Trade Is Not a Job Killer

By Donald J. Boudreaux. Excerpt:

"In January alone, the number of American workers who were laid off or dismissed from their jobs was 1.8 million. The number of workers who quit their jobs that month was 3.3 million. Adding in workers who left their jobs for other reasons, such as retirement and disability, the number of job separations in January was 5.4 million. But there were 5.6 million hires in January, too. Those numbers are typical of most months.

Awareness of job churn should calm Americans’ fears about imports. The Bureau of Labor Statistics has data on monthly nonfarm discharges and layoffs since September 2006. Unsurprisingly, this number peaked during the Great Recession, at 2.57 million in January 2009. But even excluding the recession months, the monthly average number of workers in the United States who lose their jobs is around 1.75 million. In a normal year, then, the number of workers laid off or dismissed averages 21 million.

Compared with the number of total annual job losses, therefore, job losses from trade shrink into insignificance.

Ms. Wallach’s estimate that Nafta destroyed one million jobs in its first 20 years means that it took freer trade with Mexico two decades to destroy as many American jobs as are now destroyed every 18 days on average. Mr. Autor, Mr. Dorn and Mr. Hanson’s calculation that 2.4 million American jobs were ended by trade with China from 1999 through 2011 implies that the 13-year “China shock,” as the paper called it, eliminated as many jobs as are eliminated, on average, every 41 days."

"Perhaps the major source of job destruction and creation is technological innovation. In the early 1900s automobiles famously destroyed jobs for buggy-whip makers and blacksmiths. Starting in the 1980s, personal computers and email killed jobs for stenographers and document deliverers. Today, A.T.M.s and online banking apps are eliminating jobs for bank tellers.

Yet despite these and innumerable other innovations that caused the demise of particular jobs, the number of jobs in the United States economy is today higher than ever — and contrary to popular myth, the earnings of ordinary Americans recently hit an all-time high.

The reason is that job destruction in a market economy is also job creation. When consumers buy less of a particular product, they spend or invest more money elsewhere, thus creating not only new and better products but also new jobs. Consumers’ freedom to change how they spend their money prompts entrepreneurs and investors to produce things that consumers value most highly, and to do so as efficiently as possible. The result is economic growth."

Employed full time: Median usual weekly real earnings: Wage and salary workers: 16 years and over