April 2001 | Online supplement to the
EPI Briefing Paper NAFTA at Seven
For a listing of job
losses by state and industry, download and view
the accompanying table
in Adobe
PDF or Excel formats.
NAFTA's impact on the
states
The industries and
states that suffered the
most in the agreement's first seven years
by Robert E. Scott
All 50 states and the District of Columbia
have experienced a net loss of jobs under NAFTA, with the U.S. losing
766,030 actual and potential jobs between 1993 and 2000 (see NAFTA's
Hidden Costs from the report NAFTA at Seven).
With exports from every state being offset by faster growth in imports,
net job loss figures range from a low of 395 jobs lost in Alaska to a
high of 82,354 in California. Other hard-hit states include Michigan,
New York, Texas, Ohio, Illinois, Pennsylvania, North Carolina, Indiana,
Florida, Tennessee, and Georgia, each with more than 20,000 jobs lost.
These states all have high concentrations of the kinds of industries (motor
vehicles, textiles and apparel, computers and electrical appliances) that
subsequently have expanded rapidly in the maquilidora zones in Mexico
since the implementation of NAFTA.
The U.S. manufacturing sector
lost 544,750 jobs (72% of all jobs lost) between 1993 and 2000,
due to growth in the net export deficit between the U.S. and
Canada (see the methodology section
and the accompanying table).
One of the hardest-hit sectors within manufacturing is electrical
electronic machinery (108,773 jobs lost), which includes home
audio and video equipment (28,995 jobs), communications equipment
such as telephones and cell phones (33,254 jobs), and appliances
such as refrigerators and washing machines (data not available
for this sub-sector). Other hard-hit industries in the U.S. included
motor vehicles and equipment (83,643 jobs lost), textiles and
apparel (83,258 jobs, combined), and lumber and wood products
(48,306 jobs). The service sector also lost 112,499 jobs as an
indirect result of the loss of markets to foreign producers of
traded goods. This includes legal, accounting, and data processing
services that are used as inputs to traded goods production,
and also temporary workers that are contracted out to the manufacturing
sector.
- Overall, the states with the most job
losses are: California (82,354 jobs lost), Michigan (46,817 jobs), New
York (46,210 jobs), Texas (41,067 jobs), and Ohio (37,694 jobs). Many
other states have lost tens of thousands of jobs, as shown in the attached
table.
- Within the states, job losses by industry
reflect the geographic distribution of major industries in the United
States. For example, employment in motor vehicles and equipment has
been particularly hard hit by NAFTA in Michigan (25,912 jobs lost),
Ohio (9,826), Indiana (7,119), Tennessee (3,658), Illinois (3,468),
and California (3,002).
- The electronic equipment sector has also
suffered, with large losses in California (14,332 jobs lost), Indiana
(9,721), Illinois (8,316), New York (6,288), Texas (6,170), and Pennsylvania
(5,042).
- The textiles and apparel industry is
concentrated in Los Angeles, New York City, and the South, with major
job losses in North Carolina (10,781 jobs lost), California (10,756),
New York (7,901), Alabama (5,126), Tennessee (4,982), Georgia (4,900),
Pennsylvania (4,869), and Texas (4,733).
- The lumber and wood products sectors
have lost jobs in the Northwest and Southern states (some of the latter
are hard hit by job losses in furniture production). Hard-hit states
in this industry include Oregon (3,427 jobs lost), California (3,337),
North Carolina (2,592), Texas (2,376), Washington (2,324), and Alabama
(1,991).
Overall, the eastern portion
of the U.S. has experienced heavy job loss (over 10,000 jobs
lost per state). A review of NAFTA at its seven-year mark shows
that the results are mixed and the agreement's benefits somewhat
dubious. A large and growing body of research has shown that
NAFTA has also contributed to rising income inequality, suppressed
real wages for production workers, weakened collective bargaining
powers and ability to organize unions, and reduced fringe benefits.
Trade was expected to increase the wages of the workers producing
exports, but growing trade deficits have meant that the number
of workers hurt by imports has exceeded the number who have benefited
through increased exports.
Methodology
Job losses in 2000 are estimates
of the difference between predicted trade-related employment (if the U.S.-NAFTA
deficit had remained constant between 1993 and 2000) and estimated employment
in 2000 based on actual flows. This estimate measures the number of additional
jobs and job opportunities that would have been available, above actual
employment in 2000 (see NAFTA at Seven for more details on the methodology).
Since U.S. unemployment was at low levels in 2000, a smaller deficit with
the NAFTA countries would probably shift of jobs from low-wage service
industries to traded-goods sectors (such as manufacturing), where wages
are higher. We use 1993 as the base year because NAFTA went into effect
on January 1, 1994. This analysis looks at net exports, which are equal
to domestic exports less imports from consumption. This measure is similar
but not identical to the trade deficit with these countries. Although
net exports include all domestically produced exports, this measure excludes
foreign exports such as goods imported from Canada and then re-exported
to Mexico. Foreign exports have increased more rapidly than total imports
since NAFTA went into effect. Foreign exports are included in total exports
and thus in the trade deficit. Consumption imports have a similar relationship
to total imports. Consequently, net exports are used in this analysis
to pinpoint the impact of trade on U.S. workers and goods production.
For a listing of job
losses by state and industry, download and view
the accompanying table
in Adobe
PDF or Excel formats.
Return to the EPI Briefing Paper NAFTA
at Seven.
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