How Much Does US-China Trade Hurt American Workers? Slowly, a Clearer Picture

Article excerpt

A study published earlier this year suggests that imports in US- China trade have had a significant negative impact not just on factory workers but also on their communities.

As top economic officials from the US and China meet in Washington this week, old concerns still linger: Are China's trade policies stealing jobs from American workers? Should the US take a tougher, more retaliatory line in its own trade policies?

It's a debate that raged even in under President Clinton in the 1990s, when Chinese exports to the US were much smaller and the US economy was much healthier.

In two-day bilateral talks this week, Treasury Secretary Tim Geithner pressed China to do more to protect intellectual property rights for global companies like Microsoft, and to allow its currency to move in foreign-exchange markets with greater flexibility. Some lawmakers in the US Congress have proposed a stronger-armed approach, slapping on trade penalties if Beijing fails to act along those lines.

The dialogue - and the threats of pressure from Congress - come as recent research by economists may be bringing the ripple effects of US-China trade into clearer focus. The upshot of the research isn't that trade with China is harming the US economy, but it does suggest that the negative effects on many US workers have been considerable.

Study's findings

In a study published earlier this year, three academic economists examined the effects of rising imports from China on the US job market since 1990. They sought what could be called the "China effect" by looking at local labor markets, including some that were heavily affected by Chinese imports and some that were less affected.

What they found were sizable negative effects in the form of lost jobs, lower wages, and lower labor-force participation. Although the job losses were concentrated in factories - accounting for one- third of the decline in US manufacturing jobs between 1990 and 2007 - the effects on wages spread throughout local economies, concluded researchers David Autor of the Massachusetts Institute of Technology, David Dorn of the Center for Monetary and Financial Studies in Madrid, and Gordon Hanson of the University of California in San Diego.

"There is nothing in our results to show that US trade with China overall is negative" in its impacts, Mr. Hanson says. For one thing, their study makes no effort to account for positive impacts on the economy from US exports to China. …