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TradeandAmericanJobs
TheImpactofTradeonU.S.andState-LevelEmployment:
2019Update
PreparedbyTradePartnershipWorldwide
for
BusinessRoundtable
February2019
ExecutiveSummaryU.S.tradecontinuestoexpand,andwithit,U.S.employment.Basedonthelatestavailabledata(2017)andtakingintoaccountboththegainsandthelosses(i.e.,anetestimate),tradesupportsnearly39millionU.S.jobs.ThismeansthatoneineveryfiveU.S.jobsislinkedtoexportsandimportsofgoodsandservices.Nearlytwotimesasmanyjobsweresupportedbytradein2017asin1992–beforetheacceleratedwaveoftradeliberalizationthatbeganwiththeimplementationoftheNorthAmericanFreeTradeAgreementin1994–whenourearlierresearchfoundthattradesupported14.5millionnetjobs,oroneineverytenU.S.jobs.• AsU.S.trade--bothexportsandimports--hasgrownoverthepasttwo
decades,causedinpartbytradeliberalizinginternationalagreements,sohasthenumberofU.S.jobstiedtotrade.Indeed,trade-dependentU.S.jobshavegrownmorethanfourtimesasfastasU.S.jobsgenerally.
• EveryU.S.statehasrealizednetemploymentgainsdirectlyattributabletotrade.• TradehasapositivenetimpactonU.S.jobsinboththeservicesand
manufacturingsectors.• U.S.tradewithourNAFTApartners,aswellaswithEurope,Japan,Koreaand
China,amongothers,accountsforimportantsharesofthistraderelatedemployment.In2017,tradewithCanadasupported,onnet,7.2millionjobs;Mexico,4.9millionjobs;EuropeanUnion(27),5.7millionjobs;China,7.3millionjobs;Japan,1.3millionjobs;andKoreaandtheUK,justover1millionjobseach.
TradeandAmericanJobsTheImpactofTradeonU.S.andState-Level
Employment:2019Update
LauraM.BaughmanandJosephF.Francois*
I. IntroductionThe2019TradeandAmericanJobsreportupdatesaseriesofpath-breakingstudies,firstissuedbyBusinessRoundtablein2007,thatofferathoroughexaminationoftheimpactsoftradeonU.S.jobs.1Thereportexaminestheimpacts,positiveandnegative,ofbothexportsandimportsofgoodsandservicesonU.S.employmentbasedonthelatestavailabledata(2017).ItconfirmsthattradehasanetpositiveimpactonAmericanjobs.Importantly,thepositiveimpactoftradeonU.S.employmenthasgrownsignificantlyduringthepasttwodecades,coincidingwiththeliberalizationofU.S.tradebothmultilaterallythroughtheWorldTradeOrganizationandbilaterallyandregionallythroughfreetradeagreements.
* LauraM.BaughmanisPresidentofTradePartnershipWorldwide,LLC(TPW,www.tradepartnership.com).SheholdsdegreesineconomicsfromColumbiaandGeorgetownUniversities.Dr.JosephFrancoisisManagingDirectorofTradePartnershipWorldwide,LLC,andProfessorofEconomics,UniversityofBern,DepartmentofEconomicsandManagingDirector,WorldTradeInstitute.Healsoholdsnumerousresearchfellowshipsandprofessorshipsatthinktanksanduniversitiesaroundtheworld.Dr.FrancoisformerlywastheheadoftheOfficeofEconomicsattheU.S.InternationalTradeCommission,andaresearcheconomistattheWorldTradeOrganization.Dr.FrancoisholdsaPhDineconomicsfromtheUniversityofMaryland,andeconomicsdegreesfromtheUniversityofVirginia.1 LauraM.BaughmanandJosephFrancois,TradeandAmericanJobs:TheImpactofTradeonU.S.andState-LevelEmployment,preparedfortheBusinessRoundtable,February2007;LauraM.BaughmanandJosephFrancois,TradeandAmericanJobs:TheImpactofTradeonU.S.andState-LevelEmployment,AnUpdate,preparedfortheBusinessRoundtable,July,2010;BusinessRoundtable,HowtheU.S.EconomyBenefitsfromInternationalTradeandInvestment(2013);TradeandAmericanJobs:TheImpactofTradeonU.S.andState-LevelEmployment,2014Update,preparedfortheBusinessRoundtable,October2014,TradeandAmericanJobs:TheImpactofTradeonU.S.andState-LevelEmployment,2016Update,preparedfortheBusinessRoundtable,January2016,TradeandAmericanJobs:TheImpactofTradeonU.S.andState-LevelEmployment,2018Update,preparedfortheBusinessRoundtable,March2018.
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II. TheImportanceofTradetotheUnitedStatesTradeisavitalpartoftheU.S.economy.Sincethemiddleofthe20thcentury,U.S.exportsandimportshavegrownstronglyandtodaytradereflectsalargeshareofthenation’seconomicactivity.From2011-2017,totaltrade(exportsplusimports)representednearly30percentofgrossdomesticproduct(GDP),upfrom10.6percentwhentheGeneralAgreementonTariffsandTrade—theprecursortotheWorldTradeOrganization(WTO)—waslaunchedin1947.ExportTrendsU.S.exportshavebeengenerallyincreasingoverthelast25years.Formorethantwodecades,totalU.S.exportshaveincreasedatanaverageannualrateof5.5percent,notwithstandingrecentdeclinesandthedeclinesexperiencedduringthe2001-2002and2008-2009recessions.Sinceourlastreport,servicesexportshavecontinuedtoincreaseandnowaccountfor34percentoftotalU.S.exports.Goodsexports(e.g.,industrial,agricultural)stilldominatetotalU.S.exports,accountingforjustunder70percentofthetotal,sotheirdeclinesin2015and2016drovetheoveralldeclineinU.S.exportsinthoseyears.Growthinbothgoodsandservicesexportsreboundedin2017.(DetaileddataareprovidedinAppendixA,TableA1.)
