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PPI | Trade Fact of the Week | June 15, 2005
Trade-Related Job Losses in the United States: 1 Percent of Total Layoffs?


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.")

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The Numbers:

Total layoffs in United States, 2004: 18,478,000*
Trade-related layoffs in US, 2004: 226,000**

* Bureau of Labor Statistics "Job Opening and Labor Turnover Survey"
** Institute for International Economics estimate

What They Mean:

What role do trade and the global economy play in job loss? Perhaps less than many people assume. Definitions of "trade-related" job loss are unclear, reliable statistics are scarce, and the statistics which do emerge are rarely put in the context of total layoffs. But research seems to show that at most they account for about 5 percent of layoffs, and more likely between 2 percent and 3 percent. Three questions:

First, how many jobs are there and how many layoffs? In total, about 133 million Americans are on the job this morning. In the 1990s, this number was growing by about 3 million per year; more recently the number has been less encouraging, with last year's 2 million net new jobs barely offsetting the 1.7 million lost in 2001. Either way, net changes on this scale imply annual shifts of between 1 percent and 2 percent, and so provide a misleading sense of stability and incremental change. According to the Bureau of Labor Statistics' "Job Opening and Labor Turnover" survey, the 2 million net job creation last year meant in reality the hiring of 50 million new jobs and 48 million "separations." The separations include: 26.2 million people voluntary quitting to take new jobs or go back to school; 18.5 million layoffs; and 3.0 million "other" separations, mainly retirements, but also transfers overseas, sabbaticals, deaths, and incapacitating illness or injury.

Second, how does job growth overall relate to trade? On a macroeconomic scale, the main pattern is that imports and jobs tend to rise and fall together. Job loss in 2001, for example, coincided with an $80 billion drop in imports. Likewise the 20th century periods of net job loss in 1904, 1908, 1921, 1929-1932, 1938, 1949, 1954, 1958, 1960, 1974-75, 1981-82, and 1991, likewise all coincided with falling imports; both reflect the recessions of these years.

Third, what role do trade and the global economy play in the 18 million or so layoffs each year? The question is somewhat murky, since definitions of trade-related' job loss are unclear and reliable statistics are scarce. But Institute for International Economics scholars Gary Hufbauer, Scott Bradford and Paul Grieco review independent research and Trade Adjustment Assistance filings to develop a cautious estimate of 226,000 jobs displaced annually by import competition. The highest figures are a little over 400,000. Meanwhile, such research as exists on the movement of jobs overseas as services and manufacturers open operations abroad seems to produce a similar range of figures, from quite small numbers to a maximum of 400,000 a year. Overall, therefore, the surveys seem to imply imports account for between 1 percent and 2 percent of layoffs, and international competition, generally, perhaps 3 percent to 5 percent. Domestic competition, business failures, technological change, local or national recessions, and other factors would thus account for 95 percent to 98 percent of layoffs.

A final point: Although trade-related layoffs may be rarer than many assume, reporting by the General Accounting Office in the late 1990s does seem to show that trade-related job loss may be more traumatic than typical layoffs. Workers losing jobs due to trade competition seem to be on average older, less educated, and more likely to live in rural areas or small towns than other laid-off workers. Thus they may be a rough proxy for the "most vulnerable" workers and in need of some special support.

Further Reading:

Bureau of Labor Statistics data -- For total job losses and gains see the "Business Employment Dynamics" and "Job Opening and Labor Turnover" surveys in the top right under Employment and Unemployment. For detailed looks at job totals and net job gains and losses in particular industries, see the "Employment, Hours and Earnings" survey under Industries:
http://stats.bls.gov/

The Trade Adjustment Assistance Coalition:
http://www.taacoalition.com/

The Democratic Leadership Council calls for wider eligibility for Trade Adjustment Assistance, 2002:
http://www.ndol.org/ndol_ci.cfm?contentid=250382
&kaid=131&subid=207

The GAO finds problems with administration implementation of TAA reforms program designed by Senators Tom Daschle, Max Baucus, and Jeff Bingaman in 2002:
http://www.taacoalition.com/gao/gao-04-1012.pdf

Gary Hufbauer, Paul Grieco, and Scott Bradford of the Institute for International Economics examine the benefits and costs of further trade liberalization. Job dislocation findings are on page 44 of Appendix 2B:
http://www.iie.com/publications/chapters_preview/
388%20FEP/2iie3802.pdf

And lastly, some good news for American workers. The Department of Labor tells us that workplace deaths are down from almost 7,000 in the early 1990s to about 5,500 per year today. Top causes of work-related death in the United States are traffic accidents, murders, falls, and electrocutions; the most dangerous jobs are in logging, fisheries, airplane piloting, and delivery driving. The Department presents a morbid series of pie charts, tables, and graphs explaining death on the job, including a pink-and-blue sheet on death rates among male and female workers:
http://stats.bls.gov/iif/oshwc/cfoi/cfch0002.pdf





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