Outsourcing to China Cost U.S. 3.2 Million Jobs Since 2001
“It becomes very difficult for us to do economic development at the local level when our macroeconomic policies like our trade policies with China are really putting us at a severe disadvantage and sucking wages and income out of our communities,” said Rep. Tim Ryan, D-Ohio, on the call. According to the report, the deficit with China resulted in 106,400 jobs displaced in Ohio.
Between 2001 and 2013, the expanded trade deficit with China cost the U.S. 3.2 million jobs, and three quarters of those jobs were in manufacturing, according to a report released Thursday from the Economic Policy Institute, a left-leaning Washington think tank. Those manufacturing jobs lost accounted for about two-thirds of all jobs lost within the industry over the 2001 to 2013 period.
Scott Paul, president of the Alliance for American Manufacturing, on a call with reporters Thursday said one of the ways to get the economy back on track is to fortify the U.S. middle class.
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“Rebuilding the middle class starts with a robust and growing manufacturing base,” Paul said. “The key to a robust and growing manufacturing base in the U.S. is to be exporting more, to have a balanced economy between production and consumption and to have reciprocal trade with our major partners including countries like China and Japan.”
Job loss occurred in all states and the District of Columbia, but given that the trade deficit in computer and electronic parts sector grew the most – and accounted for 39.6 percent of total job losses – the hardest hit state was California, which lost more than 560,000 jobs. The three hardest-hit congressional districts were all in Silicon Valley and among other cities, included Palo Alto, San Jose and Cupertino.
The reason for the deficit growth is multifaceted. First, China’s currency manipulation and other trade-distorting practices are a boon for its own exporting. Second, China's suppression of labor rights make outsourcing more cost efficient for U.S. companies. The AFL-CIO estimates that repression of labor rights by the Chinese government lowered manufacturing wages between 47 and 86 percent.
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“Competition with low-wage workers from less-developed countries such as China has driven down wages for workers in U.S. manufacturing and reduced the wages and bargaining power of similar, non-college-educated workers throughout the economy,” wrote the report's authors, Robert Scott and Will Kimball.
Between 2001 and 2013, the U.S. goods trade deficit with China increased by $240.1 billion, or by $21.8 billion on average per year over that time period. And over the 2001-2011 period, U.S. workers who were directly displaced by trade with China lost a collective $37 billion in wages as a result of accepting other lower paying jobs.