EPI News

All 50 states have lost jobs to China

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This week, EPI applauds the historic new health reform law, which will provide health insurance coverage to more than 30 million Americans who would have otherwise been uninsured.  EPI has long highlighted the decline of employer-sponsored health insurance, the skyrocketing costs of health insurance, and the need for a better system, and congratulates President Obama and Congress for this major achievement. The new law will lead to greater economic security for families and for the entire country.

As concern over the U.S.-China trade imbalance grows, a new paper by EPI’s Senior International Economist Robert Scott finds that 2.4 million American jobs have been lost to China between 2001 and 2008, and that every state along with the District of Columbia and Puerto Rico has felt the impact.

Scott’s paper, Unfair China Trade Costs Local Jobs, provides the first detailed analysis of the jobs that have been lost since China joined the World Trade Organization in 2001. It finds that, in addition to impacting every U.S. state, the job loss has touched every Congressional district in the country.

New Hampshire, California, Texas all suffer big losses
Scott’s paper features a color-coded U.S. map illustrating where job loss has been the most severe, as well as several detailed charts that measure job loss by industry and by state. New Hampshire, which lost 16,300 jobs during the seven-year period covered by the study, suffered the largest job loss as a share of total employment. In terms of total jobs displaced, California was first, with 370,000 jobs lost, followed by Texas, New York, Illinois, and Florida, which all lost more than 100,000 jobs.

Map of U.S. job loss

In addition to the loss of jobs, the paper finds that U.S. workers who have kept their jobs have suffered depressed wages as a result of competition with lower-wage workers overseas. “The impact,” the paper says, “has affected essentially all production workers with less than a four-year college degree – roughly 70% of the private-sector workforce, or about 100 million workers.”

The paper received widespread media coverage throughout the United States, from the Sacramento Bee, to the Boston Herald, and The Toledo Blade. A Wall Street Journal story on the paper quoted Senator Charles Schumer (D., N.Y.) saying, “We’ve known for years that U.S. manufacturing’s paying a heavy price for China’s activities, but these figures exceeded even our worst expectations.”

Scott’s paper comes at a time of growing concern over Chinese currency manipulation, which has kept the cost of Chinese exports artificially low, making it increasingly difficult for U.S. manufacturers to compete. Unlike most other major currencies, the Chinese yuan does not fluctuate freely against the dollar. While the value of its currency should have increased as China exported more goods, it has instead stayed low, and China has aggressively acquired dollars to further depress the yuan’s value.

Earlier this month, EPI hosted a panel on Currency Manipulation, where speakers including Nobel Prize-winning economist Paul Krugman, stressed that a change of policy was needed to address an extremely depressed Chinese yuan, which was fueling massive trade deficits in the United States and Europe and threatening hopes of an economic recovery.

Easing the financial burden of the unpaid internship
On March 24, EPI and Demos co-hosted the panel Unpaid and Unfair to discuss the increased pressure college students face to gain work experience through an internship, and the financial burden these often unpaid internships place on lower-income families. EPI researchers Kathryn Edwards and Alexander Hertel-Fernandez, both recent college graduates, described how students without internships on their resumes were at a significant disadvantage in the job market, even though many students already struggling to pay for college could not afford to work without pay.

Edwards and Hertel-Fernandez, together with Nancy Cauthen, director of the Economic Opportunity Program at Demos, presented a proposal to expand low-income students’ access to unpaid internships through federal financial aid. Their proposal, Paving the Way Through Paid Internships, outlines a plan to identify eligible students who would receive grants of $3,500 for three-month internships and $7,000 for six-month internships at non-profit and government organizations. Also participating on the panel was Shirley Sagawa, a national expert on children and youth policy who is currently a visiting fellow at the Center for American Progress. Sagawa described how a single internship during college had led to every other job she had held since then. “Social capital connections are absolutely fundamental,” she said.

New education policy needs work
EPI Research Associate Richard Rothstein, who has written extensively about the failings of the No Child Left Behind (NCLB) law and the best ways to revise that policy, recently published a critique of the Obama administration’s “Blueprint” for a new elementary and secondary education law that would continue NCLB’s excessive focus on reading and math tests, and expect all children to be “college ready” by 2020.

Rothstein argues that the proposed policy goes too far in demanding universal success and will continue to distort the curriculum of schools with large numbers of poorly performing students. He also warns that just as schools made the definition of proficiency “sufficiently minimal” in an effort to meet the standards of No Child Left Behind, they might respond to new requirements that students be college-ready in a similar manner, by “defining college readiness down.”

Rothstein’s criticism of the proposed new education policy, along with similar criticisms by prominent education scholars Diane Ravitch and David Berliner, was discussed at length in an eSchool News article (including video interviews) that describes these critics’ claim that the new policy proposals “follow the same punitive cycle of high-stakes testing and accountability ushered in under the presidency of George W. Bush.”

EPI in the News
CNNMoney quoted EPI Economist Heidi Shierholz in a story about the declining number of workers who are choosing to leave their jobs, even though switching jobs is a key way that workers boost their income. “When you have low unemployment, people are much more free to leave their jobs and search for jobs with higher wages, and employers will have to pay a premium to find or retain the best workers,” Shierholz said. A column in The Bangor Daily News cited data on income inequality that EPI President Lawrence Mishel presented earlier this year at a tax and budget conference in Maine. The column notes that “under the prevailing economic policies of the last 30 years, incomes barely grew, despite continued, vigorous productivity increases.”