified.
The report also explains the devastating impact of the huge U.S. trade deficit on industrial production, which in turn lowers our overall rate of economic growth. Ohio's sluggish manufacuring sector has largely missed out on the recent national economic expansion. On the national level, the report calculates that the worsening trade deficit since 2001 has cost our economy about 2.5% in real growth (it would have expanded by 14.1% instead of the actual 11.7%), resulting in a loss of $236.7 billion in inflation-adjusted U.S. GDP (gross domestic product).
The report concludes by calling for improvement of trade adjustment assistance programs and a major revision of current trade policy. In particular, the U.S. must stop implementing new free trade agreements while it is burdened with the current massive trade deficit:
In the long run, we should create a national trade policy that benefits domestic manufacturing and its workforce, and not just corporate insiders. In part, this means taking a clear stance against currency manipulation and aggressively ensuring market access for U.S. exports. It also means using access to the U.S. market as a way to leverage better treatment of foreign workers. Incredibly cheap goods come at someone else’s expense – U.S. workers who lose their jobs, and foreign workers laboring in sweatshops for sixteen hours a day, seven days a week for wages that keep them in poverty. The development of a stable middle class in Latin America, China, and other countries would allow them to be less reliant on export-led growth, and it would also create more consumers who could buy U.S.-made products.
All too often supporters of our current trade laws portray our policy options as a false choice between “free trade” and “protectionism.” This portrayal gets us nowhere in confronting the hard choices ahead of us. First, the costs of the current set of policies are extremely high. Negotiating new free trade agreements in the context of gigantic trade deficits flies in the face of reason. Second, “free trade” is a completely inaccurate description of our evolving relationship with China and other nations with export-led development policies. China’s government represses basic human rights, and provides massive subsidies to exporters through preferential loans and currency manipulation. There is limited room for meaningful change within the current framework even if the U.S. vigorously enforces its antidumping laws and aggressively uses WTO dispute resolution provisions. The current framework appears to be inadequate to enforce labor and environmental standards, and actually threatens to undermine such standards where they exist. We need to rethink current trade policies. Ohio’s workers deserve a better deal than they are getting.