Source:BureauofEconomicAnalysis,U.S.DepartmentofCommerce,asdetailedinAppendixTableA1.
LeadingU.S.goodsexports2in2017includedaerospaceproductsandparts;oilandgasandpetroleumandcoalproducts;motorvehiclesandparts;basicchemicals;pharmaceuticalsandmedicines;oilseedsandgrains;measuring,electro-medicalandcontrolinstruments;resins,rubberandartificialfibers;semiconductors;agricultureandconstructionmachinery,andothergeneral-purposemachinery.
2 Basedonfour-digitNorthAmericanIndustrialClassificationSystemcodes.
0.0
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2008
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sof$
U.S.Exports
Goods
Services
TotalExports
3
Contributingtothereturntogrowthinthetotalvalueofgoodsexportsfrom2016-2017weresurgeinexportsofcoalandpetroleumgases(up125.1percent),oilandgas(up97.7percent),industrialmachinery(up26.4percent)andpetroleumandcoalproducts(up25.7percent).Leadingservicesexportsincludebusiness,professionalandtechnicalservices;royaltiesandlicensefees,andfinancialservices.ImportTrendsU.S.importshavealsogenerallyincreasedoverthepasttwodecades,spurredbyperiodsofstrongeconomicgrowthandcurtailedbythe2001-2002and2008-09recessions.(DetailedaggregatedataareprovidedinAppendixA,TableA2.)Ingeneral,thereisapositivecorrelationbetweenchangesinimportsandchangesinU.S.economicgrowth.Thiscorrelationmakessensegiventhatapproximately60percentofU.S.merchandiseimportsarerawmaterials,capitalgoodsandindustrialproductsusedbyU.S.manufacturersandfarmerstoproducegoodsintheUnitedStates.WhenU.S.manufacturingoragriculturaloutputslowsorcontracts,producers’andfarmers’needforimportedrawmaterialsandotherinputsdeclines.Likewise,whenhouseholdincomedropsasitdoesduringarecession,familiesputoffbuyingexpensiveconsumergoods,includingconsumergoodsimportswhichconstitute40percentoftotalgoodsimports.TherecentuptickinthetotalvalueofimportsisowedinparttostrongeconomicgrowthoftheU.S.economyin2017.Intermsofservices,keyimportsincludebusiness,professional,andtechnicalservices;travel;andinsuranceservices.TheseareservicespurchasedbyU.S.entities,suchasU.S.companiesusingforeignlegalservices,orU.S.touriststravelingabroad.
Source:BureauofEconomicAnalysis,U.S.DepartmentofCommerce,asdetailedinAppendixA,TableA2.
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“Openness”oftheU.S.EconomytoTradeTradeagreementshavebeenanimportantcontributortothegrowthintrade,particularlyduringthepasttwodecades.Theyhaveincreasinglyreducedforeignbarrierstotrade,openingnewmarketsforU.S.exports,whilealsoopeningtheU.S.markettoincreasedimportsfromothercountries.• SignificantgloballiberalizationbeganbetweentheUnitedStatesandmembersof
theWTOastheUruguayRoundwasimplementedin1995.• ChinajoinedtheWTOinDecember2001,startingtheprocessofopeningitsmarket
toU.S.exportsofgoodsandservices.• FTAswereimplementedwithMexicoandCanada(NAFTA1993),Jordan(2001),
ChileandSingapore(2004),Australia(2005),Morocco(2006),CentralAmerica(2006-2009),Bahrain(2006),Oman(2009),Peru(2009),andSouthKorea,ColombiaandPanama(2012).EachoftheseagreementshelpedtoincreasetotalU.S.trade,includingbothexportsandimports.TheshareoftotalU.S.goodsandservicesexportswithbilateralorregionaltradeagreementpartnershasincreasedfromlessthan1percentin1992(whentheUnitedStateshadjusttwoFTApartners,IsraelandCanada),to39percentin2017(whentheUnitedStateshad20FTApartners).
AsU.S.manufacturers,farmersandservicesprovidershavetakenadvantageofthelowercostsofinputsandotherbenefitsofFTAs,theimportanceofglobalvaluechainstoU.S.companies,farmersandtheirworkershasincreased.U.S.exportsincorporateimportedpartsorcomponents:accordingtodatafromtheOECDandtheWTO,foreignpartsandcomponentsrepresented9.5percentofthevalueofU.S.goodsandservicesexportsin2015(themostrecentyearavailable);theforeigninputshareishigherformanufacturedgoodsexports,11.7percent.3Similarly,foreignproducersuseU.S.inputstomakegoodsorserviceslaterexportedbacktotheUnitedStates.U.S.-madepartsandcomponentsaccountedfor4.6percentofthevalueofU.S.goodsandservicesimportsin2015.4Formanufacturedimports,theU.S.contentshareishigher,6.4percent.Companieshaveloweredcoststhroughthesevaluechains,becomingmorecompetitiveinU.S.andforeignmarketsandrelyingmorethaneveronsuppliersinothercountriesforinputstoU.S.production.Consequently,theimportanceoftradetotheU.S.economyhasincreasedsignificantlyduringthelasttwodecades.Duringthisperiodofacceleratingtradeliberalization,total
3 OECD,OriginofValueAddedinGrossExports,https://stats.oecd.org/Index.aspx?DataSetCode=TIVA_2018_C2(AccessedFebruary20,2019)4 Ibid.,https://stats.oecd.org/Index.aspx?DataSetCode=TIVA_2018_C2.
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trade–exportsplusimports–rosefrom20percentofGDPin1992to30percentin2014,droppingto27percentin2017primarilyduetothevariousfactorsnotedabove(seeAppendixA,TableA3fordetaileddata).
