America’s trade deficit with China has cost 3.4 million U.S. jobs since 2001 and is a major contributor to widening economic inequality, according to a study released Tuesday by the Economic Policy Institute.
Not surprisingly, the manufacturing sector has suffered the most because of America’s lopsided trade relationship with China, losing 2.5 million jobs between 2001 and 2017. But every state and every congressional district has seen job loss as a direct result of the growing China trade deficit, and the study shows that the wider economy continues to be dragged down by the growing deficit.
“Some regions are devastated by layoffs and factory closings, while others are surviving but not growing the way they could be if new factories were opening and existing plants were hiring more workers,” authors Robert E. Scott and Zane Mokhiber write. “This slowdown in manufacturing job generation also is contributing to stagnating wages… and widening income inequality.”
That’s putting it mildly. Workers directly impacted by job loss saw their incomes dwindle by $37 billion per year between 2001 and 2011 alone, the study finds. But the wages of all non-college graduates dropped by $180 billion per year, as import competition from China led to job loss and shifted company profits to those at the top of the economic ladder.
While the data might conjure up images of rundown factories in the industrial midwest, it’s a high-tech sector — the computer and electronic parts industry — that suffered the most job loss, shedding 1.2 million jobs from 2001 to 2017. And tech-friendly California saw the most total jobs lost because of the trade deficit: 562,500. Texas followed close behind, losing 314,000 jobs, followed by New York (183,500), Illinois (148,200) and Pennsylvania (136,100).
Put together by the National Science and Technology Council Subcommittee on Advanced Manufacturing, the 40-page strategy document focuses on three key goals: the development and transition of new manufacturing technologies, the education and training of the manufacturing workforce, and the expansion of domestic manufacturing across the supply chain.
Strategic objectives for achieving each goal are included in the report, along with specific outcomes that are designed to be accomplished within four years. The plan received input from across the federal government, and many federal agencies are tasked with helping to achieve the objectives.
For example, the strategy includes priorities like expanding apprenticeships and career and technical education pathways; properly enforcing Buy American policies; and recognizing the role of programs like Manufacturing USA and the Manufacturing Extension Partnership in stimulating innovation and supporting small and mid-sized manufacturers.
And although it’s a product of the Trump administration, the new strategy began long before The Donald even came on the D.C. scene, when Congress passed the American Manufacturing Competitiveness Act back in 2014.
Nearly 4,000 people signed onto our action last week urging the Federal Trade Commission (FTC) to impose tougher penalties on companies that falsely label their imported products as “Made in USA.”
It turns out a few Senators also sent a similar message of their own to the agency.
Democratic Sens. Tammy Baldwin (Wis.), Sherrod Brown (Ohio), and Chris Murphy (Conn.) sent a letter to the FTC on Oct. 12 to “express our concerns with ‘no-fault, no-money’ settlements for ‘Made in the USA’ labeling violations” and “urge the Commission to take all steps necessary to protect the integrity of the label.” The trio continue:
“Consumers view American-made goods more positively and are often willing to pay a higher price for them. In addition, consumers may be less likely to have health or quality concerns about a product when its true country of origin is concealed. If the consequences of misusing the “Made in the USA” label do not include paying fines or admitting wrongdoing, it is unlikely that these and other companies will be deterred from using the same deceptive tactics to sell their products in the future.”
The senators specifically were responding to recent rulings by the FTC that found three individual companies labeled their products as “Made in USA” but actually imported them from countries like China.
The North American Free Trade Agreement (NAFTA) lives — under a new name, anyway.
Leaders from the United States, Canada, and Mexico announced on late Sunday night that they reached an agreement to update NAFTA, the trilateral trade deal that President Trump long has wanted to overhaul. The announcement came just before a self-imposed midnight deadline to get the deal done, and literally at the 11th hour: The White House held a conference call with reporters at 11 p.m. Eastern time.
In typical Trump fashion, the new NAFTA has new branding: It’s now called the United States-Mexico-Canada Agreement, or USMCA.
