Commentary

Middle Class Better off After Decade of Trade Expansion

Opponents of trade liberalization have sought to indict free trade and trade agreements by painting a grim picture of the economic state of American workers and households. They claim that real wages have been stagnant or declining as millions of higher-paying middle-class jobs are lost to imports. Contrary to public perceptions:

  • Trade has had no discernible negative effect on the number of jobs in the U.S. economy. Our economy today is at full employment, with 16.5 million more people working than a decade ago.
  • Trade accounts for only about 3 percent of dislocated workers. Technology and other domestic factors displace far more workers.
  • Average real compensation per hour for American workers, which includes benefits as well as wages, has increased by 22 percent.
  • Median household income in the United States is 6 percent higher in real dollars than it was a decade ago. Middle-class households have been moving up the income ladder, not down.
  • The loss of 3.3 million net manufacturing jobs in the past decade has been overwhelmed by a net gain of 11.6 million jobs in sectors where the average wage is higher than in manufacturing.
  • The median net worth of U.S. households jumped by almost one-third between 1995 and 2004, from $70,800 to $93,100. The large majority of Americans, including the typical middle-class family, is measurably better off today after a decade of healthy trade expansion.
Daniel Griswold is director of the Cato Institute’s Center for Trade Policy Studies.