Growth in U.S.-China trade deficit between 2001 and 2015 cost 3.4 million jobs - By Robert E. Scott

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Growth in U.S.-China trade deficit between 2001 and 2015 cost 3.4 million jobs

Here’s how to rebalance trade and rebuild American manufacturing

Report • By Robert E. Scott • January 31, 2017

The United States has a massive trade deficit with China. It has grown since the end of the Great Recession. The growth of that deficit almost entirely explains the failure of manufacturing employment to fully recover along with the rest of the economy. And as other studies have suggested, the trade deficit has cost us millions of jobs since China entered the World Trade Organization (WTO) in 2001.

The growth of the trade deficit means that the United States is both losing jobs in manufacturing (in electronics and high tech, apparel, textiles, and a range of heavier durable goods industries) and missing opportunities to add jobs in manufacturing (in exporting industries such as transport equipment, agricultural products, computer and electronic parts, chemicals, machinery, and food and beverages) because imports from China have soared, and exports have increased much less. The trade deficit with China affects different regions in different ways. Some regions are devastated by layoffs and factory closings while others are surviving but not growing the way they could be if new factories were opening and existing plants were hiring more workers. This slowdown in manufacturing job generation is also contributing to stagnating wages and incomes of typical workers and widening inequality.

Following are the specific problems that call for a policy response:

U.S. jobs lost are spread throughout the country but hit hardest in manufacturing, including in industries in which the United States has held a competitive advantage

• Due to the trade deficit with China 3.4 million jobs were lost between 2001 and 2015, including 1.3 million jobs lost since the first year of the Great Recession in 2008. Nearly three-fourths (74.3 percent) of the jobs lost between 2001 and 2015 were in manufacturing (2.6 million manufacturing jobs displaced).
• The growing trade deficit with China has cost jobs in all 50 states and the District of Columbia, and in every congressional district in the United States.
• The trade deficit in the computer and electronic parts industry grew the most, and 1,238,300 jobs were lost or displaced, 36.0 percent of the 2001-2015 total. As a result, many of the hardest-hit congressional districts (in terms of the share of jobs lost) were in California, Texas, Oregon, Massachusetts, Minnesota, and Arizona, where jobs in that industry are concentrated. Some districts in Georgia, Illinois, New York, and North Carolina were also especially hard-hit by trade-related job displacement in a variety of manufacturing industries, including computer and electronic parts, textiles and apparel, and furniture. In addition, surging imports of steel, aluminum, and other capital intensive products threaten hundreds of thousands of jobs in these key industries as well.
• 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 parts industry as well as other sectors such as biotechnology, life sciences, aerospace, and nuclear technology. In 2015, the United States had a $120.7 billion deficit in advanced technology products with China, and this deficit was responsible for 32.9 percent of the total U.S.-China goods trade deficit. In contrast, the United States had a $28.9 billion surplus in advanced technology products with the rest of the world in 2015.

Wage losses have hurt not just manufacturing workers but workers who don’t have a college degree

• Between 2001 and 2011 alone, growing trade deficits reduced the incomes of directly impacted workers by $37 billion per year, and growing competition with imports from China and other low wage countries reduced the wages of all non-college graduates by $180 billion per year. Most of that income was redistributed to corporations, and to workers with college degrees in the very top of the income distribution, in higher profits and wages.

Link to Entire Article
http://www.epi.org/publication/growth-in-u-s-china-trade-deficit-between-2001-and-2015-cost-3-4-million-jobs-heres-how-to-rebalance-trade-and-rebuild-american-manufacturing/