Trade bills have cost the US 6 million jobs, and TPP will make it worse

In mid 2015 TPP, (the Trans-Pacific Partnership) became a major issue. There was widespread concern about the potential trade bill, specifically it’s impact on American jobs, the back door nature in which it was drafted, environmental concerns, and people from both parties and various sources calling the bill “Crony Capitalism” and “managed trade”. Then TPP seemed to disappear from the news, and the deal was signed, though it still needs to pass the US Congress. What can we expect from TPP?

This report by EPI shows that trade with the TPP countries cost the US 2 million jobs in 2015 alone, with every state seeing losses. The hardest hit state was Michigan, with over 5% job loss, others badly hit being Indiana, Kentucky, Ohio, Tennessee, Alabama as well as Oklahoma and Wyoming. The report notes 52% of jobs lost were in manufacturing, the biggest chunk of that, (36.4%) being in motor vehicles.[1] While all states and many sectors were impacted, clearly the worst pain was dealt to US manufacturing, which continues to leave not just it’s traditional upper mid west base, but now the south.

TPP

The above graph shows jobs loss per state by % of jobs lost. It struck me that a state could lose far more jobs than another, but have a larger population thus lose a lesser percentage. With this in mind I used the EPI data to make the map below, showing the 10 hardest hit states by TPP country trade by the number of jobs lost, while also taking population into account.

tpp jobs

All this was before TPP was even implemented! This has just been the impact due to current trade with the 11 TPP countries, imagine how much worse it will be if the bill is actually implemented. The US will continue to see a net loss of jobs, particularly hurting manufacturing, and overall putting more downward pressure on wages, (due to both job replacement being lower wage and having to compete with low wage labor in other countries). The erosion of the American middle class, and thus increasing inequality and worsening social mobility, will continue if TPP is implemented.

This is nothing new however. TPP is just the latest in a series of trade bills, which have had a negative impact on the US economy.

NAFTA:

Passed by Congress and signed by Bill Clinton in 1993, NAFTA was a trade agreement between the US, Canada and Mexico. NAFTA has cost the US 682,900 jobs. All 50 states and DC saw a net loss of jobs. Nearly 61% of jobs lost were in manufacturing, and nearly 38% of these jobs lost were in computer, electronics and automobiles.[2] The 10 worst hit states in terms of number of jobs lost, and as a percentage of their workforce were Michigan, Illinois, Indiana, Kentucky, Ohio, Pennsylvania, New York, Texas, Florida and California as seen in the map below, made using EPI data.

nafta jobs

China:

In 2000 permanent normal trade relations with China was passed by Congress and signed by Bill Clinton. Since 2001 trade with China has cost the US 3.2 million jobs, with all 50 states and DC seeing a net loss. 75% of jobs lost were in manufacturing. Jobs displaced due to trade with China, for those who were able to find one, paid 17% less, and trade with China cost the US $37 billion in wages per year.[3]

china trade

Korea:

In 2011 a US-South Korean trade bill was passed by Congress, signed by Barack Obama, (and supported by Secretary Hillary Clinton) which cost the US 75,000 jobs between 2011 and 2014. Over 79% of the growth in trade deficit with South Korea came in manufacturing, with 75% of that coming in auto vehicles and parts. The EPI report notes the deal isn’t fully implemented, with some protection of the US auto industry still in place. However, these expire in 2021, meaning the loss of auto vehicle/part manufacturing will only accelerate after that. [4] It is also noted the agreement with Korea opened up access to American auto markets but without guaranteeing equal access to Korea’s.[5] This virtually ensures a loss of American auto manufacturing jobs.

There have been numerous other trade agreements signed. Ones with the US and Jordan, Bahrain, Morocco, Oman, Panama, Colombia, as well as CAFTA a multi lateral deal with the US and Central America and the Dominican Republic. While I can’t find any analysis on most of these bills, EPI notes that each of these trade agreements is with low wage labor countries. Also, these agreements put US labor in competition while protecting US skilled professions.[5] This is not only managed trade, deciding who gets protected from competition and who doesn’t, but worsens inequality. To make matters worse, EPI also finds that trade with low wage countries puts downward pressure on wages even in jobs not lost. On average yearly wages were $1,800 lower for Americans without college degrees, due to competition with low wage labor, and with roughly 100 million non college educated workers in the US, this is a roughly $180 billion yearly loss in wages.[6]

This is what we do know:

Trade agreement – Loss of jobs – % lost in manufacturing

NAFTA – 682,900 – 61%

CHINA – 3.2 million – 75%

KOREA – 75,000 – 79%

TPP counties- 2 million – 52%

TOTAL: 5.96 million  – 66.75%

These 4 trade agreements, our largest, have cost the US 6 million jobs. While all sectors and states have been impacted, two thirds of these jobs lost have come from manufacturing, hitting particularly hard the rust belt from New York to Illinois, the upper south, (Kentucky and Tennessee), Texas and California. These trade bills have directly or indirectly lowered the wages for tens of millions of working Americans, and thus has been a major factor in the erosion/weakening of the US middle and working classes.

We need to renegotiate our trade bills, not put up tariffs, to ensure trade works for American workers, not against us, including stopping TPP before it can be implemented.

Sources/References:

1: http://www.epi.org/publication/trans-pacific-partnership-currency-manipulation-trade-and-jobs/

2: http://www.epi.org/files/page/-/BriefingPaper308.pdf

3: http://www.epi.org/publication/china-trade-outsourcing-and-jobs/

4: http://www.epi.org/blog/u-s-korea-trade-deal-resulted-in-growing-trade-deficits-and-more-than-75000-lost-u-s-jobs/

5: http://www.epipolicycenter.org/blm-trade_and_jobs.pdf

6: http://www.epi.org/publication/unfair-trade-deals-lower-the-wages-of-u-s-workers/

 

 

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