It’s an exciting development, and one that many astute observers didn’t expect was possible just a few days ago. But don’t break out the champagne quite yet.
While all three USMCA leaders are expected to sign the accord within 60 days — including, crucially, the outgoing Mexican president —Congress also needs to approve the new pact, as do legislative bodies in Mexico and Canada. In the United States, congressional approval isn’t a guarantee, especially if Democrats regain control of the House of Representatives following the midterm elections in November.
The self-imposed deadline for reaching a trilateral deal on the North American Free Trade Agreement (NAFTA) is Sept. 30. Barring a miracle at the 11th hour, more than likely the deadline will be missed.
Conventional wisdom is that despite the missed deadline — and continued tension between Trump and Canadian Prime Minister Justin Trudeau — talks between the United States and Canada are likely to continue. The U.S. and Mexico already have made a deal, after all, and there’s a lot of desire to make sure Canada is ultimately included in the final agreement.
Most of the media coverage of the NAFTA negotiations have centered on the inside baseball aspects of it: When are talks happening? What’s the mood been like between negotiators? What latest insult has Trump hurdled at Trudeau?
But what’s missing is something pretty essential: What do Americans actually want to get out of a new NAFTA deal?
The Mellman Group, Inc., and Public Opinion Strategies asked 1,200 likely voters just that. What the pollsters found is that across all demographics — political parties, race, region, and more — voters have a pretty clear idea of what they want trade agreements like NAFTA to accomplish.
Higher wages top the list, as 72 percent of poll respondents said it is “very important” that trade deals “raise wages for U.S. workers.” Voters also want trade agreements to “promote strong alliances” and “establish penalties to prevent trade partners from cheating.”
Other “very important” priorities include reducing the trade deficit (66 percent); maximizing the use of U.S. parts in automobiles and other products (65 percent); and reduce barriers to American goods in foreign markets (64 percent).
And the foundation attracted some big names to help them do it.
Former Vice President Joe Biden and Sen. Kirsten Gillibrand (D-N.Y.) were among the keynote speakers at a summit sponsored by the foundation in Washington. Biden and Gillibrand — both of whom are being floated as potential 2020 presidential contenders — noted that too many Americans are stuck working low-paying jobs, and elected leaders haven’t done enough to help them.
“Ordinary Americans can do extraordinary things, if you just give them a chance,” Biden said. “This is not beyond our capacity. There is so much we can do to begin to change things.”
Gillibrand echoed Biden’s remarks.
“We have the hardest working people in the world. We have an ideal, it’s called the American dream,” Gillibrand said. “I can tell you, wherever I travel in my state, people don’t believe the dream is for them anymore…They just want someone fighting for them.”
The Century Foundation’s new agenda serves as a blueprint for doing just that, and manufacturing is at the heart of it. Foundational officials spent the past year meeting with hundreds of people in cities like Cleveland, Chicago, and Pittsburgh to help put their ideas together.
First, there’s this piece in the Wall Street Journal on how employers “feel the pinch” because of an “increasingly tight labor market.” There were 650,000 available jobs in the United States in July, the highest level on records back to 2000, according to the article.
The story mirrors what we often hear about the “skills gap” in manufacturing, the idea that there are many advanced manufacturing jobs out there but not enough workers with the know-how to fill them.
Remember that — we’ll come back to it.
We also came across this devastating story in the New York Times on Wednesday about how so many of the jobs out there — especially for workers without a college degree — simply do not pay enough to live on. Here’s an excerpt:
“In recent decades, the nation’s tremendous economic growth has not led to broad social uplift. Economists call it the ‘productivity-pay gap’ — the fact that over the last 40 years, the economy has expanded and corporate profits have risen, but real wages have remained flat… American workers are being shut out of the profits they are helping to generate.”
That NYT piece profiles Vanessa Solivan, a mother-of-three who, when times are good, makes about $1,200 a month as a home health aide. The 33-year-old spent almost three years as part of the “working homeless,” holding down a job but not making enough money to afford a place to live.
