Agricultural Exports Cannot Offset Manufacturing Job Losses
There have been a few signs recently that the U.S. trade deficit is narrowing, but these signs are misleading. One major factor is that the American economy is depressed, causing Americans to buy less imported goods. But another important factor is that American agricultural exports have been rising. While the high productivity of the American agricultural sector is laudable, the overall impact of this productivity on jobs is negligible compared to other industries, particularly manufacturing.
U.S. exports of agricultural goods are projected to reach a record $137 billion this year, with U.S. trade surplus in agricultural goods expected to be over $42 billion. Despite this booming surplus, less than 2 percent of Americans are employed in the agricultural sector. Even with the massive decline in the U.S. manufacturing sector in recent years, approximately 9 percent of Americans are still employed in manufacturing. But as recently as the 1970s, when the American economy was still a center of manufacturing, 25 percent of the population was employed in manufacturing.
Many more Americans used to be employed in agriculture, but the system has evolved in a way that requires much less manpower for much greater production. Because of this evolution, no matter how successful agriculture is or how much its exports grow, it is unlikely to reemerge as a major employer of Americans.
Manufacturing on the other hand has seen some improvement in productivity per worker, but the reduction in jobs in the United States has largely been due to other factors. Rather than workers losing their jobs to innovation and increased productivity as in the agricultural sector, manufacturing jobs have been lost to third world countries with low labor rates. Oftentimes these overseas factories employ even more workers than they did in the United States while utilizing archaic technology, due to the fact that labor is cheap enough to make this profitable.
So while at first glance the trade deficit may not look as horrendous as it once did, the question still remains of what any improvements will do for jobs. While those improvements continue to come from agricultural exports the effect will be negligible. We need real trade reform that will allow our country to compete in all areas, manufacturing in particular. Until that time, all improvements in our massive trade deficit are likely to be temporary and unsubstantial.