Source:DerivedfromBureauofEconomicAnalysis,U.S.DepartmentofCommerce.
20% 20% 21%22% 23% 23% 23% 23%
25%23% 22% 22%
24% 26%27% 28%
30%
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31% 31% 30% 30%28% 26% 27%
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1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Trade'sShareofGDP
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III. TradeandAmericanJobsConcernsabouttheimpactoftradeonU.S.jobsremainwidespreadinAmerica.SomepolicymakersareconvincedthatU.S.goodstradedeficitsequatetolostU.S.jobs.ItisgenerallyacceptedthatexportshaveapositiveimpactonU.S.jobs.However,manyworrythatimportshaveanegativeimpactonU.S.jobs.AproperassessmentoftheimpactsoftradeonU.S.jobsshoulduseanapproachthatcapturesthefullrangeofthemanywaysinwhichthoseimpactsareexperiencedbyfarmers,manufacturers,servicesproviders,workersandconsumers.Thisstudyusessuchanapproach,whichisdetailedinAppendixB.Brieflystated,itexploresthedirectandindirecteffectsofexports,thedirectandindirecteffectsofimports,andtheeffectsofadditionaltrade-inducedspendingonU.S.outputandconsumptionand,consequently,jobs.Itreflectsthedifferencesinprice,quantityandqualitybetweenimportedgoodsandU.S.-producedgoods.ItalsocapturesthejobsdirectlyandindirectlyrelatedtotheprocessofimportinggoodsandservicesintotheUnitedStates(e.g.,jobsassociatedwithtransportingimportsfromtheportstowarehouses,jobsatthewarehouses,orretailjobsthatselltheimportedgoodsiftheyarefinishedconsumerproducts).Finally,ourmethodologyalsoconsidersthepositiveandnegativeeffectsoftradeonjobs,andresultsreportedaretherefore“net”jobimpacts.Briefly,thefindingsofthisanalysisareasfollows:
• In2017,anestimated39.0millionnetjobsweretiedtotrade(seeTable1).• Thesejobsrepresent19.9percentoftotalemployment,oroneinfivejobs(see
Table1).• Astheeconomyhasbecomemoredependentontrade,employmentrelatedto
tradehasincreasedatmorethanfourtimestherateofnon-traderelatedemployment.Between1992and2017,trade-dependentjobsincreasedby169percent(fromanetof14.5million5to39.0million),comparedto40percentforemploymentgenerally.6
• Nearlytwotimesasmanyjobsweresupportedbytradein2017(19.9percent)
comparedto1992(10.4percent)–beforetheacceleratedwaveoftradeliberalizationthatbeganwiththeimplementationofNAFTAin1994.7
5 BaughmanandFrancois(2007),opcit.6 DerivedfromU.S.BureauofEconomicAnalysis,“Totalfull-timeandpart-timeemploymentbyindustry,”(accessedFebruary20,2019).7 LauraM.BaughmanandJosephFrancois,TradeandAmericanJobs:TheImpactofTradeonU.S.andState-LevelEmployment,preparedfortheBusinessRoundtable,February2007,Table6,p.12.Itshouldalso
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• TradehasanetpositiveimpactonU.S.jobsinboththeservicesandmanufacturing
sectors.
Table1NetNumberofU.S.JobsRelatedtoTrade,*2017
(Thousands)Total +38,956.2Agriculture,forestry,fishing +1,514.7Manufacturing +1,782.9Services +36,205.9
Construction +1,251.3Wholesaleandretailtrade +8,717.8Finance +1,347.5Insurance +738.7Transportation +2,354.7Communications +926.2Businessandprofessionalservices +6,604.3Personalandrecreationalservices +2,683.9Otherservices(e.g.educ.,health,gov’t,etc.) +12,507.7
Energy(mining,utilities) -547.38
ShareofTotalU.S.Employment 19.9%*“Trade”=exportsplusimportsofgoodsandservices.SeeAppendixTableB.1forsectordescriptionsSource:Authors’estimates.
Asnotedabove,thebiggestimpactsoftradearethewaysinwhichitincreasesspendingacrosstheU.S.economy.ButmostanalystsseekingtoassesstheimpactsoftradeonU.S.jobsstopwiththedirectandindirectimpactsofexportsandimports.Indoingso,theymissthelargestsourceofjob-creatingactivitythatcomesfromtrade:theextraspendingpowercompanies,workersandconsumershaveintheirbankaccounts,spendingpower
benotedthat,becausetradehasplayedasomewhatsmallerroleintheU.S.economyin2017thanin2014,U.S.employmentrelatedtothattradehasdeclinedfromthe41millionestimatedfor2014(TradeandAmericanJobs:TheImpactofTradeonU.S.andState-LevelEmployment,2016Update,preparedfortheBusinessRoundtable,January2016).8 TheU.S.energysectorpresentsaspecialcasewithrespecttotheimpactsoftradeonjobs.Despitesignificantincreasesindomesticcrudeoilproduction,theUnitedStatesstillimportsasignificantshareofthepetroleumitconsumes.AccordingtotheEnergyInformationAgency,in2017,theUnitedStatesreliedonimportsfor19percentofitspetroleumconsumption(seehttps://www.eia.gov/tools/faqs/faq.php?id=32&t=6).Therefore,ourmodelingscenario(theimpactoftheabsenceoftrade–exportsandimportsofpetroleum,asdescribedinAppendixA)meansthattheUnitedStateswouldneedtoproduceallofitspetroleum,includingcrudeoil,requirementsdomestically.Thiswouldbeexpensive:thecostsofproducingthisoildomesticallywouldbehigh,drawingresources(includinglabor)fromothersectorsoftheeconomyatgreatexpense.
