Tuesday, January 8, 2013

Report: Blame China for the jobless US recovery

Let's face it, things haven't gotten a whole lot better since the Great Recession ended in mid-2009. For most working Americans, the Great Recession never did end.

Blame China.

U.S. manufacturing employment is nearly a third lower than it would have been had we not granted Permanent Normal Trade Relations with China, according to a new study.

Two economists, Justin R. Pierce and Peter K. Schott, just published a paper called "The Surprisingly Swift Decline of U.S. Manufacturing Employment." The Washington Post summarized it as follows:
...employment in the manufacturing sector in the United States was 29.6 percent lower than it otherwise would have been absent PNTR. That means that employment in that sector would have grown — by close to 10 percent, Pierce and Schott estimate — as opposed to shrinking considerably, as it actually did. It presumably would have grown even more in the absent of other, non-PNTR liberalizations, such as China’s admission to the World Trade Organization. The effect was four times as strong for production-line workers as for non-production workers, which is in line with the usual finding that the losers from trade tend to be low-skilled workers in rich countries.
That agrees with what our friends at the Economic Policy Institute, who conclude the U.S. lost 2.8 million jobs to China since 2001.

The Wall Street Journal reports that most of the damage was inflicted shortly after PNTR with China became law in October, 2000.
Take the case of the U.S. recession of 2001, which followed the bursting of the tech bubble and was mild by most measures. It lasted  eight months. 
GDP declined just a bit. Unemployment topped out at 5.5% during the downturn. But it also ushered in a huge decline in manufacturing employment. About 1.5 million manufacturing jobs were lost in the first year of that downturn –and continued to fall for years afterward– far more than the 900,000 manufacturing jobs lost in the first year of the so-called Great Recession of December 2007 through mid-2009.
TradeReform points out that far more people are suffering from the jobs crisis than the numbers might indicate:
In the weakest recovery since the Great Depression, most of the reduction in unemployment from its 10.0 percent peak in October 2009 has been accomplished through a significant drop in the percentage of adults working or looking for work. Were adult labor-force participation the same today, the unemployment rate would be 9.7 percent. 
Adding in part time workers who would prefer full employment but can’t find it, the unemployment rate becomes 14.4 percent. It rose above 14 percent in the wake of the financial crisis and remains stuck there.
Buy American.