EPI: CHINESE TRADE SURPLUS WITH U.S. COSTS ALMOST 2.3M JOBS

Friday, August 15, 2008

(PAI)EPI: CHINESE TRADE SURPLUS WITH U.S. COSTS ALMOST 2.3M JOBS

            WASHINGTON (PAI)--China’s trade surplus with the U.S., created by undervalued currency, low or no pay for Chinese workers and a deliberate drive for industrial exports, has cost the U.S. economy almost 2.3 million jobs--2.295 million, to be precise--from 2000 through 2007, an Economic Policy Institute analysis reports.

            The average U.S. worker who lost his or her job to China since 2000 lost more than $8,000 yearly in wages when he or she found a new job, EPI adds, but the impact was wider than that.

            That’s because competition from low-priced Chinese imports and low-paid Chinese workers drove down other U.S. workers wages, EPI said. It calculated an average U.S. worker who kept a job, but whose firm faced competition from the Chinese imports was forced to take a $1,400 pay cut over the last seven years as a result.

            Between 2001 and last year, China’s trade surplus with the U.S.--and our deficit with China--tripled, to $262 billion, Scott noted. That was 21% annually.



            Two-thirds of the lost jobs were in high-paying industries. One third were among workers with college degrees. “More than half (55.6%) of the displaced jobs were in the top half of American wage earners…Growing China trade deficits contributed to the loss of 200,000 scientist and engineering jobs within the manufacturing sector, a 10.7% drop,” the report says.

            “This new data is a wake-up call about the devastating effect of our unbalanced China trade on American jobs, wages and our economy,” said its author, senior economist Robert Scott. “The damage is being felt in every state. And as the trade deficit continues to grow and China moves into higher-wage sectors, the trend lines on the future loss of jobs and depression of incomes are especially alarming.”

            The largest job losses to China came in the largest states: California (325,000), Texas (203,000), New York (127,000), Illinois (102,800) and Ohio (102,700) in that order. But losses were proportionally larger, as a percentage of a state workforce, in smaller states such as New Hampshire.

            The mix of factory job losses to China is changing, EPI says. Factory jobs in general--including those lost to China--generally have better wages and benefits. And “China is rapidly diversifying its export base and expanding into higher value-added commodities such as computer and electronic products, aircraft, and auto parts and machinery,” it said. China’s 2007 trade surplus included $68 billion in high-tech areas.

            “China’s manipulation of its currency makes the yuan artificially cheap, effectively subsidizing exports. Beijing’s suppression of labor rights lowers wages. China subsidizes some key industries and maintains barriers to some imports. We must demand a fundamental change in exchange rate policies and labor standards in the Chinese economy as a critical first step toward restoring a level playing field where American workers can compete fairly,” Scott concluded.

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