A Study of Job Losses and Trade

This article is about the relationship between job losses and trade. It seems as though the well-organized labor unions with their political clout have influenced many people of the need for protectionist trade policies. With an understanding of the way the market functions in a dynamic economy, and a little research, it is not difficult to come to a completely different conclusion.

There has been extensive research on the subject of protectionism which found that restricting trade to protect a weakening industry does not create jobs, or save jobs in the long-run. According to a study on trade issues, by economist Brink Lindsey of the Cato Institute’s Center for Trade Policy Studies, between 2000 and 2003, manufacturing employment dropped by nearly 2.8 million, yet imports of manufactured goods rose only 0.6 percent. Of course there were some job losses that occurred from the 0.6 percent increase of imports during that period of time; however, the majority of job losses were the result of a recession beginning in 2000, as well as the September 11, terrorist attacks.

On page two of the publication mentioned above, there is a graph illustrating the unemployment rate remaining consistent with the size of the labor force. This is very significant because in the past fifty years the increase in the supply of labor has increased because of factors such as “the baby boom, the surge in work force participation by women, and rising rates of immigration after decades of restrictionist policies” (Lindsey).

Despite what the special interest lobbyists would like for you to believe, jobs are just as likely to be lost to technology or many of the other necessary components of a strong economy, than they are to trade. It’s the reality of having a strong, expanding, dynamic economy.

As pointed out by Brink Lindsey, the agriculture industry used to dominate the U.S. economy. As a matter of fact, in 1870, 47.6 percent of U.S. employment was in agriculture. By 2002, that number had dropped to 1.7 percent. Technological advancements in the production process have been the main reason for this drastic decrease of employment in agriculture. What if the U.S. would have been successful at containing the decrease in jobs in agriculture? The standard of living would most certainly not be as it is today. It is a necessary part of a thriving, expanding economy to allow resources to shift to sectors where producers have a greater advantage in efficiency.

Again, there is no doubt that some jobs are lost due to the increase in competition brought on by trade. However, there is a bigger story to be told rather than what the labor union lobbyists would like for everyone to believe. The politicians making these decisions to increase trade restrictions for specific industries know better. It is no secret that organized special interest lobbyists dictate the decisions that some politicians make by promising the support (votes) of the members of their organization. It is situations such as that, which have diluted the real-representation in our government for average citizens.