Ohio lost 120,000+ jobs due to U.S. trade deficit with China: EPI
The jobs that disappeared, between 2001 and 2015, represented more than 2.3 percent of Ohio's employment, according to the report released Tuesday by the liberal Economic Policy Institute in Washington, D.C. The rankings in the report were based on the share of employment a state lost to trade with China. Ohio ranked 24th out of the 50 states and Washington, D.C.
Nationally, the trade deficit with China eliminated 3.4 million jobs, or 2.45 percent of U.S. employment. More than 2.5 million, or roughly three-quarters, of the jobs lost were in manufacturing.
"The U.S. trade deficit with China has more than quadrupled since China entered the World Trade Organization in 2001, rising from $83 billion to $367 billion in 2015," said Robert E. Scott, EPI's director of trade and manufacturing policy research.
The report shows that all 50 states lost jobs due to trade with China -- to varying degrees. As Ohio's middle of the pack showing suggests, most of the industrial Midwest didn't rank near the top of the list, as is often the case with such job loss statistics.
"The hardest hit industry of all was computers and electronic parts," Scott said.
Oregon ranked first, losing 65,400 jobs, or 3.82 percent of employment. California lost the most jobs -- 589,100 -- due to trade with China. However, California ranked second because those jobs represent 3.59 percent of California's employment. Both states have sizeable high tech industries.
Scott said former President Bill Clinton, and other supporters of China joining the WTO, projected that its entrance would benefit U.S. trade. Supporters said joining "would require China to open its markets to imports from the United States and other nations by reducing Chinese tariffs and addressing non-tariff barriers to trade," Scott said.
Instead, China engaged in "trade-distorting practices," he said. This includes dumping, or selling goods in the United States at artificially cheap prices, often for less than the cost of making them.
"It is important to address some misimpressions that are out there - myths if you will," Scott said "We are not importing toys and shoes and textiles in great volume from China. The vast bulk of the manufacturing jobs lost have been in so-called durable goods industries. (These are) high-tech and very capital-intensive industries that provide very good jobs with excellent benefits, like steel and machine tools and electronic appliances."
Iain Murray is vice president of strategy at the Competitive Enterprise Institute in Washington, D.C., which supports free trade. He said Scott's report failed to see the many factors influencing trade, which make it a "dynamic" business activity.
"Even in the United States, as one company comes up with a brilliant new idea, and uses that to become a dominant player in the market, other companies fade," he said. "It is a process called creative destruction. Old industries are destroyed, but new industries appear, which in the end, are more beneficial than the old industries."
Murray said a flaw of Scott's analysis is that it doesn't take into account the role automation has played in U.S.
The analysis, based on government data, determined the net impact trade with China had on U.S. jobs by subtracting the job opportunities lost to imports from those gained through exports.
Scott said automation, which often leads to greater productivity with fewer workers needed to do the same amount of work, hasn't necessarily led to job loss in the past.
"We had productivity growth of almost 4 percent a year in the 1990s, and yet employment was roughly constant in manufacturing," he said. "Since 2000, there has been no net growth in real manufacturing output.
"Why is output not growing?" Scott said. "It is because of this huge surge of manufactured products from China and other countries. The growth of the trade deficit is responsible for the failure of domestic manufacturing output."
The growth in the deficit with China "represents a direct loss of 1.6 percent of U.S. Gross Domestic Product in 2015," he said in the report.
In the report, Scott offers several recommendations for addressing the trade deficit. They include "enhanced enforcement" of fair trade laws, which is aimed at putting the U.S. and China on a level playing field. Scott said Congress should pass legislation aimed at eliminating illegal currency manipulation, in which a government purposely lowers the value of its currency so that the goods it produces are cheaper to sell abroad. He also recommends a border-adjustable carbon fee on imports produced by energy-intensive industries. Such policies aim to eliminate the cost advantage to companies manufacturing in countries with low environmental standards that often don't require businesses to invest in pollution control equipment.