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thatgeneratesstillmorejob-supportingeconomicactivity.Additionalspendingpowercomesfrom,forexample,wagesofdirectandindirectworkersinexport-relatedjobs,fromwagesofdirectandindirectworkersinimport-relatedjobs,andfromconsumerswhotakeadvantageoflowerpricesforgoodsandservicesresultingfromimports,whichinturnsupportsstillmoreeconomicactivitythatsupportsevenmorejobs.Theextraincomeisspentonothergoodsandservicesthatarenottradedinternationally–likedinnersout,pre-schoolordaycareforone’schild,orahomerenovationproject.Thus,Table1reportslargetrade-relatedjobsinsectorslike“Construction”and“Personalandrecreationservices.”TheestimatesinTable1reflecttheincreasedspendingthatgoesonthroughouttheeconomyasaresultofhigherincomesandlowercostsduetotrade.Themethodologyinthereportcapturesalltheseeffects.9U.S.JobsRelatedtoTradewithSelectedTradingPartnersTable2detailsjobssupportedbytradewithselectedleadingU.S.tradingpartners.TradewithCanadaandMexicotogethersupportedmorethan12millionjobsin2017,31percentofalltrade-relatedjobs.TradewithChinasupportsanetpositivenumberofU.S.jobs,over7million,accounting19percentoftotalU.S.trade-relatedjobsand3.7percentofallU.S.jobs.TradewithJapan,Korea,theEU(27)andUKalsoaddimportantlytonetU.S.employmentrolls.Together,tradewiththesepartnersalonesupported14.6percentofallU.S.jobsin2017.
Table2NetNumberofU.S.JobsRelatedtoTradewithLeadingU.S.TradingPartners,*2017
(Thousands)
Canada Mexico China Japan Korea EU(27) UKTotal +7,191.2 +4,870.2 +7,328.0 +1,336.7 +1,042.2 +5,712.5 +1,204.0Ag.,forestry,fishing +113.3 +71.7 +464.6 +157.2 +100.8 +166.7 +39.4Manufacturing +553.9 +75.7 -530.7 -181.1 -48.1 -118.2 +51.5Services +6,554.0 +4,469.4 +6,385.5 +1,218.1 +934.2 +5,353.0 +1,090.7Energy -224.8 -55.8 +142.3 +34.6 +7.4 +120.1 +2.0ShareofTotalU.S.Jobs 3.7% 2.5% 3.7% 0.7% 0.5% 2.9% 0.6%ShareofTrade-RelatedJobs 18.5% 12.5% 18.8% 3.4% 2.7% 14.7% 3.1%*“Trade”=exportsplusimportsofgoodsandservices.Source:Authors’estimates.
9 OurmethodologydoesnotcapturethenumberofjobssupportedbyforeigninvestmentsintheUnitedStates,andthereforeourresultslikelyunderstatethenumberofU.S.jobstiedtotheinternationaleconomy.WedocapturethejobsatU.S.subsidiariesofforeignfirmsthatarelinkedtotrade(exportsand/orimports).Wedonotcapturejobsatforeigncompaniesnotengageddirectlyorindirectlyinforeigntrade.
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State-LevelTrade-RelatedEmploymentAsdemonstratedbyabreakdownofthenationalemploymentestimatesbystate(seeTable3),everyU.S.staterealizesanetpositiveimpactfromtrade.Notsurprisingly,thelargeststatesbenefitthemost.Sharesoftotalstateemploymentrelatedtotraderangedfromalowof17percent(WyomingandOklahoma)toahighof21percent(NebraskaandSouthDakota).SeeAppendixBforanexplanationofourmethodologyforbreakingdowntrade-relatedemploymentbystate.
Table3NetNumberofU.S.JobsRelatedtoTotalTrade,byState,2017
(Thousands)Alabama +532.2 Montana +137.5Alaska +86.7 Nebraska +277.1Arizona +736.7 Nevada +343.9Arkansas +334.5 NewHampshire +170.4California +4,710.6 NewJersey +1,091.8Colorado +720.8 NewMexico +211.9Connecticut +467.8 NewYork +2,512.8Delaware +118.1 NorthCarolina +1,177.8DistrictofColumbia +188.5 NorthDakota +110.8Florida +2,395.7 Ohio +1,387.8Georgia +1,222.4 Oklahoma +403.5Hawaii +190.9 Oregon +505.7Idaho +205.2 Pennsylvania +1,526.3Illinois +1,566.8 RhodeIsland +128.1Indiana +770.0 SouthCarolina +550.7Iowa +432.6 SouthDakota +127.9Kansas +380.4 Tennessee +806.1Kentucky +512.3 Texas +3,141.0Louisiana +516.2 Utah +389.0Maine +171.3 Vermont +89.3Maryland +742.8 Virginia +1,054.0Massachusetts +945.1 Washington +921.4Michigan +1,114.9 WestVirginia +167.4Minnesota +752.1 Wisconsin +748.5Mississippi +324.5 Wyoming +69.0Missouri +767.4 TOTAL +38,956.3Source:Authors’estimates.
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Table4NetNumberofU.S.JobsRelatedtoTradewithCanada,byState,2017
(Thousands)Alabama +97.4 Montana +23.2Alaska +14.3 Nebraska +49.0Arizona +137.2 Nevada +63.7Arkansas +58.6 NewHampshire +34.1California +898.5 NewJersey +207.4Colorado +130.4 NewMexico +36.2Connecticut +85.9 NewYork +475.9Delaware +22.1 NorthCarolina +225.8DistrictofColumbia +34.8 NorthDakota +17.3Florida +446.3 Ohio +257.5Georgia +229.2 Oklahoma +61.3Hawaii +35.2 Oregon +95.2Idaho +37.2 Pennsylvania +282.3Illinois +293.7 RhodeIsland +24.2Indiana +144.4 SouthCarolina +103.4Iowa +77.9 SouthDakota +22.4Kansas +62.7 Tennessee +149.7Kentucky +91.5 Texas +549.4Louisiana +88.8 Utah +72.6Maine +31.5 Vermont +16.7Maryland +139.9 Virginia +193.8Massachusetts +183.6 Washington +163.3Michigan +209.7 WestVirginia +27.6Minnesota +142.8 Wisconsin +138.7Mississippi +57.5 Wyoming +10.1Missouri +139.3 TOTAL +7,191.2Source:Authors’estimates.
