BASIC RESEARCH
Trading places
Economists take a new look at the evidence that the U.S. has lost millions of jobs to China.
When jobs vanish, the better-trained workers may bounce back, but many blue-collar workers do not.
Tennessee has abundant hardwood forests, and business sectors related to them thrived for many years. Yet the state’s employment levels in the flooring, furniture-making, and cabinetry industries have cratered — down by 72 percent, 50 percent, and 50 percent, respectively, from 2005 to 2009.
What happened? The economic slump in the U.S. certainly hurt those trades. But also: China happened. As some economists now recognize, the formal trade relationship between the U.S. and China, established in the 1990s and solidified with a World Trade Organization agreement in 2001, dramatically affected a large number of labor-intensive industries in the U.S. In those fields, jobs moved en masse to China, where workers are available at even lower wages.
That relatively sudden shift, research has shown, comes with a heavy cost to U.S. workers. When jobs vanish, the better-trained workers may bounce back, but many blue-collar workers do not. And entire communities have been punished economically as well. These findings run against the bullish assumptions many economists have made about international trade in recent decades. But now a paper co-authored by MIT economist David Autor analyzes the data and makes clear how significant that impact has been.