- By Catherine A. TraywickCatherine A. Traywick is a fellow at Foreign Policy.
Many Americans already believe, intuitively, that cheap imports from China threaten manufacturing jobs in the United States. But while there’s plenty of anecdotal evidence to support this — stories of factories closing and companies relocating — economists and policymakers have always asserted that the benefits of increased trade outweigh the initial costs.
Now, a study by the National Bureau of Economic Research proves that increased trade with China has more significant long-term effects on blue-collar workers than previously thought. The impact has been particularly profound because China’s dramatic export growth has outpaced U.S. firms’ ability to adjust.
The study, by economists David Autor, David Dorn, Gordon Hanson, and Jae Song, looked at the impacts of increasing trade with China on the employment and earnings of nearly 900,000 American workers between 1991 and 2007. During that period, China’s share of world manufacturing exports grew considerably, from just two percent in 1990 to 12 percent in 2007 and 16 percent in 2011. Meanwhile, the number of US factory workers fell by nearly 10 percent between 1991 and 2001, and by another 16 percent in the subsequent years.
Workers across skill and seniority levels were affected by exposure to trade with China, though lower-wage workers bore the brunt — particularly if they had less overall experience and were employed with larger firms.
Workers with the highest industry trade exposure — such as those working in toys or apparel — were far more likely to leave their employer, either voluntarily before layoffs or as part of mass layoffs. They were also more likely to exit their industry than those with less exposure. The researchers argue that this indicates “workers possess job or industry-specific skills that they can no longer gainfully employ once they leave the initial firm or industry.”
One of the study’s most interesting findings is that women were disproportionately harmed by trade shocks than men, largely because women comprise a higher proportion of low-wage workers. While the men, who tended to by higher-wage and longer-tenured workers, were also impacted by trade exposure, they were more able to mitigate their losses by changing jobs before mass layoffs occurred. High trade exposure also correlated with a greater reliance on unemployment and disability benefits among manufacturing workers.
Of course, trade with China isn’t the only issue the American worker faces. But the provocative study joins a growing body of research focused on the domestic impacts of China’s meteoric rise as a world exporter of manufactured products. While this particular study suggests that U.S. manufacturing firms aren’t able to cope with China’s rapid export growth – potential leading to more profound effects on employment and wages, others are looking at the role of policy on this phenomenon. A Yale study from earlier this year linked the sharp decline in U.S. manufacturing jobs after 2001 to a significant shift in U.S. trade policy with China the year before.
Clyde Prestowitz is the founder and president of the Economic Strategy Institute (ESI), where he has become one of the world's leading writers and strategists on globalization and competitiveness, and an influential advisor to the U.S. and other governments. He has also advised a number of global corporations such as Intel, FormFactor, and Fedex and serves on the advisory board of Indonesia's Center for International and Strategic Studies.| Prestowitz |