The huge U.S. trade deficit, especially in manufactured goods, led to the loss of all 5 million U.S. factory jobs that have disappeared since 2000, EPI stated. Analyst Robert Scott’s issue paper adds productivity gains in factories were responsible for virtually none of the losses, counter to many prevailing economists’ claims.
U.S. factories lost just over 5 million jobs since 2000, when factories employed upwards of 18 million people. They fell to 11.5 million during the Great Recession, and recovered 800,000 jobs since. But productivity rose at least 3.7 percent yearly through 2007, and 1.7 percent since then. The reason for so small a factory recovery is the trade deficit, Scott says.
The leading cause of growing U.S. trade deficits is currency manipulation, which distorts trade flows by artificially lowering the cost of imports and raising the cost of exports. More than 20 countries, led by China, have been spending about $1 trillion per year buying foreign assets to artificially suppress the value of their currencies. Ending currency manipulation can create between 2.3 million and 5.8 million jobs for working Americans, and about 40 percent of those jobs -- between 891,500 and 2.3 million -- would be in manufacturing.
As the analysis explains:
A rising trade deficit indicates that U.S. manufacturers are losing business to manufacturing industries in other countries like China and Japan, who manipulate their currency to make their goods cheaper and therefore more appealing to consumers in the United States and elsewhere. This leads to reduced demand for goods produced by U.S. manufacturers, both at home and abroad.Teamsters General President Jim Hoffa went further into the potential damages currency manipulation could wrought on American workers in a piece he authored this week. With the Trans-Pacific Partnership still looming, concerns about future job lost maybe even more important than those from the past.
- Press Associates, Inc. contributed to this report.