EPI: U.S. non-oil Trade Deficit Cost 5.6 Million Jobs in 2007

A report released today by the Economic Policy Institute [www.epi.org] connects the dots between a growing U.S. trade deficit and job losses for millions of Americans last year. And it isn't just a "Rust Belt" problem. States like California, Texas, Florida, North Carolina and Georgia were hard hit by trade-related job loss.

U.S. Non-oil Trade Deficit Cost 5.6 Million Jobs in 2007;
California, Michigan Among States Hardest Hit

WASHINGTON – While woes on Wall Street have riveted national attention, the
situation on Main Street continues to deteriorate. Even without considering the glut of foreign oil imports, the United States’ massive trade deficit with all of its trading partners resulted in the loss or displacement of 5.6 million jobs in 2007, according to a new report by the Economic Policy Institute (EPI).

The net job loss due to the U.S. non-oil trade deficit has been felt nationwide, displacing workers and weakening job growth in all 50 states and the District of Columbia. Leading the list in net job loss is California, which had 696,300 jobs lost or displaced in 2007, followed by Texas with 405,300, New York (326,100), Michigan (319,200), Ohio (303,800), Illinois (260,800), Florida (233,800), Pennsylvania (228,900), North Carolina (222,100) and Georgia (186,000).

Michigan took the biggest hit at 7.5 percent of total employment, followed by South
Carolina with 6.2 percent of total employment lost (121,100 jobs). Others in the top 10 include Alabama (5.9 percent, 117,700 jobs), Tennessee (5.8 percent, 161,400,), Ohio (5.6 percent, 303,800), Maine (5.9 percent, 34,500), Indiana (5.5 percent, 165,600), North Carolina (5.4 percent, 222,100), New Hampshire (5.2 percent, 34,000), and Kentucky (5.2 percent, 97,000).

“The turmoil on Wall Street can only compound the problems of an already weakening
job market,” said Robert E. Scott, EPI’s Director of International Programs and the
author of the report. “Our research shows no state or sector is exempt from the impact of non-oil U.S. trade deficits.”

While several factors contribute to the nation’s trade deficit, the most important causes “are the unfair trade practices of many U.S. trading partners, especially the distortion of exchange rates through the currency intervention policies of China and other Asian governments,” the report states. Ending currency manipulation by the Chinese government is essential in order to persuade Japan and other currency manipulators to end these practices as well, it concluded.

“The overall U.S. trade deficit has grown steadily for almost two decades, mainly
draining jobs in the manufacturing sectors,” Scott said. “Ending unfair trade practices can significantly improve the fundamentals of the domestic economy and help restore sustainable, broadly shared growth of jobs and income. “

The Economic Policy Institute (EPI) is an independent, nonprofit, nonpartisan think tank that researches the impact of economic trends and policies on working people in the United States and around the world. EPI's mission is to inform people and empower them to seek solutions that will ensure broadly shared prosperity and opportunity. In addition to the loss of jobs, “competition with artificially cheap imports has also put downward pressure on the wages of all U.S. workers,” the report concludes. Between 2000 and 2007, workers displaced from manufacturing—the sector hardest hit by U.S. non-oil trade deficits—are often forced to take jobs in sectors such as in home health care, accommodation and food service industries, where wages are typically much lower than in manufacturing. The average wages of those who secured re-employment were 11 percent to 13 percent lower than in their previous jobs.

The report notes that the dollar has lost substantial value, facilitating U.S. exports, but imports have skyrocketed because of unfair trade policies by other countries. The elimination of the U.S. non-oil trade deficit could support millions of new jobs in export industries, and contribute to the revitalization of U.S. manufacturing, it said. More than four million (70 percent) of the jobs displaced in 2007 were in the manufacturing sector. The automobile industry in Michigan was hit hard, along with computer and electronic components in such states as California, Texas, Oregon and Minnesota. Another hard-hit major industrial sector is textile, clothing and accessories, with job loss especially affecting the Carolinas, Tennessee, Kentucky and other southern states.

The accompanying tables show the state-by-state totals, both in numbers of jobs lost and as a share of total employment, due to the U.S. non-oil trade deficit. They can be viewed online at http://www.epi.org/content.cfm/bp222