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The New China Syndrome


Maybe you remember The China Syndrome. It was a 1979 thriller movie starring Jack Lemmon, Jane Fonda and others that told the fictitious tale of a nuclear power plant going haywire. The premise was that the out-of-control reactor could burn a hole through the center of the earth all the way to China. This movie, coupled with the real events at Three Mile Island and Chernobyl, changed attitudes dramatically about the use of nuclear power.

But now there’s a new China Syndrome and it’s real. It’s a hole to China but what’s falling through this time are American jobs.

According to a study released this week by the Economic Policy Institute, a non partisan think tank created in 1986 that focuses on low- and middle-income employment issues, the U.S.-China trade deficit has eliminated or displaced nearly 2.8 million U.S. jobs since 2001.

 According to the report, which was written by Robert Scott, EPI’s Director of Trade and Manufacturing Policy Research, all 50 states, the District of Columbia and Puerto Rico suffered jobs lost or displaced as a result of the growing U.S.-China trade deficit.

The trade deficit with China grew from $84 billion in 2001, when China entered the WTO, to $278 billion in 2010. It eliminated or displaced 2,790,100 jobs, or about two percent of total U.S. employment, over that period. The biggest net losses, in terms of the total number of jobs displaced, occurred in California, Texas, New York, Illinois, Florida, North Carolina, Pennsylvania, Ohio, Massachusetts and Georgia. In ten states, the jobs lost or displaced exceeded 2.2 percent of total employment. These states are New Hampshire, California, Massachusetts, Oregon, North Carolina, Minnesota, Idaho, Vermont, Colorado and Rhode Island. Here in Pennsylvania, our trade deficit with China cost 106,900 jobs.

Of the nearly 2.8 million jobs lost or displaced, 1.9 million of them were in manufacturing. These jobs represent nearly half of all U.S. manufacturing jobs lost between 2001 and 2010. The largest share of manufacturing jobs lost or displaced were in computer and electronic parts, at 909,400 jobs, or 32 percent of all jobs lost or displaced. Other hard-hit sectors of the manufacturing industry were apparel and accessories, textile fabrics and products, fabricated metal products, plastic and rubber products and motor vehicles and parts. Service industries, including administrative, support and waste management services experienced significant job displacement.

Increases in U.S. exports tend to create jobs in the United States, and increases in imports tend to lead to job loss, which means that a growing trade deficit signifies growing job loss. The trade deficit with China is exacerbated by the currency manipulation. Because China has pegged its currency to the U.S. dollar instead of allowing it to fluctuate freely, the yuan has remained artificially low, effectively subsidizing Chinese exports and artificially raising the cost of U.S. exports. U.S. goods are less competitive in China and in countries where U.S. exports compete with those from China.

The impact of the trade deficit with China extends beyond U.S. jobs lost or displaced. Competition with China and countries like it has resulted in lower wages and less bargaining power for U.S. workers in manufacturing and for all workers with less than a four-year college degree.

So next time you think you got yourself a great deal by buying a cheap product imported from China, think again. The money you’re saving is costing someone their job and it could end up being your job.


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