Michigan Sen. Debbie Stabenow (D) is a longtime proponent of Buy America, which ensures that when the federal government builds new infrastructure or buys new goods, the materials and products purchased are American-made.
It’s commonsense policy, as it reinvests taxpayer money into local communities, supporting job growth and strengthening the economy.
But loopholes have meant that some federal agencies have skirted Buy America — and so Stabenow wanted to find out just how much money is being sent overseas.
Spoiler: It’s a lot.
A new report from Stabenow’s office found that 13 federal agencies used Buy America loopholes to spend more than $92 billion on foreign contracts between 2008 and 2016.
The Defense Department led the way, spending nearly $85 billion on foreign contracts because of loopholes (and spent about $154 billion total on foreign purchases during that same period). The department, unfortunately, has a history of skirting these laws — 81 out of 280 Defense Department contracts were found to not comply with Buy America, a recent audit by the agency’s inspector general found.
And while the Defense Department is certainly the biggest offender, it is hardly alone. Other agencies that used loopholes to spend money on foreign contracts include the State Department, which spent nearly $2.5 billion; the Department of Homeland Security, which spent more than $1.58 billion; and the Treasury Department, which spent more than $510 million.
There’s a whole lot going on in D.C. this week, including the mystery over who exactly wrote that op-ed in The New York Times. You know who might know?
China.
O.K., I kid – but maybe not really.
It’s not a secret that China is engaging in massive cyber espionage against the United States, and a new report from the Foundation for Defense of Democracies highlights some of the consequences.
The findings are astounding. China is responsible for 50 to 80 percent of cross-border intellectual property theft worldwide, and more than 90 percent of all cyber-enabled economic espionage in the United States.
All that cyber theft costs the U.S. economy up to $300 billion annually, according to report author Zach Cooper. The damage adds up to more than just dollars and cents:
“Chinese espionage has not only damaged U.S. companies, but has also helped China save on research and development expenses while catching up in several critical industries… Perhaps most worryingly, China is reversing many of the U.S. military’s technical and industrial advantages and creating potential vulnerabilities should a conflict arise.”
Shortly after taking office, President Trump paid a visit to the headquarters of Snap-on tools in Kenosha, Wis., to talk up his “Buy American, Hire American” campaign pledge.
During that April 2017 trip, Trump endorsed Buy America legislation put forth by Wisconsin Sen. Tammy Baldwin (D) that requires the use of American-made steel and iron in government-funded drinking water projects, ensuring that taxpayer money is reinvested in American workers and communities rather than being sent overseas.
Baldwin wrote to Trump on Monday to remind him of his commitment to the Made in America Water Infrastructure Act – and at a critical time. While Baldwin’s legislation was included as part of the Senate’s version of the water infrastructure bill known as the Water Resources Development Act (WRDA), it is not in the House version.
That’s a big concern. The last time Congress took up WRDA in 2016, similar Buy America language was included in the Senate version of the legislation, but Republicans in the House successfully stripped it from the final WRDA bill that became law.
Now there are fears that could happen again – unless Trump steps up. Baldwin writes:
“You need to back up your words with action. I’m proud to have earned your support for my Buy America reform and now is the time to keep your promise to workers in Wisconsin and across this country. I again urge you to make sure that the WRDA legislation that reaches your desk includes a permanent Buy America pledge that requires that our nation’s drinking water infrastructure is built with American workers and American-made materials.”
Scott Paul and Robert E. Scott join Leslie Marshall to discuss a new EPI report entitled, "The China toll deepens: Growth in the bilateral trade deficit between 2001 and 2017 cost 3.4 million U.S. jobs, with losses in every state and congressional district."
Scott Paul is President of the Alliance for American Manufacturing (AAM), a partnership established by some of America’s leading manufacturers and the United Steelworkers union.
Robert E. Scott is Senior Economist and Director of Trade and Manufacturing Policy Research at the Economic Policy Institute (EPI). EPI is a nonprofit, nonpartisan think tank created in 1986 to include the needs of low- and middle-income workers in economic policy discussions.
