'Made in China' price tag: Thousands of U.S. jobs

InTech, Jan 2002

Researchers report that up to 100,000 U.S. jobs are being lost to China every year

Editor's note: This report consists of excerpts, chosen by InTech associate editor Jim Strothman, from a 127-page pilot study titled Impact of U.S.-China Trade Relations on Workers, Wages, and Employment, funded by the U.S.-China Security Review Commission/U.S. Trade Deficit Review Commission. The report was prepared by project director Kate Bronfenbrenner, Connell University's School of Industrial and Labor Relations, and co-authored by James Burke, Mount Holyoke College; Robert Hickey, Connell University; and Stephanie Luce, Tom Juravich, Elissa Braunstein, and Jerry Epstein, all of the University of Massachusetts at Amherst. The U.S. Congress created the commission to investigate economic and security implications of the bilateral economic relationship between the

U.S. and China. To produce their report, the seven researchers developed and implemented a news media tracking system, believed to be the first and only national database focused on production shifts out of the U.S.

In the past decade, U.S. trade and investment with China has increased dramatically. Today, China has become the U.S.'s fourth-largest trading partner, following Canada, Mexico, and Japan. Foreign direct investment in China by U.S. firms has increased from only $200 million in 1989 to more than $7.8 billion in 2000. Contrary to once-high expectations that China's 1.2 billion population would provide an ever-expanding market for U.S. goods, by 2000 the value of goods imported to the U.S. from China exceeded the value of U.S. goods exported to China by a factor of more than 61-resulting in a bilateral trade deficit of $84 billion.

Today, the trade deficit with China comprises almost 20% of the total U.S. trade deficit and is the largest trade deficit the U.S. has with any single nation.

Since the enactment of Permanent Normal Trade Relations (PNTR) legislation with China, production shifts out of the U.S. and into China have escalated. According to [the researchers'] media-tracking data, between 1 Oct. 2000 and 30 April 2001, more than 80 corporations announced intentions to shift production to China, with the number of production shifts increasing from two per month in October 2000 to 19 per month by April 2001.

More Than 70,000 Jobs Lost

The estimated number of jobs lost through these production shifts to China was as high as 34,900, compared with 29,267 jobs lost to Mexico, 9,061 jobs lost to other Asian countries, and fewer than 1,000 jobs lost to other Latin American countries. However, because media tracking captures fewer than half of all production shifts out of the U.S. to China and other countries during this period, the actual number of jobs lost through production shifts to China and Mexico can average between 70,000 and 100,000 jobs each year for each country.

Production shifts out of the U.S. into China are concentrated in certain industries: electronics and electrical equipment (37%), chemicals and petroleum products (17%), household goods (11%), toys (8%), textiles (6%), plastics (6%), sporting goods (5%), and wood and paper products (5%).

Production shifts to China were also concentrated in certain regions and states: the Southeast and West Coast. California was hardest hit, accounting for 14% of all production shifts to China, followed by North Carolina (11%) and Texas (10%).

Mostly U.S. Multinationals

U.S. companies shutting down and moving to China and other countries tend to be large, profitable, well-established companiesprimarily subsidiaries of publicly held, U.S.based multinationals, including such familiar names as Mattel, International Paper, General Electric, Motorola, and Rubbermaid.

The media-tracking data also suggests the majority of the U.S.-based multinational corporations shifting production to China are not simply targeting a Chinese market. Companies such as La Crosse Footwear (winter boots), Lexmark (printers), Motorola (cell phones), Rubbermaid (cookware and storage products), Raleigh (bicycles), Cooper Tools (wrenches), Mattel Murray (Barbie doll playhouses), and Samsonite (luggage) may have moved their production to China, but they still intend to serve a U.S. and global market.

The media-tracking data also suggests an increasing percentage of jobs leaving the U.S. are in higher-paying industries producing goods such as bicycles, furniture, motors, compressors, generators, fiber optics, clocks, injection molding, and computer components. As the data shows, it is these higher-end jobs that are most likely to be unionized and therefore more likely to have a much larger wage and benefit package.

Many of those who lost their jobs were high seniority, top-of-the-pay-scale employees who have a great deal invested in their jobs and in their communities.

The employment effects of these production shifts go well beyond the individual workers whose jobs were lost. Each time another company shuts down operations and moves work to China, Mexico, or any other country, it has a ripple effect on the wages of every other worker in that industry and that community, through lowering wages, restraining union organizing and bargaining power, reducing the tax base, and reducing or eliminating hundreds of jobs in related businesses.