The High Cost of Cheap Goods
August 11, 2008
 Free trade advocates have argued for years that normalizing trade relationships with China would help consumers and create new jobs at home.
But a new study by the Economic Policy Institute refutes those claims, highlighting the hidden cost of a market flooded with cheap goods. Based on eight years of economic research, the report, “The China Trade Toll,” details the destructive impact the rapidly widening U.S. trade deficit with China is having on American jobs and wages.
Photo used under a Creative Commons
license from Flickr user Sonya.
Since 2001, the trade gap with China has more than tripled in size, growing approximately $30 billion a year.
“This new data is a wake-up call about the devastating effect of our unbalanced
China trade on American jobs, wages and our economy,” said senior EPI economist Robert Scott, author of the report.
Between 2001 – when China joined the World Trade Organization – and 2007, more than 2 million jobs were lost thanks to the $262 billion trade deficit, the report says.
The majority of the jobs have been in the manufacturing sector, but the increasingly technologically advanced Chinese economy is cutting more and more into high-tech sectors of the U.S. economy, including computers, electronics and aircraft.
More than 500,000 computer and electronics jobs have been lost since 2001, more than three times the average loss in the garment industry.
The report also takes note of the downward pressure the low wage Chinese economy is placing on American wages. The average worker without a four-year college degree has seen their pay decrease by roughly $1,400 thanks to competition from China, said EPI economist Josh Bivens. “China … is a chief contributor to this downward wage pressure.”
To read the whole report click here.
Trade Chart courtesy of the Economic Policy Institute
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