More Than Half a Million Jobs Are at Risk Due to Unfair Trade in the U.S. Steel Industry

Earlier this week, I estimated that up to half million (583,600) U.S. jobs are at risk due to surging imports of unfairly traded steel. A recent post by blogger Tim Worstall suggests that the number can’t possibly be that large because the steel industry employs only 150,000 people. But this misses the point—the risk to the steel industry goes far beyond the steel companies themselves, and the workers they employ. It also includes workers in iron ore and coal mines, in other manufacturing industries that support steel production, as well as lawyers, accountants, managers and other workers who supply services to the steel industry. All these jobs, 583,600 in total, are threatened by the flood of steel imports.

Half of the 46 top steel companies in the world were government-owned, and they accounted for 38 percent of global production. Illegally dumped and subsidized steel products are stealing market share and jobs from domestic producers. Worstall claims that we should ignore unfair import competition because, “if we get cheaper steel then this makes us all richer.” He concludes that “the market price is the fair price” for imports.

Responding to a similar question from a reporter this week, Ohio Senator Sherrod Brown said that this is “like arguing it’s OK to buy stolen TVs because they are cheaper.” Even a market economy needs rules to prevent cheating and unfair trade.

Worstall claims that we performed “some very heroic calculations” in estimating the jobs at risk due to unfair imports. He goes on to claim that “what is being done here is to assume that… steel workers buy restaurant meals so waiters are employed…and so on.” But this is exactly what we did not do.

Our model used standard data from the Bureau of Labor Statistics to estimate the direct and indirect jobs supported by U.S. steel production. Indirect jobs include those in production of “input commodities such as minerals and ore, coke, and other fuels, as well as downstream services and other resources consumed in the production of and distribution of steel products.” Furthermore, we very clearly stated that our estimate did “not include respending jobs supported by the wages of workers in the steel industry.”

The direct and indirect jobs at risk were fully disclosed in several tables. They are summarized in the table below, which is drawn from Table 6 of my study. We estimated that in 2012, U.S. steel production supported 123,400 direct jobs in the steel industries, and 460,200 indirect jobs in supplier industries.

Table 1

U.S. jobs supported by U.S. steel production, 2012

Jobs affected* Jobs supported by domestic production
Direct 123,400
Indirect 460,200
Total 583,600

*Jobs can be affected directly (in the immediate industry) and indirectly (industries that supply goods and services to industry of interest).

Sources: Economic Policy Institute analysis of U.S. Census Bureau (2013), Bureau of Labor Statistics (BLS 2013), and BLS Employment Projections program (BLS-EP 2014b and 2014c)

Copy the code below to embed this chart on your website.

Apparently, Worstall assumed that his readers would not bother to read our report. His blog post did not even bother to include a link to my report, nor to the EPI website, where I work. In fact, at one point he claims that our report was published by the “Employment Policy Institute,” a front group for a corporate PR firm that, ironically, works to discredit our research.

Jobs supported by steel production, both directly and in the industries supported by steel in other mining, manufacturing, law, accounting, management and other service industries are highly paid with good wages. Six years after the start of the Great Recession, in an economy that still needs 7.1 million jobs to eliminate excess unemployment, we cannot afford to stand idly by and let unfair import competition put the U.S. steel industry, and the half-million good jobs it supports, at risk.

  • timworstall

    I did link to the page at EPI discussing your report. That rather embarrasing bit calling you the Employment, not Economic, I will cop to. And the link to them, that was automatically inserted by Zemanta, the software used over at Forbes. I shall remove that.

    Still don’t believe you on the jobs numbers though. For the reason I give: total employment depends upon aggregate demand, not trade. Further, the specific pipe steel imports being so vociferously complained about have gone from 0.85% to 1.8% of the US market. Even if we were to believe all of your “heroic” calculations that’s not going to cost half a million jobs.

    • Rob Scott

      Our report is about the threat posed by surging imports of all steel products to the 583,600 workers whose jobs are supported by U.S. steel production. The complaint about dumped and subsidized imports of oil country pipes and tubes is just the canary in the mine-shaft, illustrative of much larger threats facing the industry as a whole. U.S. steel producers and the United Steelworkers Union have filed petitions for import relief involving 9 products from 18 countries in 2013 and the first quarter of 2014, and covering 40 individual antidumping and countervailing duty complaints. These petitions cover plants located in 92 communities and 29 states, and directly employing 14,000 workers.

      The present situation is similar to the early stages of the 1999-2003 import crisis, when 33 major steel companies were pushed into bankruptcy. 55,000 steelworker jobs were lost in that crisis and never recovered. Our study has shown that 3.7 additional indirect jobs were lost for every direct job lost in
      supporting industries such as mining, other manufacturing and business service industries. That means that more than
      one-quarter million (258,500) jobs were lost in total as a result of the 1999-2003 crisis. Our research has shown that even more high-wage jobs with excellent benefits are at risk in the present

      Even the most effective aggregate demand management policies cannot compensate communities or workers for the adjustment costs, wage and permanent income losses that will result if we fail
      to respond to the challenges posed by unfair trade. While full employment in some jobs, somewhere in America could, in theory, be achieved with better demand management, the Republican party has done everything in its power to prevent that from happening for the past six-plus years. Meanwhile, unfair steel trade threatens to increase the number of unemployed workers by
      more than one-half million. You may view that outcome as acceptable collateral damage so that America’s oil companies
      can save a few pennies on their pipelines by abetting unfair trade. I do not.

      • msbhavn

        Thank you.

  • David Henderson

    Why do we persist proceeding as tea-baggers? “Our way or the highway!”
    The inane gridlock imposed on our government by corporatized politicians requires activists to revisit strategies. Neither local entreprenures, nor big business are going to move against their own self-interests (anything regarding the successfulness of their enterprises). So, if we have any hope of changing their mindset about wages, we must apply the principles in the steel imports conundrum and speak to the entire business community as to their self-interests. For example, why insist on a general increase in the minimum wage, which imposes extreme difficulties on local entreprenures, rather than the more reasonable (and more helpful to employees) living wage? If a business exists in a tough local economy, they may truly be unable to meet their payroll in a minimum wage regimen. If folks looking for fairness cannot accept that fact, the progress we look for will neve be achieved…unless, of course, a lt more progressives become “job creators!” Ever hear the old maxim, “Walk a mile in my shoes.”?

  • benleet

    From BLS Monthly Labor Review, March 2011, “Despite large increases in recent years, hourly compensation costs in China’s manufacturing sector remained only 4 percent of those in the United States in 2008; that year, hourly compensation costs rose to $1.36, as China’s manufacturing employment continued to increase despite the beginning of the global economic downturn.” Wages of $.136 per hour times 1900 hours, a yearly estimate, $2,584 annual income.