Labor & Employment Law

Trade Deficit Costs Jobs in Every Congressional District

By James Parks

Members of Congress, listen up: The nation’s huge trade deficit, mainly with China, has cost jobs in every congressional district, according to a report issued today by the Economic Policy Institute (EPI). Contrary to conventional wisdom, high-tech industries are losing jobs faster than any other sector of the economy.

Since 2001, some 2.4 million jobs have been lost or displaced in this country as a result of the massive trade deficit with China, the report says. More than one-quarter?26 percent or about 628,000 jobs?displaced by trade between 2001 and 2008 are in computer, electronic equipment and parts industries. Last year alone, China was responsible for more than 80 percent of our total, nonoil trade deficit in goods.

The report cites China’s currency manipulation as a major cause of the trade deficit. Over the past decade, China has consistently undervalued its currency by an estimated 35 percent to 40 percent. As a result, while imports from China and U.S. trade deficits set records, American manufacturing employment has plummeted. Other causes of the deficit include massive industrial subsidies in China, lax labor and environmental law enforcement, intellectual property theft and piracy and Chinese policies that block U.S. imports. Click here to read the report.

Says Robert Scott, EPI’s director of international programs:

This intervention makes the yuan [China's currency] artificially cheap and provides an effective subsidy on Chinese exports. Unless China raises the real value of the yuan by at least 40 percent and eliminates other trade distortions, the U.S. trade deficit and job losses will continue to grow rapidly.

The congressional districts hit hardest by the deficit are in the heavy information technology areas of California and Texas, and also in North Carolina, which lost mainly jobs in a number of manufacturing industries. You can check out the impact of trade on your congressional district on an interactive map here.

The Currency Exchange Rate Oversight Reform Act of 2010 was introduced last week by Democratic Sens. Charles Schumer (N.Y.), Debbie Stabenow (Mich.) and Republican Sens. Lindsey Graham (S.C.) and Olympia Snowe (Maine), with 10 other co-sponsors. The bill would change the U.S. Treasury Department’s rules to make it easier to determine if a country is manipulating its currency. The bill also provides meaningful sanctions, including countervailing duties or tariffs, if negotiations to stop currency manipulation fail.

As Alliance for American Manufacturing (AAM) Executive Director Scott Paul says:

China’s cheating is causing America to lose more than just the capacity to make widgets in the one-sided trade arrangements with China. Sophisticated electronics and high-tech products that once were made in the United States are increasingly being made in China instead. We are losing more and more of these good jobs.

The report also notes competition with low-wage workers from less-developed countries has driven down wages for U.S. workers in manufacturing and reduced the wages and bargaining power of essentially all production workers with less than a four-year college degree, roughly 80 percent of the private-sector workforce.

Full post as published by AFL-CIO NOW BLOG on March 23, 2010 (boomark / email).