Where the jobs aren’t

Particular industries and states bear brunt of dislocations wrought by trade agreements

by Robert E. Scott

All 50 states and the District of Columbia have experienced a net loss of jobs since the implementation of NAFTA in 1994 and the creation of the WTO in 1995. Between 1994 and 2000, the U.S. lost more than 3 million jobs and job opportunities-equal to 2.3% of the labor force. (For details, see the EPI Briefing Paper, Fast Track to Lost Jobs). Exports rose over the period, but imports rose faster, yielding net job loss figures ranging from a low of 6,000 in North Dakota to a high of 310,000 in California. Other hard-hit states-over 100,000 jobs lost in each-include Texas, New York, Michigan, Pennsylvania, Illinois, Ohio, North Carolina, Indiana, and Florida. These states have high concentrations of the kinds of industries (motor vehicles, textiles and apparel, computers and electrical appliances) for which production has moved to export-processing zones in China, Mexico, and other countries since the implementation of NAFTA and the WTO.

Table 1 details job losses in each state by industry category.

Job losses caused by rapidly growing trade deficits increased six times as rapidly between 1994 and 2000 as they did between 1989 and 1994. Persistent barriers to U.S. exports (as well as overvaluation of the U.S. dollar) have contributed to these growing deficits, but the North American Free Trade Agreement and the World Trade Organization were supposed to overcome these barriers. Instead, trade deficits have accelerated, with resulting job losses:

• Every state and the District of Columbia lost jobs equaling at least 1.2% of their workforce because of U.S. trade policies under NAFTA and the WTO.
• The 10 states suffering the highest rates of job losses are Rhode Island (5.8%), North Carolina (3.7%), Maine (3.6%), Tennessee (3.6%), Indiana (3.4%), Mississippi (3.3%), Michigan (3.2%), Alabama (3.1%), Arkansas (3.1%), and South Carolina (3.0%). (For a full list, see Fast Track to Lost Jobs, Table 2B.)
• Nearly two out of every three jobs (1.9 million out of 3.0 million) lost were in manufacturing.
• In some manufacturing sub-sectors, job losses increased even faster than they did overall: 497.2% in transportation equipment; 448.6% in communications equipment; 363.8% in paper and allied products; 308.7% in petroleum refining and related products; and 207.5% in fabricated metal products (excluding machinery and transportation equipment).
• Outside manufacturing, the sectors that experienced the most rapid acceleration of job losses were financial, insurance, and real estate (201.6%); communications (195.6%); construction (188.8%); and transportation (180.9%).

Table 1: Trade- related job losses by state, 1994- 2000

Table 1a (1 of 6):

Table 1b (2 of 6):

Table 1c (3 of 6):

Table 1d (4of 6):

Table 1e (5 of 6):

Table 1f (6 of 6):

Methodology
This analysis of the employment effects of U.S. trade policies under NAFTA and the WTO takes into account both actual job losses and potential jobs, or job opportunities, lost as a result of increasing U.S. trade deficits. Job losses in 2000 are estimates of the difference between predicted trade-related employment (if the trade deficit had remained constant between 1994 and 2000) and estimated employment in 2000 based on actual trade flows. This estimate measures the number of additional jobs and job opportunities that would have been available, above actual employment in 2000. Since U.S. unemployment was at low levels in 2000, a smaller deficit with the NAFTA countries would probably shift jobs from low-wage service industries to traded-goods sectors (such as manufacturing), where wages are higher. We use 1994 as the base year because NAFTA went into effect on January 1, 1994, the WTO on January 1, 1995. This analysis evaluated the impacts of changes in the trade balance on domestic employment.