NAFTA’s Impact on U.S. Workers

The North American Free Trade Agreement (NATFA) was the door through which American workers were shoved into the neoliberal global labor market.

By establishing the principle that U.S. corporations could relocate production elsewhere and sell back into the United States, NAFTA undercut the bargaining power of American workers, which had driven the expansion of the middle class since the end of World War II. The result has been 20 years of stagnant wages and the upward redistribution of income, wealth and political power.

NAFTA affected U.S. workers in four principal ways. First, it caused the loss of some 700,000 jobs as production moved to Mexico. Most of these losses came in California, Texas, Michigan, and other states where manufacturing is concentrated. To be sure, there were some job gains along the border in service and retail sectors resulting from increased trucking activity, but these gains are small in relation to the loses, and are in lower paying occupations. The vast majority of workers who lost jobs from NAFTA suffered a permanent loss of income.

Second, NAFTA strengthened the ability of U.S. employers to force workers to accept lower wages and benefits. As soon as NAFTA became law, corporate managers began telling their workers that their companies intended to move to Mexico unless the workers lowered the cost of their labor. In the midst of collective bargaining negotiations with unions, some companies would even start loading machinery into trucks that they said were bound for Mexico. The same threats were used to fight union organizing efforts. The message was: “If you vote in a union, we will move south of the border.” With NAFTA, corporations also could more easily blackmail local governments into giving them tax reductions and other subsidies.

Third, the destructive effect of NAFTA on the Mexican agricultural and small business sectors dislocated several million Mexican workers and their families, and was a major cause in the dramatic increase in undocumented workers flowing into the U.S. labor market. This put further downward pressure on U.S. wages, especially in the already lower paying market for less skilled labor.

Fourth, and ultimately most important, NAFTA was the template for rules of the emerging global economy, in which the benefits would flow to capital and the costs to labor. The U.S. governing class—in alliance with the financial elites of its trading partners—applied NAFTA’s principles to the World Trade Organization, to the policies of the World Bank and IMF, and to the deal under which employers of China’s huge supply of low-wage workers were allowed access to U.S. markets in exchange for allowing American multinational corporations the right to invest there.

The NAFTA doctrine of socialism for capital and free markets for labor also drove U.S. policy in the Mexican peso crisis of 1994-95, the Asia financial crash of 1997 and the global financial meltdown of 2008. In each case, the U.S. government organized the rescue of the world’s bank and corporate investors, and let the workers fend for themselves.

In terms of U.S. politics, the passage of NAFTA signaled that the Democratic Party—the “progressive” side of the U.S. two-party system—had accepted the reactionary economic ideology of Ronald Reagan

A “North American Accord” was first proposed by the Republican Reagan in 1979, a year before he was elected president. A decade later, his Republican successor, George H.W. Bush negotiated the final agreement with Mexico and Canada.

But the Democrats who controlled the Congress would not approve the agreement. And when Democrat Bill Clinton was elected in 1992, it was widely assumed that the political pendulum would swing back from the right, and that therefore NAFTA would never pass. But Clinton surrounded himself with economic advisers from Wall Street, and in his first year pushed the approval of NAFTA through the Congress.

Despite the rhetoric, the central goal of NAFTA was not “expanding trade.” After all, the U.S., Mexico, and Canada had been trading goods and services with each other for three centuries. NAFTA’s central purpose was to free American corporations from U.S. laws protecting workers and the environment. Moreover, it paved the way for the rest of the neoliberal agenda in the US—the privatization of public services, the regulation of finance, and the destruction of the independent trade union movement.

The inevitable result was to undercut workers’ living standards all across North America. Wages and benefits have fallen behind worker productivity in all three countries. Moreover, despite declining wages in the United States, the gap between the typical American and typical Mexican worker in manufacturing remains the same. Even after adjusting for differences in living costs, Mexican workers continue to make about 30% of the wages of workers in the United States. Thus, NAFTA is both symbol and substance of the global “race to the bottom.”

Here in North America there are two alternative political strategies for change. One is repeal. NAFTA gives each nation the right to opt out of the agreement. The problem is that by now the three countries’ economies and populations have become so integrated that dis-integration could cause widespread dislocation, unemployment, and a substantial drop in living standards.

The other option is to build a cross border political movement to rewrite NAFTA in a way that gives ordinary citizens rights and labor protections at least equal to the current privileges of corporate investors. This would obviously not be easy. But a foundation has already been laid by growing collaboration among immigrant, trade unionist, human rights and other activist organizations in all three counties. If such a movement could succeed in drawing up a new continent-wide social contract, North American economic integration, instead of being a blueprint for worker exploitation might just become a model for bringing social justice to the global economy.


