NAFTA Jobs Losses Continue to Mount
No state has been spared the wrath of the North American Free Trade Agreement, with all 50 losing jobs due to the bilateral trade pact, according to a new report by the Economic Policy Institute.
As of last year, the U.S. had amassed a $97.2 billion trade deficit with Mexico, resulting in the loss of 682,900 jobs.
Of those jobs lost, 415,000, or 60 percent, were in manufacturing industries. Computer and electronic parts, and motor vehicles and parts were the two hardest hit industries. Over the years, 150,300 jobs in the computer industry have been lost to Mexico, along with another 108,000 in the auto industry.
All 50 states have had to share the burden, but none more so than Michigan, which lost one percent of its total jobs due to barrier-free trade with Mexico. As of 2010, the state has lost 43,600 jobs because of NAFTA’s failures.
“From a standpoint of the business community, NAFTA’s most important achievement was that it made Mexico a much safer and more attractive location to invest and outsource U.S. manufacturing production,” the report said.
The states with the most jobs lost in terms of sheer numbers are California (86,500), Texas (55,600), Michigan (43,600), Ohio (34,900), Illinois (34,700), New York (34,300), Florida (28,800) and Pennsylvania (26,300).
The report mainly focuses on the impact of Mexico’s involvement in NAFTA. The other party involved, Canada, has not been nearly as problematic for the U.S. because its economy is very similar. Canada also has a currency that is stronger than the dollar.
“U.S. trade with Canada in non-oil goods is no longer a significant source of job displacement for the United States,” the report found.
Mexico, on the other hand, can lure American companies south of the border with a promise of an abundance of cheap labor.
In the U.S., the average factory worker makes roughly $18 per hour while his Mexican counterpart earns just $3 per hour. This has encouraged a “race to the bottom” in which American companies are frequently relocating production facilities across the border. Iconic American companies such as Coca Cola, Ford, RCA, General Motors, General Electric and Nokia have all opened up assembly plants in Mexico.
Apparently, American policymakers have never heard the saying about being doomed to repeat history if you do not learn from it because they are on the verge of entering the U.S. into a bilateral trade pact with South Korea.
According to the report, it will be as bad, if not worse, than NAFTA. In the first seven years of the deal alone, the agreement is set to cost the U.S. 159,000 jobs.
“Mexico and South Korea are different countries, but there are striking similarities in the U.S. trading patterns with both,” the report says.
“Like NAFTA, the KORUS FTA is likely to result in growing U.S. trade deficits and job displacement, especially in the motor vehicles and parts and the computer and electronics parts industries.”