Ending Currency Manipulation Would Substantially Erase State Jobs Deficits

Last week my colleague, Rob Scott, published a report highlighting the impact of ongoing currency manipulation on employment in the United States.  In the report, Scott explained that currency manipulation by U.S. trading partners—including China, Denmark, Hong Kong, South Korea, Malaysia, Singapore, Switzerland and Taiwan—distorts trade flows in two ways.  It raises the cost of U.S. exports, and lowers the cost of U.S. imports.

Currency manipulation has cost the U.S. economy millions of jobs, including a disproportionately large share of manufacturing jobs. The impact of these job losses is clearly evident in the Midwest, which suffered significant manufacturing job losses. Further, the displacement of  manufacturing jobs not only meant fewer job opportunities, but also the elimination of unionized jobs that pay family-supporting wages.  Ending currency manipulation would likely lead to significant growth in the American manufacturing sector, a necessary step to begin rebuilding a strong middle class.

Figure A
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Impact on states’ “jobs deficits” of eliminating currency manipulation: Percent of December 2013 state jobs deficits eliminated by elimination of currency manipulation

State Jobs deficit eliminated
District of Columbia 13.6%
Nevada 15.5%
Hawaii 23.6%
Florida 26.1%
Wyoming 29.1%
New Mexico 30.9%
Delaware 34.3%
Arizona 35.0%
Alabama 36.1%
North Carolina 36.2%
California 39.5%
Virginia 39.7%
South Carolina 42.1%
New Jersey 43.2%
Georgia 46.0%
Oregon 46.8%
Idaho 46.9%
Maryland 49.4%
Connecticut 51.0%
Colorado 51.0%
Washington 51.5%
Tennessee 55.0%
Utah 59.4%
Mississippi 59.4%
Maine 67.9%
Missouri 68.8%
Alaska 73.6%
Louisiana 74.1%
Montana 74.7%
Arkansas 75.6%
Texas 76.5%
Rhode Island 77.8%
Oklahoma 77.8%
Ohio 81.8%
Illinois 82.7%
Nebraska 85.5%
Kansas 88.8%
Pennsylvania 92.4%
Kentucky 92.5%
Indiana 103.8%
Wisconsin 112.0%
Michigan 112.2%
New Hampshire 117.2%
Minnesota 117.8%
Iowa 126.0%
Massachusetts 132.8%
South Dakota 173.4%
New York 245.4%
Vermont 264.8%
West Virginia 319.0%

Notes: As the only state to have already eliminated its jobs deficit, data for North Dakota (which would gain up to 17,000 jobs by ending currency manipulation) are excluded from the graph. Calculations are based on the “high impact” employment estimates.

Source: Rob Scott, 2014 Stop Currency Manipulation and Create Millions of Jobs, Economic Policy Institute Briefing Paper 372, Table 4

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As seen in the figure above, the jobs created by ending currency manipulation would more than erase the jobs deficit in 11 states, including several Midwest and Northeast states.  These states include Indiana, Wisconsin, Michigan, New Hampshire, Minnesota, Iowa, Massachusetts, South Dakota, New York, Vermont and West Virginia.  In another 21 states, ending currency manipulation would create enough jobs to eliminate more than half of the jobs deficit remaining as of December 2013. With more than 8 million jobs needed nationwide to return to pre-recession employment rates, moving to end currency manipulation provides a means to take a very big step towards solving the ongoing employment crisis, nationwide, and in virtually every state.