Why, This Time, Free Trade Has Hit American Workers So Hard

By Montlake, Simon | The Christian Science Monitor, July 1, 2016 | Go to article overview

Why, This Time, Free Trade Has Hit American Workers So Hard


Montlake, Simon, The Christian Science Monitor


When his injection-molding plant began shedding workers in early 2011, Terry Hernden knew the drill. It was his third layoff since the 2008 recession.

But he never considered moving. Even though other states were adding jobs and manufacturers were hiring in western Michigan, autos in the Motor City had long been the career of choice for Mr. Hernden, as they were for his father, a machinist.

"I figured I would stay here and handle it. I can find something else."

This presidential election season has cast a harsh light on the economic shocks of the 21st century - particularly trade - which have left behind large centers of concentrated unemployment and poverty. But largely untold is the fact that similar economic shocks have happened throughout American history, and many Americans have found an effective coping mechanism: They have moved.

From the Gold Rush to the Dust Bowl, pioneers, dreamers, self- made men, and immigrants have built America by hitching their wagons and heading toward brighter opportunities.

Since before the Great Recession, however, that coping mechanism has largely faltered.

No one is quite sure why. An aging nation might be less footloose, and the rise of dual-earner families means it's harder to make two career changes, one study suggests. Soaring housing costs are making some cities unaffordable. Underwater mortgages make other cities hard to leave.

But one line of research points to something deeper: Americans have adopted a bunker mentality as wages have stagnated.

The declining worker movement cuts across industries, socio- economic classes, and generations, says Abigail Wozniak, a labor economist at Notre Dame University in Indiana and coauthor of a 2014 study of internal migration.

"Something is shifting in how workers make transitions in the labor market," she says.

In short, her research suggests that fewer Americans find it's helpful to move, because the chances of finding a significantly better salary are low, and the chances of being laid off again are high. Without the incentive of moving for work, mobility has slowed.

Recently, there are signs that wages are starting to creep upward again. As is mobility. But the long-term trend for mobility is down, and if the decline persists, it presents new challenges for a country that has always depended upon it economically.

It raises the question of whether the United States will need to act more like Europe, where mobility within national borders has long been less robust - and where countries have to spend more to retrain workers where they are.

"When you have a less-mobile workforce the need to retrain becomes far more urgent," says Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington.

A trade 'shock' with no absorberFor months, the causes behind these economic stresses have been a topic of vehement debate. Presidential aspirants Bernie Sanders and Donald Trump stoked concerns over trade.

Indeed, the period of decline in mobility has coincided with an acceleration in foreign trade and outsourcing of manufacturing and services under trade agreements that many Americans blame for their job insecurity. A surge of cheap imports from China created what economists call a "trade shock" that devastated labor-intensive industries like furnituremakers in North Carolina.

China accounted for about a quarter of the decline in United State manufacturing jobs between 1990 and 2007, according to a 2013 Massachusetts Institute of Technology (MIT) study by economist David Autor and two coauthors.

But their data also suggest automation is an even bigger culprit for the job loss. Combined, the forces of automation and trade competition since 2000 have decimated blue-collar jobs and the wages they pay. In 2003, the median hourly wage in a US automotive parts factory was $18.35; a decade later it was $15.83.

At other times, trade shocks have come when Americans were ready to move. …

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