Report | Trade and Globalization

NAFTA’s Impact on the States

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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.

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.

Return to the EPI Briefing Paper NAFTA at Seven.


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