  • Ken Bowser

    Interesting reading. No wonder I was against NAFTA.

    • tuffydog

      Any American worker with a brain should have been against NAFTA. We have Bill Clinton to thank for it.

      • Technically, Reagan and Bush started the whole deal. Clinton is the one who threw in the North American Agreement on Labor Cooperation, and the North American Agreement on Environmental Cooperation. Supposedly those were to protect the workers and the environment. But it provided no protection for American jobs whatsoever and did nothing to improve American environmental practices… which those agreements were never designed to do anyway. In other words, Clinton was just trying to make it look better to the Senate. And no, I’m not a lefty and I’m not trying to bash the Republicans here. This is just my understanding of what happened… feel free to correct me if I’m wrong.

        • Josh Yaksich

          Did slick willy sign it or not? Believe me, i know bush wanted it, but In the end it was Clinton that sealed the deal.

          • Mattroski

            Does that somehow make you feel better…

          • leftofabbie

            Bill Clinton did indeed sign the NAFTA Agreement, but it had already passed both the House and the Senate with a veto-proof majority. The lobbyists already had convinced our representatives how wonderful the deal would be for everyone (their employers). Clinton, of course, couldn’t turn down an opportunity to show everyone what a pro-business kinda guy he was, so he signed the deal with great fanfare. I watched the vote on C-SPAN and I was screaming at the TV, since I had just written a 26-page term paper on all the reasons the US should not pass NAFTA.

          • Ray Rainer

            He sealed the deal because he approved of NAFTA and convinced other Democrats to vote for it. It is that simple. It was a bipartisan deal. HW Bush had earlier ratified it and Clinton signed it. So you can again thank our politicians. The mistake is believing that Clinton was really that left. He was a right centrist. He was liberal about some issues but none that really matter, at least to me. Bernie Sanders voted against it.

      • Will Johnston

        I do not understand the all of it, but I am beginning to understand that the average worker who thinks that the solution is with either Republican or Democratic party is simply a willing pawn. The controllers of commerce with all of the capital who support these trade agreements appear to be the enemy to ALL workers of any country. You won’t find the answer at Fox or CNN, only division.

      • Sans Bushmen

        After years of negotiations, NAFTA draft was signed on Oct 1992 by Bush I. The House passed the bill with the supports of 132 Republicans and 102 Democrats, the Senate with 34 Republicans and 27 Democrats.

        It was officially enacted on Jan 1 1994.

        Why do you pin NAFTA on Bill Clinton alone?

        • Ray Rainer

          It just occurred to me that Bill Clinton is really a NeoLiberal because he believed in NAFTA. NAFTA is considered a NeoLiberal idea if you look up NeoLiberalism in wikipedia.

  • Gregory McCleaf

    I think we live in so type of Feudal economic system with Corporations and the people who control them as the Feudal overlords..

  • NAFTA could have been written to raise the working conditions and wages of Mexican workers. TPP could also do that, if corporate lobbyists were replaced with representatives of US workers..

  • pbr90

    With NAFTA under Bush I, and CAFTA under Bush II, with friends like these…800,000 jobs lost, and a million illegals…..why is Jeb even running?

    • JusticeVegas

      Good comment! But I think we’ve lost more jobs and have a heck of a lot more illegals.

    • master94

      And now with Obama’s TPP we will lose another 3 million. Seriously, is anyone in Washington not a corporate tool? Republican or Democrat, we the people are doomed.

      • Mattroski

        The illusion of choice….. historically, the only thing that changes a bill such as this, (with massive amounts of capital being shifted from poor to the exceptionally rich), is war. And as we all know, Americans cannot stomach violence, so they will have to stomach watching their children’s future evaporate, they will have to stomach poverty, and indignation, and misery. I can only think, that people must deserve this, for being so callously stupid with their freedom, for giving away their children’s future for “pretty” words, and reassurances of safety. For not every investigating the truth, or even caring. People who cannot empathize with their neighbors do not deserve freedom, and will not bear its price. Sadly, there are good people who have been dragged down this path by the weak. I believe it was a fundamentally stupid decision to give everyone the right to vote, because those who have nothing, have nothing to lose, and quickly learn to vote out or greed, to enrich themselves.

        If the minority of Americans with virtue, and principles, do not resist, then all is lost, and perhaps it is better that way.

      • Dan E Parker

        Go Trump!!

    • Tony Lock

      Telling that most Dems voted against NAFTA, while most Rubs voted for it. Whenever a Dem prez sides with the Rubs, we need to be very suspicious of motives.

      • leemat

        Well, Bush got full blame for the 2008 meltdown even though the Dems controlled the house and the senate for the previous 2 years. Oh, another thing under Clinton’s watch, he repealed the Glass Steagall act which we now know if not repealed, the meltdown would have never happened.

