Where way too many jobs have gone
By Dian Vujovich
No matter what you think about China, our U.S trade agreement with that country has translated into numerous job losses and an increase our debt. Both something America can’t afford today or tomorrow.
According to a September 20 briefing report from the Economic Policy Institute, ever since China became a member of the World Trade Organization a decade ago, the U.S. has piled up mountains of foreign debt, lost export capacity and our trade deficit with China has been a significant factor in our huge unemployment mess.
Below, taken pretty much literally, is a bit of what you’ll find in that report:
-Between 2001 and 2010, the trade deficit with China eliminated or displaced 2.8 million jobs, most in manufacturing. Of the 2.8 million jobs lost, 453,100 jobs were lost or displaced from 2008 to 2010 alone—even though imports from China and the rest of world collapsed in 2009.
-The growing trade deficit with China has cost jobs in every congressional district, including the District of Columbia and Puerto Rico. The trade deficit in the computer and electronic parts industry grew the most, displacing 909,400 jobs—32.6% of all jobs displaced between 2001 and 2010.
-Jobs lost has meant lower wages for workers in U.S. manufacturing and reduced the wages and bargaining power of similar, non-college educated workers through- out the economy. The affected population includes essentially all workers with less than a four-year college degree—roughly 70% of the workforce or about 100 million workers.
In other words, for a typical full-time median-wage earner in 2006, earnings losses due to globalization totaled approximately $1,400.
-Then there’s currency manipulation.
A major cause of the rapidly growing U.S. trade deficit with China is currency manipulation. Unlike other currencies, the Chinese yuan does not fluctuate freely against the dollar. Instead, China has tightly pegged its currency to the U.S. dollar at a rate that encourages a large bilateral surplus with the United States.
As China’s productivity has soared, its currency should have adapted, increasing in value to maintain balanced trade. But the yuan has instead remained artificially low as China has aggressively acquired dollars and other foreign exchange reserves to further depress the value of its own currency. (To depress the value of its own currency, a government sells its own currency, which increases its foreign reserves.) China had to purchase $450 billion in U.S. treasury bills and other securities between December 2009 and December 2010, alone, to maintain the peg to the U.S. dollar (International Monetary Fund 2011). China’s foreign exchange
To reduce the U.S. current account deficit to 3.0% of GDP in 2016 (from a projected 4.6% if currencies are not realigned), it is estimated that the yuan needs to rise 28.5% against the U.S. dollar, and currencies from the other four Asian countries listed need to rise by 27.5% to 38.5% against the dollar.
The promoters of liberalized U.S.-China trade thought that the United States would benefit because of increased exports to a large and growing consumer market in China. However, despite widespread reports of the rapid growth of the Chinese middle class, this growth has not resulted in a significant increase in U.S. consumer exports to China. The most rapidly growing exports to China are bulk commodities such as grains, scrap, and chemicals; intermediate products such as semiconductors; and producer durables such as aircraft. Furthermore, the increase in U.S. exports to China since 2001 has been overwhelmed by the growth of U.S. imports.
-Each $1 billion in exports to China from the United States supports American jobs. However, each $1 billion in imports from China displaces the American workers who would have been employed making these products in the United States. An improving trade balance can support job creation, but growing trade deficits usually result in growing net U.S. job displacement.
Read the entire report at http://www.epi.org/publication/growing-trade-deficit-china-cost-2-8-million/.
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