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Table5NetNumberofU.S.JobsRelatedtoTradewithMexico,byState,2017
(Thousands)Alabama +64.8 Montana +17.0Alaska +11.5 Nebraska +33.9Arizona +91.1 Nevada +44.1Arkansas +42.0 NewHampshire +20.6California +572.2 NewJersey +141.2Colorado +91.1 NewMexico +26.8Connecticut +59.1 NewYork +323.5Delaware +15.2 NorthCarolina +150.6DistrictofColumbia +24.9 NorthDakota +13.5Florida +304.1 Ohio +170.9Georgia +158.2 Oklahoma +51.0Hawaii +24.8 Oregon +58.9Idaho +24.0 Pennsylvania +195.7Illinois +198.0 RhodeIsland +16.5Indiana +89.2 SouthCarolina +69.9Iowa +52.1 SouthDakota +15.3Kansas +47.2 Tennessee +99.0Kentucky +60.0 Texas +399.5Louisiana +68.5 Utah +48.8Maine +22.2 Vermont +10.9Maryland +96.1 Virginia +135.3Massachusetts +118.9 Washington +113.8Michigan +128.6 WestVirginia +21.7Minnesota +91.0 Wisconsin +92.5Mississippi +40.1 Wyoming +9.0Missouri +95.3 TOTAL +4,870.2Source:Authors’estimates.
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Table6NetNumberofU.S.JobsRelatedtoTradewithChina,byState,2017
(Thousands)Alabama +103.4 Montana +30.6Alaska +20.6 Nebraska +55.8Arizona +132.6 Nevada +66.5Arkansas +68.0 NewHampshire +24.7California +780.8 NewJersey +193.8Colorado +142.2 NewMexico +46.6Connecticut +87.4 NewYork +454.8Delaware +21.9 NorthCarolina +206.1DistrictofColumbia +37.1 NorthDakota +27.6Florida +448.8 Ohio +265.4Georgia +226.9 Oklahoma +103.3Hawaii +38.0 Oregon +83.0Idaho +37.5 Pennsylvania +287.9Illinois +285.6 RhodeIsland +22.6Indiana +147.4 SouthCarolina +103.2Iowa +83.6 SouthDakota +26.2Kansas +84.4 Tennessee +157.0Kentucky +107.5 Texas +657.7Louisiana +115.6 Utah +70.9Maine +31.6 Vermont +16.2Maryland +139.3 Virginia +204.3Massachusetts +154.5 Washington +182.8Michigan +213.4 WestVirginia +33.8Minnesota +124.4 Wisconsin +134.5Mississippi +66.8 Wyoming +39.3Missouri +149.4 TOTAL +7,328.0Source:Authors’estimates.
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Table7NetNumberofU.S.JobsRelatedtoTradewithJapan,byState,2017
(Thousands)Alabama +15.1 Montana +6.5Alaska +4.1 Nebraska +11.3Arizona +24.9 Nevada +12.2Arkansas +13.0 NewHampshire +4.9California +165.1 NewJersey +38.2Colorado +28.5 NewMexico +9.6Connecticut +12.7 NewYork +88.9Delaware +4.3 NorthCarolina +39.8DistrictofColumbia +7.3 NorthDakota +5.6Florida +85.8 Ohio +37.3Georgia +41.6 Oklahoma +19.6Hawaii +7.4 Oregon +18.3Idaho +8.5 Pennsylvania +51.5Illinois +50.3 RhodeIsland +4.1Indiana +15.0 SouthCarolina +15.8Iowa +15.9 SouthDakota +5.4Kansas +14.3 Tennessee +23.7Kentucky +15.2 Texas +124.8Louisiana +20.9 Utah +13.6Maine +6.3 Vermont +3.3Maryland +27.0 Virginia +37.3Massachusetts +31.3 Washington +30.0Michigan +23.1 WestVirginia +7.0Minnesota +25.9 Wisconsin +22.9Mississippi +11.3 Wyoming +3.9Missouri +26.2 TOTAL +1,336.7Source:Authors’estimates.
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Table8NetNumberofU.S.JobsRelatedtoTradewithKorea,byState,2017
(Thousands)Alabama +13.4 Montana +4.5Alaska +2.9 Nebraska +8.5Arizona +19.2 Nevada +9.2Arkansas +10.1 NewHampshire +3.9California +124.8 NewJersey +28.7Colorado +20.1 NewMexico +6.7Connecticut +11.8 NewYork +66.9Delaware +3.2 NorthCarolina +31.0DistrictofColumbia +5.2 NorthDakota +3.9Florida +64.1 Ohio +33.3Georgia +33.0 Oklahoma +13.6Hawaii +5.5 Oregon +13.6Idaho +6.0 Pennsylvania +40.8Illinois +40.2 RhodeIsland +3.3Indiana +16.3 SouthCarolina +13.8Iowa +12.6 SouthDakota +4.0Kansas +11.8 Tennessee +20.5Kentucky +13.4 Texas +90.3Louisiana +15.3 Utah +10.2Maine +5.7 Vermont +2.5Maryland +19.9 Virginia +28.7Massachusetts +23.7 Washington +26.3Michigan +23.2 WestVirginia +5.2Minnesota +19.7 Wisconsin +19.4Mississippi +9.5 Wyoming +2.5Missouri +21.2 TOTAL +1,042.2Source:Authors’estimates.