    • Dan E Parker

      It was bill clinton who passed Nafta through. Not bush. So now what sunshine?? 800,000 jobs lost by a democrat

  • Will Johnston

    What group(s), if any, are working on the options, either repeal or cross border political movement?

    • William Jones

      Trump.

      • James Hickman

        You mean the Trump whose clothing line and other products are made in Mexico,China and Bangaladesh?

        The same Trump whose tax plan gives himself and other 1% massive tax cuts while telling you he is going to waste billions in a futile attempt to Remove (Deport) 11 to 12 million people.

        The Trump who is literally ignorant about immigration, who does not understand that undocumented immigrants have constitutional rights? Who does not understand that the average cost to Remove Undocumented immigrants who contest the removal averages $12,500. You do the math.

        The same Trump who is going to waste billions building a concrete wall on our Southern Border at a time when most undocumented immigrants are coming from Asia. And no Mexico will not pay for the wall.

        In fact without Mexico’s cooperation we can’t remove 10 people, so millions are out of the question.

        This is the same Trump who said our minimum wage is too high. He also claimed he is going to save $300 bil by Medicare negotiating for drugs when the actual spending on prescription drugs is $78 billion total.

        How many lies and ignorant statements does the man have to make before you believe he would be a disaster as President.

        • William Jones

          Mexico will pay through confiscated money, drugs before wall will make it money after wont but the money was to go to Mexico so they dont get it. also the wholesale export of US funds (not taxed or accounted for sent back by illegal workers) will stop. IE Wall payed for by Mexico. You should go to outskirts of any city with illegals. go to a BOA (largest exporter of money to Mexico) just wait in line and listen. Count how many and how much you hear. Do it often then wonder….If I see same guy sending back 10-15 thousand a week, yeah maybe for multiple peeps, I see one individual always at bank same time as me, I know what he does for a living and why, because we talked he told me he had enough to live like a king I havent seen or heard from him in over 5 years, last I heard from others( his workers (also illegal)) He did just that………………………………….

        • Stanley Harrison

          # 1 do we have a country or not, Mexico can pay a tariff to import to pay for the wall
          #2 do we have laws or not: end sanctuary cities, when we find undocumented people we follow the law on the book and send them back and or pay a fine if you broke the law, you can not let people brake t he law
          #3 the country not just Mccare pay more for drugs than other countries
          #4 until we send a message to Washington that we no longer will allo billionaires buy elections we continue to get what we got: 90 million Out of work, 20 trillion in debt, useless wars

          Name 1 candidate who is not bought except Trump

          Democrat for Trump

          • Humanity1st

            We already have a wall, in fact the last 5 years has been a net “loss” of immigrants. Many have left, and many more don’t want to come here anymore. Bush left boarders open, and Obama Fixed it already. Immigrants who came last year were “refugees” and so were most others. That status was due to our undermining governments that were democratically elected, and profuse support of drug-lords and dictators whenever they showed progress, or denied trade with our “corporations” (Fascists) who as predicted destroyed any surplus, started all these wars, and are polluting us into extinciton.

          • brian mccabe

            Bingo!

        • Dan E Parker

          Funny thing is that bill clinton deported over 9 million ILLEGALS and nobody on the left ever mentions that. Get educated on what your talking about before you look like a moron again

          • Ray Rainer

            I would like to know who wants undocumented illegal transient people walking around? It certainly isn’t the majority of people. Perhaps there is a loony fringe that wants that. Of course, many businesses want nothing better than cheap labor. The Unions don’t want them. So why are they here? You answer that. James Hickman is not so far off. It is easy to talk, especially when you are part of the problem. The damage is so severe that nothing so easily can be done. Certainly not overnight. I say to start with severely punishing businesses who hire them then they would have no where to do. There is no welfare unless you are a citizen. Perhaps they will ask to go back and we will gladly send them back.

        • leemat

          The reason Trump’s clothing line is made out of the country is because you can’t compete with other lines if made here. Or corporate tax rate is 35%, Canada’s is 15%, Ireland’s is 12.5%. Trump wants to change things so it is feasible to have products that are “made in America”.

          Anyone who actually believes that Trump is going to deport 11 million ILLEGALS,( not undocumented ) is really not very bright. It is part of a negotiation tactic. Trump knows what he is doing and will certainly be a great negotiator for the USA, not like Obama and his Iran deal or his deal with Bergdahl. BTW, any perceived rights illegals have can certainly be changed.

          Nothing will change with Hillary. She thinks Obama has done a great job, that is laughable!! She should be in jail for all her crimes and corruption, not running for president.

