Trade, Jobs, and Manufacturing: Why (Almost All) U.S. Workers Should Welcome Imports

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Many Americans assume that imports are bad for economic growth,production, and employment, a “burden” we must bear to help othernations recover their economic health. In reality, the level ofimports has no negative impact on total employment, and the vastmajority of Americans work in sectors of the economy that do notface significant import competition.

Like technology, trade tends to shift resources to industrieswhere worker productivity (relative to compensation) and returns oninvestment are higher compared with other domestic industries. Thelimited and temporary dislocation caused by import competitionshould not cause us to sacrifice the lasting benefits thatcompetition creates.

The large majority of America’s nonfarm workers, about 85percent, are employed in service‐​providing industries,construction, and government – sectors where import competition isminimal. To those workers, imports are an unambiguous blessing thatspurs innovation, expands consumer choice, and raises realwages.

Even in the more tradable sector of manufacturing, importpenetration is low in most industries. Based on an analysis of 1994import, production, and employment figures, 2.2 million Americanswork in manufacturing industries with an import penetration of 30percent or more. Workers in trade‐​sensitive manufacturingindustries thus account for only 12 percent of total manufacturingworkers and less than 2 percent of total nonfarm workers.

Technological change and other non‐​trade factors account formost of the workers displaced from their jobs each year. In thethree‐​year period from 1995 through 1997, three‐​quarters of the 8million Americans displaced from their jobs were in sectors that bytheir nature are relatively insulated from import competition. Only23 percent were in manufacturing, and 2 percent in mining andagriculture.

Daniel Griswold

Daniel T. Griswold is associate director of the Cato Institute’s Center for Trade Policy Studies.