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Table9NetNumberofU.S.JobsRelatedtoTradewiththeEU(27),byState,2017
(Thousands)Alabama +72.7 Montana +21.3Alaska +15.2 Nebraska +38.5Arizona +110.4 Nevada +52.8Arkansas +47.3 NewHampshire +24.4California +700.5 NewJersey +161.2Colorado +114.5 NewMexico +35.7Connecticut +64.9 NewYork +380.9Delaware +17.6 NorthCarolina +168.3DistrictofColumbia +30.6 NorthDakota +18.6Florida +356.3 Ohio +187.0Georgia +176.0 Oklahoma +73.6Hawaii +28.9 Oregon +72.9Idaho +29.8 Pennsylvania +220.0Illinois +222.4 RhodeIsland +18.6Indiana +95.2 SouthCarolina +75.1Iowa +57.4 SouthDakota +17.9Kansas +57.1 Tennessee +109.2Kentucky +68.6 Texas +509.0Louisiana +81.4 Utah +57.7Maine +24.2 Vermont +13.0Maryland +112.9 Virginia +156.6Massachusetts +141.5 Washington +129.6Michigan +146.3 WestVirginia +27.6Minnesota +107.4 Wisconsin +97.7Mississippi +45.9 Wyoming +13.3Missouri +107.0 TOTAL +5,712.5Source:Authors’estimates.
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Table10NetNumberofU.S.JobsRelatedtoTradewiththeUK,byState,2017
(Thousands)Alabama +15.9 Montana +4.4Alaska +3.0 Nebraska +8.3Arizona +22.2 Nevada +10.8Arkansas +10.4 NewHampshire +5.5California +148.8 NewJersey +33.7Colorado +22.8 NewMexico +7.1Connecticut +12.8 NewYork +78.7Delaware +3.5 NorthCarolina +37.1DistrictofColumbia +6.2 NorthDakota +3.6Florida +72.7 Ohio +41.9Georgia +37.3 Oklahoma +13.8Hawaii +6.0 Oregon +16.1Idaho +6.5 Pennsylvania +47.4Illinois +48.2 RhodeIsland +3.9Indiana +23.0 SouthCarolina +16.5Iowa +13.0 SouthDakota +3.9Kansas +11.0 Tennessee +24.4Kentucky +15.3 Texas +100.0Louisiana +16.2 Utah +12.1Maine +5.2 Vermont +2.8Maryland +23.3 Virginia +32.1Massachusetts +29.9 Washington +25.8Michigan +33.4 WestVirginia +5.6Minnesota +23.8 Wisconsin +23.1Mississippi +9.9 Wyoming +2.4Missouri +22.9 TOTAL +1,204.0Source:Authors’estimates.
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IV ConclusionOuranalysisdemonstratesthattradecontinuestobeimportant–indeed,increasinglyimportant–totheU.S.economyandAmericanworkers.AstheU.S.economyhasbecomemoreopenandbothexportsandimportshavegrown,sotoohaveU.S.jobsdependentontrade.Thus,policymakersandothersseekingtocreatenewjobsforunemployedAmericansshouldnotoverlooktheopportunitiesaffordedbytradepolicies,negotiationsandprogramsthatincreaseAmerica’sparticipationintheinternationalmarketplace.
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AppendixA
TradeData
TableA1U.S.ExportstotheWorld,1992-2017
(Billions)
Goods Services Total Exports Exports Exports
1992 $448.2 $177.3 $625.51993 465.1 185.9 651.01994 512.6 200.4 713.01995 584.7 219.2 803.91996 625.1 239.5 864.61997 689.2 256.1 945.31998 682.1 262.8 944.91999 695.8 271.3 967.12000 781.9 290.4 1,072.32001 729.1 274.3 1,003.42002 693.1 280.7 973.82003 724.8 290.0 1,014.72004 814.9 338.0 1,152.82005 901.1 373.0 1,274.12006 1,026.0 416.7 1,442.72007 1,148.2 488.4 1,636.62008 1,287.4 532.8 1,820.22009 1,056.0 512.7 1,568.72010 1,278.5 562.8 1,841.32011 1,482.5 627.0 2,109.52012 1,545.7 655.7 2,201.42013 1,578.4 700.5 2,278.92014 1,621.9 741.1 2,363.02015 1,503.1 755.3 2,258.42016 1,451.0 758.9 2,209.92017 1,546.3 797.7 2,344.0Source:U.S.DepartmentofCommerce,BureauofEconomicAnalysis,using“Censusbasis”tradedataforgoods.
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TableA2U.S.ImportsfromtheWorld,1992-2017
(Billions)
Goods Services Total Imports Imports Imports
1992 $532.7 $119.6 $652.31993 580.7 123.8 704.41994 663.3 133.1 796.31995 743.5 141.4 884.91996 795.3 152.6 947.81997 869.7 165.9 1,035.61998 911.9 180.7 1,092.61999 1,024.6 192.9 1,217.52000 1,218.0 216.1 1,434.12001 1,141.0 213.5 1,354.52002 1,161.4 224.4 1,385.72003 1,257.1 242.2 1,499.32004 1,469.7 283.1 1,752.82005 1,673.5 304.4 1,977.92006 1,853.9 341.2 2,195.12007 1,957.0 372.6 2,329.52008 2,103.6 409.1 2,512.72009 1,559.6 386.8 1,946.42010 1,913.9 409.3 2,323.22011 2,208.0 435.8 2,643.72012 2,276.3 452.0 2,728.32013 2,268.0 461.1 2,729.12014 2,356.4 480.8 2,837.22015 2,248.8 491.7 2,740.52016 2,187.6 509.8 2,697.42017 2,342.0 542.4 2,884.4
Source:U.S.DepartmentofCommerce,BureauofEconomicAnalysis,using“Censusbasis”dataforgoods.
