Growth in the U.S. goods trade deficit with China between 2001 and 2013 eliminated or displaced 41,100 jobs in Kentucky, according to “China Trade, Outsourcing and Jobs,” a new study from the Economic Policy Institute (EPI) released today.
Among the states, Kentucky had the 17th-highest job loss from trade with China as a share of employment, according to the report. Job losses have been particularly steep in the 6th Congressional District in central Kentucky, where 11,000 jobs have been lost or displaced. That gave the district the 46th-highest job losses as a share of employment of all 436 congressional districts.
“One of Kentucky’s economic strengths is that it’s a manufacturing state, but that has made it vulnerable to unfair trade policies in recent years,” said Jason Bailey, director of the Kentucky Center for Economic Policy. “If public officials are serious about supporting manufacturing jobs in Kentucky, they must work to reduce the trade deficit by putting an end to trade practices that create an uneven playing field disadvantaging Kentucky workers.”
Of the 41,100 cumulative jobs lost or displaced in Kentucky because of the growing trade deficit with China, 31,600 are in manufacturing. Job loss has been particularly steep in computer and electronic parts manufacturing, where 10,700 jobs have been lost or displaced; apparel manufacturing, with 4,500 fewer jobs; industrial supplies including plastics and rubber products with 4,000 fewer jobs; and electrical equipment, appliances and components with 2,500 fewer jobs.
Supporters of China’s entry into the World Trade Organization in 2001 claimed that the move would create jobs and increase U.S. exports to China. However, China has continued to engage in unfair trade practices—such as currency manipulation, Illegal industry subsidies, tariff and non-tariff barriers to imports, dumping, and the suppression of wages and labor rights—that have limited the growth of U.S. exports. Meanwhile, growth in outsourcing by multinational companies has created a flood of Chinese imports into the United States, leading to rapidly growing trade deficits and corresponding job loss. U.S. trade deficits with China have nearly quadrupled since 2001, reaching $324.2 billion in 2013.
“Currency manipulation by China is the single biggest contributor to growing U.S. trade deficits and the resulting job loss,” said Robert Scott, Director of Trade and Manufacturing Policy Research at EPI and an author of the report. “It’s time for Congress and the president to enact tough new policies to end currency manipulation by China and more than a dozen other nations that have adopted similar policies. Congress should pass pending legislation that would allow the Commerce Department to penalize currency manipulators, and the president should use existing authority to tax or offset currency manipulation by foreign governments.”
The impact of the trade deficit with China is not limited to direct job losses. Competition with low-wage countries has driven down wages and reduced bargaining power for millions of workers throughout the U.S. economy.
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The full report is available here: http://www.epi.org/publication/china-trade-outsourcing-and-jobs/
Click here for KCEP’s blog on the report which includes data on Kentucky job losses: https://kypolicy.org/trade-deficit-china-cost-41100-kentucky-jobs-many-manufacturing/.