  • Ernie Cohen

    In a poll of the IGM formum (a group of about 130 top economists from elite institutions, with diverse political and social ideologies), about 95% agreed or strongly agreed that, on average, Americans have benefited from NAFTA. Wouldn’t it make more sense to use sensible redistribution to provide support or compensation for those disproportionately harmed, rather than throwing the baby out with the bathwater?

  • rssrai

    The truth is even without NAFTA corporations were already figuring out how to leave the US. NAFTA just fast tracked it. At least workers got something for losing their jobs under NAFTA. Otherwise workers would still lose their jobs and get nothing in return. Globalization was going to happen. The US would have had their finger in the dike trying to stop a fast moving train by not passing NAFTA or delaying it. Does anyone believe that not passing NAFTA would have stopped the outsourcing of jobs to other countries?

  • Marnita Coble

    I remember an economic professor saying that Nafta would be the down fall of the great United States. I didn’t pay attention to his remark. Now it has come to pass. The citizens of America are sleeping. The citizens need to wake up. I will not vote for Hillary Clinton. I am sure if she is successful and becomes the President or if Trump is successful we will have another Revolutionary war. This government is dishonest. The American citizens are sleeping.

    • icthelite

      Your vote for this liberal will aid in the continued downfall of this nation. She has threaten us with the promise to continue Obama’s move to dissolve this country’s sovereignty. His goal is to line the USA up to fall under the control of one world power.
      She has also recently back peddled on her decision to not use our tax dollars to provide medical care for illegal aliens.
      She’s not even close to the Oval Office yet and her plans have us headed to an accelerated rate of increasing the national debt Obama has nearly doubled in just over 7 years.

    • icthelite

      One more point….. We already had free trade agreements with Mexico and Canada. Slick Willie signed this deal to pay back his campaign financial backers.
      Its sole purpose was to do as this article stated… “NAFTA’s central purpose was to free American corporations from U.S. laws protecting workers and the environment.”

    • Gary Pakes

      Regarding NAFTA, it is scary that the author of this article appears unfamiliar with the history of this international agreement. NAFTA was created and negotiated over several years by Republican President George Bush Sr, working with Canadian Prime Minister Brian Mulroney and Mexican President Carlos Salinas, all of whom ceremonially signed the agreement in their respective capitals on December 17, 1992, with the largest number of Congressmen voting for NAFTA being Republicans — https://en.wikipedia.org/wiki/North_American_Free_Trade_Agreement So, now the Republicans are trying to pretend that they had nothing to do with NAFTA and its major repercussion of lost manufacturing jobs in the U.S. and consequent shift of laborers to lower-pay jobs. Face it–the Republicans are to blame and should take their medicine by being voted out. As for Hillary Clinton, who initially favored the TPP, she is an opponent now that the details of the agreement are known — http://www.cnn.com/2015/10/07/politics/hillary-clinton-opposes-tpp/index.html . As Hillary told CNN last year:
      “I have said from the very beginning that we had to have a trade
      agreement that would create good American jobs, raise wages and advance
      our national security and I still believe that is the high bar we have
      to meet…I don’t believe it [the TPP] is going to meet the high bar I have set (above CNN reference).

  • liberty

    Nafta did not outsource products to asia. This accounting seems totally false. How did the US loose a net 700,000 jobs when mexico and canada didn’t gain them? How did unemployment decrease in the US after nafta was passed. I pulled this up looking for real numbers, and got an opinionated piece of crap that is all exagerated. I don’t know if nafta was good or bad for the country, but free trade with canada and mexico is definitely good for the US. Some have been hurt, some helped. I’d like to know the problems with how nafta was drafted, not some idiot spouting bad numbers like they just came from a trump rally and think unemployment is 46%.

  • Joe Urban

    Excellent analysis. A point you did not raise was that the US government actually HELPED companies relocate to Mexico. A great segment was done on an old Michael Moore show in which the US government rep was telling Michael how to relocate his show to Mexico to take advantage of the cheap labor and lack of regulation. The US actually enabled corporations to leave.

  • The best way forward is to repeal NAFTA, mainly for stopping this North America Union coming in 2023, which will finish off the US Constitution with a new Continental Currency.. Enact the consumption tax to get rid of the embedded taxes in domestic product, about 22% of the price. Then negotiate with each Country individually. End this globalism that has goals way beyond economics.

    • illnino4545

      I agree.

  • illnino4545

    The new (not new to those who have paid attention) debate in America, which is highlighted by this presidential race, is not about conservatism and liberalism. Rather, the new debate is globalism vs. nationalism. North American Union vs. national sovereignty. America must choose sovereignty, it is to survive.