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TableA3“Openness”ofU.S.Economy,1992-2017
(BillionsandPercent) Total TotalTrade’s U.S. Shareof Trade* U.S.GDP
1992 $1,300.9 20.0%1993 1,374.8 20.01994 1,534.3 21.11995 1,715.4 22.51996 1,831.7 22.71997 2,009.6 23.41998 2,068.7 22.81999 2,241.4 23.32000 2,567.6 25.02001 2,417.2 22.82002 2,422.8 22.22003 2,575.5 22.52004 2,974.3 24.42005 3,331.6 25.62006 3,716.1 26.92007 4,040.2 28.02008 4,397.2 29.92009 3,560.4 24.62010 4,206.5 25.22011 4,785.5 30.82012 4,951.2 30.62013 5,037.6 30.02014 5,250.3 30.02015 5,051.5 27.72016 4,955.7 26.52017 5,278.8 27.1*“TotalTrade”isgoodsandservicesexportsplusgoodsandservicesimports,using“balanceofpayments”basisdatatocoincidewithGDPdata.Source:U.S.DepartmentofCommerce,BureauoftheCensus,NationalIncomeandProductAccountstables.
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AppendixB
MethodologyWeappliedamulti-sectormulti-countrycomputablegeneralequilibrium(CGE)modeloftheU.S.economytoestimatetheimpactsoftradeonU.S.employment.CGEmodelsuseregionalandnationalinput-output,employmentandtradedatatolinkindustriesinavalue-addedchainfromprimarygoodstointermediateprocessingtothefinalassemblyofgoodsandservicesforconsumption.Inter-sectorallinkagesmaybedirect,liketheinputofsteelintheproductionoftransportequipment,orindirect,viaintermediateuseinothersectors(e.g.,energyusedtomakesteelthatisusedinturninthetransportequipmentsector).OurCGEmodelcapturestheselinkagesbyincorporatingfirms’useofdirectandintermediateinputs.Themostimportantaspectsofthemodelcanbesummarizedasfollows:(i)itcoversallworldtradeandproduction;and(ii)itincludesintermediatelinkagesbetweensectorswithineachcountry.TheModelThespecificmodelusedwastheGlobalTradeAnalysisProject(GTAP)model(seeHertel2013).ThemodelanditsassociateddataaredevelopedandmaintainedbyanetworkofresearchersandpolicymakerscoordinatedbytheCenterforGlobalTradeAnalysisattheDepartmentofAgriculturalEconomicsatPurdueUniversity.Guidanceandbase-levelsupportforthemodelandassociatedactivitiesareprovidedbytheGTAPConsortium,whichincludesmembersfromgovernmentagencies(e.g.,theU.S.DepartmentofCommerce,U.S.DepartmentofAgriculture,U.S.EnvironmentalProtectionAgency,andU.S.InternationalTradeCommission,EuropeanCommission),internationalinstitutions(e.g.,theAsianDevelopmentBank,OrganizationforEconomicCooperationandDevelopment,theWorldBank,UnitedNationsandtheWorldTradeOrganization),theprivatesectorandacademia.Dr.FrancoisisamemberoftheConsortium.Themodelassumesthatcapitalstocksarefixedatanationallevel.Firmsareassumedtobecompetitive,andemploycapitalandlabortoproducegoodsandservicessubjecttoconstantreturnstoscale.10Productsfromdifferentregionsareassumedtobeimperfectsubstitutesinaccordancewiththeso-called“Armington”assumption.ArmingtonelasticitiesaretakendirectlyfromtheGTAPv.10database,asaresubstitutionelasticities
10 ComparedtodynamicCGEmodelsandmodelswithalternativemarketstructures,thepresentassumptionofconstantreturnstoscalewithafixedcapitalstockisclosestinapproachtoolderstudiesbasedonpureinput-outputmodelingoftradeandemploymentlinkages.Inthepresentcontext,itcanbeviewedasgeneratingalower-boundestimateofeffectsrelativetoalternativeCGEmodelingstructures.
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forvalueadded.11WeareinterestedintheimpactoftradeontheU.S.andstateeconomiesgiventheU.S.wagestructuresin2017(i.e.,giventheprevailingwagestructureofthelaborforceinagivenyear,howmanyjobsintheU.S.economyandineachstate’seconomywerelinkedeitherdirectlyorindirectlytotrade?).Assuch,themodelemploysalabormarketclosure(equilibriumconditions)wherewagesarefixedatprevailinglevels,andemploymentlevelsareforcedtoadjust.Thisprovidesamodel-generatedestimateoftheU.S.jobssupported,atcurrentwagelevels,bythe2017leveloftrade.DataThemodelincorporatesdatafromanumberofsources.Dataonproductionandtradearebasedoninput-output,finaldemand,andtradedatafromtheGTAPdatabase(seeAguiar,Narayanan&McDougall2016).Thesedataprovideimportantinformationoncross-borderlinkagesinindustrialproduction,relatedtotradeinpartsandcomponents.Forthe2017simulation,socialaccountingdataaredrawndirectlyfromthemostrecentversionoftheGTAPdataset,version10.Tradedata(bothexportsandimports)excludere-exports.12Thisdatasetisbenchmarkedto2014andincludesdetailednationalinput-output,trade,andfinaldemandstructuresfor140countriesacross56sectors(seeTableA-1).Wehaveupdatedthetradeandnationalaccountsdatato2017.Thebasicsocialaccountingandtradedataaresupplementedwithdataontariffsandnon-tariffbarriersfromtheWorldTradeOrganization'sintegrateddatabaseandfromtheUNCTAD/WorldBankWITSdataset.AlltariffinformationhasbeenconcordedtoGTAPmodelsectorswithintheversion10database.Forthepurposesofthemodelingexercise,theaggregationoftheGTAPdatabaseincludes110regionsand27sectors.13TheGTAPmodelsectorswereconcordedtostate-levelemploymentdatafromtheCommerceDepartment’sBureauofEconomicAnalysis(BEA).Thisallowedustomapnationwideeffectstoindividualstates.Itisimportanttoemphasizethatwedistributetheemploymentimpactsoftradeatthenationalleveltoemploymentatthestatelevel.Wearethereforereportingstate-levelemploymentrelatedtotradenationally.Wearenotreportingthestatelevelemploymentimpactsofstate-leveltrade.Basedontheavailabilityofemploymentdataaswellasthesizeofsomeofthesectors,weexpandedsomesectors11 Technicallyweworkwithwhatisknownasa“non-nested”versionofthetradedemandequationintheGTAPmodel.Assuch,inthiscasethemodelalsocorrespondsanalyticallytoarecenttypeofmodelknownasanEaton-Kortummodel.SeeBekkersetal(2017)forfurthertechnicaldiscussionandderivations.12 Seehttps://www.gtap.agecon.purdue.edu/databases/contribute/reexports.asp.13 TheGTAPdatabaseincludesrelativelymoredetailinsectors,particularlyinagricultural,primaryproduction,andprocessedfoodsthanwecanuseherewhenmappingmodelresultsbysectortostateemploymentdatabysector.Stateemploymentdataformostofthesesectorsarenotavailable.
