America's Trade Avalanche

Recognizing Achievement - At a December International union event celebrating the accomplishments of staffers who have given three decades of service to AFSCME.

Recognizing Achievement - At a December International union event celebrating the accomplishments of staffers who have given three decades of service to AFSCME. (Photo credit: Luis Gómez)

Message from the Secretary-Treasurer

By William Lucy

As America’s downward economic spiral continues—costing us good jobs and livable wages—it’s time to examine a primary cause: We import more and export less. The result is a trade deficit that rose almost $2 billion between August and September of last year. Unless we do business differently with other countries—more export and less import—our unemployment may stay above 10 percent for a long time.

Some economists seem to believe it’s okay when international trade causes us to lose a hundred manufacturing jobs in places like Ohio and Pennsylvania, as long as we add a hundred construction jobs elsewhere. But here’s the reality: When the housing bubble burst, those construction jobs disappeared. In the end, we traded good manufacturing jobs for no jobs at all!

Improving economic growth and increasing overall job creation means creating good trade agreements with good trade partners. Unfortunately, that’s not the current situation. Since being admitted to the World Trade Organization, China has headed the list of bad trade partners—unfortunately other Asian nations are following suit. As Economic Policy Institute (EPI) economist Robert Scott noted in his July 2008 EPI briefing paper, “Trade with less-developed countries has reduced the bargaining power of all workers in the U.S. economy.” In fact, the annual salaries of all workers without a four-year college degree—the majority of our workforce—are roughly $1,400 lower today because of this competition. We certainly don’t need trade partners who steal our jobs and reduce our incomes. Unfortunately, that’s exactly what China is doing.

China’s Double-Cross

Between 2001 and 2007, growing trade deficits with China displaced over two million American workers. More than one-third of these workers held manufacturing jobs and dropped out of the labor force altogether, while average wages of those who secured re-employment fell between 11 and 13 percent. Lost jobs and smaller paychecks in the private sector mean decreased spending and lower tax revenues. These last two hit public sector workers in the form of layoffs and less money for critical government programs at a time when they are most needed.

China’s dishonest trade practices have hurt America deeply. For example: Their government illegally subsidizes products—like glass—so they can be sold cheaply. And when Chinese tire manufacturers first open for business, they’re required to export 100 percent of their products for the first five years. None can be sold in China! How can we honestly compete when cheap products are easy to come by? Fortunately, President Obama has put restraints on the tire industry. But more needs to be done as other nations adopt China’s ways.

The result of poor trade practices is that demands for goods produced in every region of America have been reduced, costing jobs in all 50 states and the District of Columbia. According to EPI, the biggest losers were California, with a job loss over 300,000; Texas, which lost more than 200,000; and New York with a loss of over 125,000.

America’s Bottom Line

The next time someone tries to sell us a bill of goods about how unchecked globalization won’t hurt, we must counter with our experiences of economic insecurity and permanent wage losses. The promise that imports lead to new job opportunities in expanding export sectors like China are false. They’ve led to trade imbalance and less lucrative jobs or long-term unemployment. And facing the threat that they can be replaced by cheap foreign labor, workers have lost bargaining power. Let’s encourage our legislators to revamp trade policy. It’s a critical step in reinvesting in our nation and our workers so we can truly repair our economy.