Rich World, Poor World

Global Trade, Jobs and Labor Standards

6/15/06
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Global trade and jobs: A complex relationship

Trade has the potential to be a force for raising incomes worldwide by spurring economic growth, reducing prices, increasing the variety of goods for con­sumers, and helping countries acquire new technologies. Trade contributes to economic growth in the U.S., but does have tradeoffs. While it does not affect the total number of jobs in the short run—that is determined by the overall strength or weakness of the economy—it does change the distribution of jobs across sectors and creates losers as well as winners. For example:

Workers in industries that compete with imports suffer:

  • Between 1984 and 2004 more than 30 million US workers lost their jobs, mostly in high import-competing manufacturing industries such as clothing, autos, and electronics. These industries account for only 30% of all manufacturing jobs in the U.S., but 38% of manufacturing job loss.
  • Of the workers displaced--both in high import-competing and other manufacturing--about one in three moved into new jobs with equal or better incomes, but one in four suffered earnings losses of more than 30%.
  • Recent trends in globalization, like the growth of China and India, have increased the number of U.S. jobs "outsourced" to other countries.  One estimate puts the number of white-collar job losses at 3.3 million by 2015.
  • Nearly 70% of Americans who have health insurance get their coverage through employers, so losing a job can be extremely costly to families, with lost health coverage as well as lost wages.