While the significant improvement in employment numbers since the 2008 recession cannot be contested, all is not well in the workplace. Too many Americans have wages have remained flat for a decade, while others are either underemployed or working a couple of jobs. And the unemployed in their 50s and 60s, especially, who would bring work experience to new jobs, seem to be too often overlooked by employers.
In cities in the Northeast, upper Midwest and South, small- and medium-sized factories have been shuttered for years with very little hope of reopening.
The uncertain employment future in this country is beginning to cause a new look at trade agreements that fostered jobs overseas in return for the importation of an increased number of lower-priced goods. Were those agreements, which almost eliminated trade barriers, in Americans’ best interest? Did America give up too many jobs in hopes of a work environment that did not materialize? The mixed reaction from both political parties about the current proposed Pacific trade pact reflects that discomfort.
And the president is vulnerable when Republicans say, yes, the number of employed may have climbed nicely, but the percent of those wanting and able to work still falls far short of what it should be.
A story in The New York Times last week reflects on what did and did not occur since barriers were eliminated and the U.S. began importing so much from overseas, particularly from China. The results are worth considering.
The bedrock of trade agreements is that expanded trade grows economies to put more people to work, and that Americans with their head start in the workplace and in their education would move up the production chain to assume more skilled jobs at higher pay and play roles in the creation of even more products. But that happened to only a limited degree. Unexpectedly, the wages the Chinese accepted, and workers in other countries nearby, were so low that more factory production than expected swiftly migrated to that part of the world.
Also unexpectedly, the working Chinese (the hundreds of millions of them), even though they were beginning to have disposable income for the first time, did not become the consumers they were hoped to be. They saved what they earned, and the expected rough balance between exports and imports (some to come from the United States) did not occur.
(The Times’ author points out that China’s one-child policy, recently officially canceled but likely to change slowly, had the effect of encouraging saving. Savings would be mandatory to supplement the support in old age that only one child could give.)
That reluctance to spend is also proving to be a challenge for the Chinese government, which would like its citizens to consume more in order to absorb some of the production from the too-many Chinese factories built without realistic business models.
The mismatch continues on another continent, where the home-grown textile industry which employed many Nigerians has almost been wiped out by inexpensive clothing imported from China.
The New York Times article offers no easy solution to bringing exports and imports between countries into better balance: There is no single formula, and each situation will require diplomacy.
Those who believe in as much of a free trade environment as possible may see their position challenged in the coming years, and for good reason. Equal benefits are not guaranteed.
