By Frederick H. Lowe
The United States lost 5 million manufacturing jobs between January 2000 and December 2014 because of growing trade deficits prior to the Great Recession and the massive output collapse during the Great Recession, which hurt black workers, the Economic Policy Institute, a Washington, D.C.-based think tank recently reported.
Between 2000 and 2007, growing trade deficits in manufactured goods led to the loss of $3.6 million manufacturing jobs, EPI reported in a paper titled “Manufacturing Job Loss: Trade, Not Productivity, Is the Culprit.”
Between 2007 and 2009, the massive collapse in overall U.S. output hit manufacturing particularly hard. This was followed by the slowest recovery in domestic manufacturing output in more than 60 years.
“Reasonably strong GDP growth over the past five years has not been sufficient to counter these trends; only about 900,000 of the 2.3 million manufacturing jobs lost during the Great Recession have been recovered. In addition the resurgence of the U.S. trade deficit in manufactured goods since 2009 has hurt the recovery of manufacturing and employment,” the report stated.
Manufacturing employment was relatively stable between 1970 and 2000, ranging from 16.8 to 19.6 million. However, the relationship broke down in the early 2000s with rapidly growing trade deficits. The U.S. had a relatively small and stable manufacturing trade deficit between 1989 and 1997 that never exceeded $131 billion annually.
The U.S. manufacturing trade deficit began to rise sharply after the Asian financial crisis of 1997-1998. The trade deficit peaked at $558.5 billion in 2006.
Manufacturing employment fell to a low of 11.5 million in February 2010 before recovering by December 2014 to 12.3 million. The drop in manufacturing employment has hurt black male workers.
The Economic Policy Institute’s paper counters the argument that rapid productivity growth caused the decline in manufacturing jobs.
Past international trade agreements have eliminated hundreds of thousands of high-paying jobs in the manufacturing for black workers and other working-class families as companies moved their operations to other countries where labor costs are cheaper than in the United States.
Trade agreements that led to job losses in manufacturing, include NAFTA, a trilateral agreement between the U.S., Canada and Mexico, which took effect in January 1994. It was negotiated under President Bill Clinton. The other trade agreements are KORUS which took effect March 15, 2012, under President Obama. China joined the World Trade Organization (WTO) on December 11, 2001 under President George W. Bush. The World Trade Organization deals with rules of trade between nations.
In each case the U.S. Chamber of Commerce, U.S. Trade Representative and some politicians claim the deals would bring new higher-paying jobs here. Some jobs did materialize, but black manufacturing workers lost more jobs than they gained.
President Clinton, for example, claimed NAFTA would create an export boom from Mexico that would create 200,000 jobs in two years and millions of jobs in five years, but 20 years later, trade deficits with Mexico eliminated 682,000 good jobs in the U.S. and 61 percent were in manufacturing,” Robert E. Scott, director of trade and manufacturing policy research at EPI, wrote in 2013 paper titled “NAFTA’s Legacy: Growing U.S. Trade Deficits Cost 682,000 jobs.”
When China entered the World Trade Organization in 2001, it cost black workers 281,100 high-paying manufacturing jobs from 2001 to 2011, said Scott, author of the 2013 research paper, “Trading away manufacturing advantage: China trade drives down U.S. wages and benefits and eliminates good jobs for U.S. workers.”
Scott estimated that African Americans made up 25% of minorities displaced by trade with China, suffering wage losses in excess of $2.5 billion.
“The displacement of manufacturing jobs by growing U.S. trade deficits with China has been particularly hard on minority workers: 958,800 were displaced, with wage-related losses in 2011 of $10,485 per worker and $10.1 billion overall,” Celeste Drake, Trade and Globalization Policy Specialist for the AFL-CIO in Washington D.C., wrote in an email.