Trade and Jobs

Automation, Not Trade, Biggest Cause of Manufacturing Job Loss

Donald Trump rose to power of the false claim that America’s trade deficit was the reason American manufacturing jobs were falling, a claim belied by the fact that manufacturings job are falling dramatically in chronic trade surplus countries like Japan and Germany. The reason reason jobs are falling is that modern machinery saves labor. In 2000, it took twelve workers laboring for a year to produce $1 million worth of vehicles and parts output (in constant 2009 dollars). In 2015, it took half that number of workers. That’s the kind of productivity growth that should allow a substantial rise in workers’ wages. That it hasn’t is not due to globalization but who has the power in Washington.

For the economics of this, see this piece and this one. On how to remedy the harm to workers, see my post on this site “How To Fight the Anti-Trade Populism.”