23
(e.g.,“FinanceandInsurance”its“Finance”and“Insurance”components)andcollapsedothers(e.g.,individualfoodproductsintoonesector,“FoodProducts,”orindividualtransportationmodesintoonesector,“Transportation”).BEAdoesnotdisclosestate-levelemploymentdataforcertainsectorsforconfidentialityreasons.Forsomeofthesesectors,wewereabletouseMoody’sAnalyticsstate-levelemploymentestimatestoestimatethemissingnationalemploymenttoundisclosedsectorsinthesestates.However,becausewemixedemploymentdatafromtwosources(BEAandMoody’s),thesumoftheemploymenteffectsforthestatesmaynotaddperfectlytothetotalfortheUnitedStates.Forpurposesofthemodelingexercisehere,the110countries/regionsinthestandardGTAPmodelwereplacedineightdistinctgroupingsoftradingpartnersforthepurposeofexaminingtheimpactofU.S.tradewiththosecountries:Canada,Mexico,China,Japan,Korea,theEuropeanUnion(excludingtheUK),theUnitedKingdom,andrest-of-world.WealsoaggregatedthestandardGTAPmodelsectorsintothoseshowninTableB-1.
TableB-1ModelSectors
PrimaryagriculturePrimaryenergy,miningProcessedFoodsBeveragesandtobaccoPetrochemicalsChemicals,rubber,plasticsMetalsMotorvehiclesElectronicequipmentTextilesClothingFootwear,leatherWood,paperOthertransportequipmentOthermachineryOthergoods
ConstructionAirtransportWatertransportOthertransportTradeanddistribution(Wholesale,retail,accommodationandfoodservices)Communications(Information,postal,deliveryservices)FinancialservicesInsuranceBusinessandprofessionalservicesPersonalandrecreationalservices(Arts,entertainment,andrecreationservices)Otherservices(Education,healthcare,socialassistance,governmentservices)
Model-basedSimulationsThesimulationconductedwiththeGTAPmodelinvolvedimposingchangesinU.S.trade,inthisinstanceahypotheticaleliminationofallU.S.exportsandimportsofgoodsandservicesbyimposingprohibitivedutiesagainstgoodstradewiththeUnitedStatesacrosstheboard,andprohibitivetradecostsagainstservicestradewiththeUnitedStates.14
14 Wehavemodeledanextremeshocktotheeconomytoshowtheextenttowhichsectorsofthe
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OurresultstellushowmuchU.S.andstateoutputandemploymentwoulddeclineweretheUnitedStatestoceaseexportingandimportinggoodsandservices,tracingchangesattheborderastheyworkthroughtheU.S.economy.Thenetnegative(orpositive,insomecases)impactsonoutputandjobsfromanabsenceoftradeserveasaproxyfortheopposite:thenetpositive(ornegative)impactsonU.S.outputandemploymentbecauseoftrade.Wereporttheresultsfromthissecondperspectiveinthispaper.ReferencesAguiar,Angel,BadriNarayanan,&RobertMcDougall."AnOverviewoftheGTAP9DataBase."JournalofGlobalEconomicAnalysis1,no.1(June3,2016):181-208.Bekkers,E.,Francois,J.F.andRojas-Romagosa,H.(2017),MeltingIceCapsandtheEconomicImpactofOpeningtheNorthernSeaRoute.EconomicJournal.doi:10.1111/ecoj.12460Hertel,T.(2013).“GlobalAppliedGeneralEquilibriumAnalysisUsingtheGlobalTradeAnalysisProjectFramework,”inP.B.DixonandD.W.Jorgensoneds.HandbookofComputableGeneralEquilibriumModeling.Amsterdam:Elsevier,815-76.Reinert,K.A..andD.W.Roland-Holst(1997),"SocialAccountingMatrices,”inFrancois,J.F.andK.A.Reinert,eds.(1997),Appliedmethodsfortradepolicyanalysis:ahandbook,CambridgeUniversityPress:NewYork.
economyaretiedtotrade.Wearenotsuggestingthataprohibitivetariffisapolicyoptionthathasbeenproposedbyanyone.Itisusefultounderstandthejobimpactofcompleteeliminationofbothexportsandimports,inordertoquantifytheoppositescenario:thejobimpactofactualU.S.tradeintheexperimentyears.
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