Economic Snapshot | Trade and Globalization

U.S. workers pay the price for NAFTA

A weekly presentation of downloadable charts and short analyses designed to graphically illustrate important economic issues. Updated every Wednesday.

Snapshot for October 20, 1999

U.S. workers pay the price for NAFTA

Since its adoption in 1994, the North American Free Trade Agreement (NAFTA) has not led to the creation of more jobs in the United States, as promised by the Clinton Administration and the business community. In fact, the figure below shows that all 50 states and the District of Columbia have experienced a net loss of jobs under NAFTA. The increase in exports are offset in every state by a larger loss of jobs due to an increase in imports. Net job loss figures range from a low of 395 in Alaska to a high of 44,132 in California. Other hard-hit states include Michigan, New York, North Carolina, Indiana, Pennsylvania, Ohio, Texas, Tennessee, Illinois, Georgia, Florida, Alabama, New Jersey, and Missouri, each with more than 10,000 jobs lost.

Several states, notably Arkansas, Michigan, North Carolina, Indiana, Tennessee, Kentucky, and Rhode Island experienced job losses disproportionate to their share of the overall U.S. labor force. These states have high concentrations of industries (such as motor vehicles, textiles and apparel, and computers and electrical appliances) in which a significant amount of production has moved to Mexico.

As for NAFTA’s impact on workers’ wages, even when displaced workers are able to find new jobs in the growing U.S. economy, they face a significant reduction in wages. Their new jobs are likely to be in the service industry, the source of 112% of net new jobs created in the U.S. since 1993, where average compensation is only 77% of that of the manufacturing sector.

Source: EPI Analysis of U.S. Census Trade Data; State of Working America 1998-99.

Check out the archive for past Economic Snapshots.

See related work on Trade deficit | Trade and Globalization