U.S. UNIONS COMPLAIN ABOUT CHINA, BUT RAISE COST OF OUR WORKERS AND AMERICAN GOODS
Verne Strickland Blogmaster, September 23, 2011
Over the past decade, American imports from China have grown much more than what the country has been able to export into it, causing a massive loss of jobs. “Between 2001 and 2010, the trade deficit with China eliminated or displaced 2.8 million jobs,” the EPI noted in a paper released this month.
As would be expected, 1.9 million of those jobs, or nearly 70%, were in manufacturing, the EPI found. The greatest damage occurred in the computer and electronic parts industry, as well as several finished manufactured goods sectors such as apparel and motor vehicles and parts.
China was able to achieve manufacturing cost advantage by moving millions of laborers from rural areas to cities with newly built facilities. Even American companies such as Walmart (NYSE: WMT) cannot afford to buy goods made in the U.S. when they are made so much more efficiently — and of course, so much cheaper — abroad.
Cheap labor may well be the main reason for China’s manufacturing advantage, but currency manipulation could be another, the EPI states. While the cost of labor affected China’s exports, the currency manipulation, which happened despite China joining the World Trade Organization in 2001, distorted its imports. American policymakers have long assumed that as China’s huge middle class grew, U.S. companies’ sales to these new consumers would also grow.
But it did not work out that way, the EPI reports: “as a result of China’s currency manipulation and other trade distorting practices, including extensive subsidies, legal and illegal barriers to imports, dumping and suppression of wages and labor rights, the envisioned flow of U.S. exports to China did not occur.” Added to its labor cost advantage, this currency manipulation has been devastating to many U.S. companies.
24/7 Wall St. has looked at the ten states that have had the greatest number of jobs displaced or lost to China in the past decade based on the EPI report: Growing U.S. Trade Deficit with China Cost 2.8 Million Jobs Between 2001 and 2010. We also included the number of jobs lost through imports and gained through exports due to trade with China.
The EPI research does not make an exact forecast of how many more American jobs may be lost due to China’s manufacturing cost advantages and questionable trade policies. And the damage, of course, did not suddenly end in 2010, and is almost certainly ongoing. In fact, nearly half a million jobs were lost or displaced from 2008 to 2010 alone. The joblessness problem in the U.S. is so severe that any added erosion of employment opportunities from forces outside the country will make a recovery of the American economy all the more difficult.
These are the ten states losing the most jobs to China.
> Net job change: -87,700
> Jobs lost: 101,200
> Jobs gained: 13,500
Georgia has lost a significant number of jobs, primarily in industries “including computers and electronic parts, textiles and apparel, and furniture,” according to the EPI. One of the hardest hit districts in the country was the state’s 9th congressional district, which is located in the northern part of the state and includes the city of Gainesville. Georgia has historically been known for its textile industry and remains one of the top cotton-producing states in the country.
> Net job change: -88,600
> Jobs lost: 99,300
> Jobs gained: 10,700
Two of the nation’s 20 hardest-hit congressional districts are located in Massachusetts. The first of these is the 5th congressional district, which includes the cities of Lowell, one of the country’s earliest textile centers, and Lawrence, home of a number of textile and electronics manufacturers. The state’s neighboring 3rd congressional district also lost an exceptional number of jobs. This district includes Worcester, another historically significant textile city, which has since increased its technology industry.
> Net job change: -103,500
> Jobs lost: 124,100
> Jobs gained: 13,500
Ohio is one of the U.S.’s biggest manufacturing states. It is home to major companies such as Procter & Gamble (NYSE: PG) and AK Steel Corporation (NYSE: AKS). However, the state’s manufacturing sector is declining at a faster rate than the nation’s. The automobile sector has had the highest unemployment growth since 2007, although companies in other sectors have contributed to sending jobs overseas as well.
> Net job change: -106,900
> Jobs lost: 127,200
> Jobs gained: 20,200
According to the National Association of Manufacturers, “Manufacturers in Pennsylvania account for 12.5 percent of the total output in the state” and employ “10 percent of the workforce.” Politicians have been outspoken about China’s effect on the state’s economy. Senator Bob Casey recently stated that “Unfair Chinese trade practices harm Pennsylvania businesses … and reduce their ability to create jobs.”
6. North Carolina
> Net job change: -107,800
> Jobs lost: 122,400
>Jobs gained: 14,600
North Carolina is home to three of the top 20 hardest hit districts in the U.S. Textiles and furniture are among the two industries that have lost the most jobs to China, according to the EPI report. North Carolina Congressman Howard Coble is co-sponsoring House Bill 639, the Currency Reform for Fair Trade Act, to address this issue. “This bill will at least force China to compete on a level playing field with U.S. manufacturers,” Coble is quoted as saying in the Winston-Salem Journal.