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PPI | Trade Fact of the Week | April 16, 2003
The United States Has Added 20 Million Jobs Since NAFTA


Editor's Notes: The PPI "Trade Fact of the Week" is a weekly email newsletter published by PPI's Trade & Global Markets Project. To sign up for a free subscription, click here. (Just make sure to check the box next to "Trade & Global Markets.")

Original links are included though some may have expired.


The Numbers:

Private-sector U.S. jobs, February 1993: 91 million
Private-sector U.S. jobs, February 2001: 112 million
Private-sector U.S. jobs, February 2003: 109 million

What They Mean:

Signing NAFTA's labor and environmental side agreements in the fall of 1993, President Clinton argued that "the way we can recover the fortunes of the middle class in this country so that people who work harder and smarter can at least prosper more, the only way we can pass on the American Dream of the last 40 years to our children and their children for the next 40, is to adapt to the changes which are occurring. In a fundamental sense, this debate about NAFTA is a debate about whether we will embrace these changes and create the jobs of tomorrow, or try to resist these changes, hoping we can preserve the economic structures of yesterday."

How did this proposition fare? Theory argues that trade agreements can shift the mix of jobs, helping the United States specialize in high-wage and high-skill fields. Opponents like Ross Perot argued that NAFTA would mean more low-wage competition, less investment, and fewer jobs for American workers. Ten years later, U.S.-Mexico trade, combining exports and imports, still equals only about 2 percent of GDP (well below trade with Canada), and so has limited effects. But two facts seem clear: (1) America and Mexico trade more; (2) more Americans are working, and most make more money.

Trade: Cross-border goods trade with Mexico totaled $232 billion in 2002 -- an eighth of America's total $1,857 billion in goods trade, and up $150 billion from the $82 billion total in 1993. In context, from 1993-2002, Mexico accounted for a third of all U.S. export growth and a fifth of import growth. Mexico now buys more American goods than Germany, Britain, and France combined, with export growth especially rapid in auto parts, semiconductor chips, computers, medicines and cameras. As a goods import source, Mexico now ranks behind only Canada and the EU, and just ahead of China. Investment and services trade links with European countries and Japan, however, remain much larger than those with Mexico.

Jobs: Meanwhile, the United States has more jobs and better-paying jobs. According to the Bureau of Labor Statistics, the United States had 91 million private sector jobs in December of 1993, the month before NAFTA went into effect. Employment rose continuously in the next seven years to peak at 112 million jobs in February 2001, and has fallen back over the past two years to 109 million. (Bonus fact -- last four-year Presidential term in which total employment fell -- 1929-1933.) At the same time, real hourly wages are up from $13.66 to $15.08, in constant 2003 dollars.

Further Reading:

President Bill Clinton joins three former Presidents to speak at the signature ceremony for NAFTA labor and environmental side agreements, September 2003:
www.multied.com/Documents/Clinton/SigningNaFTA.html

The U.S. government's NAFTA website:
www.ustr.gov/regions/whemisphere/nafta.shtml

The Mexican government's NAFTA website:
www.naftaworks.org/

Canada's NAFTA website:
www.dfait-maeci.gc.ca/nafta-alena/menu-en.asp

Data on jobs, wages, employment rates and other issues from the Bureau of Labor Statistics:
http://stats.bls.gov/





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