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��StMrtent Performance Today, Brookings Policy Brief #23
http://www.brook.edu/es/policy/Polbrt24.htm
Return to the Brookings Home Page
Return to the Policy Brief Main Page
Brookings Policy B r i e f No. 24
Globaphobia: The Wrong Debate Over Trade
Policy
by Robert Z. Lawrence and Robert E. Litan
The outcome o f the fast-track debate that opened this month w i l l determine whether
the United States continues to lead the w o r l d toward a more open global economy or
whether, f o r the f i r s t time since the end of W o r l d W a r I I , it sends the opposite
message.
A n unusual coalition of opponents in both political parties and across the
ideological spectrum now shares the fear that increasing globalization o f the w o r l d
economy is bad f o r the United States. Recent opinion polls suggest that the critics
have substantial public support.
The authors argue that this is a misdiagnosis that could harm the U.S. economy.
They urge policymakers to adopt a novel trade adjustment program to help those
who have been displaced.
Until
nOW presidents have had relatively little difficulty getting congressional approval for trade
negotiations. This time could be different. Recent opinion polls suggest that the critics have substantial
public support. The uneven performance of the U.S. economy has contributed to the prevailing climate.
The good news is that the economy continues to generate more jobs without pushing up a very low rate
of inflation. The critics pounce on the bad news, however—slow growth in wages, widening inequality,
and job anxieties across the middle class—and blame it on trade.
We contest this critique, but argue that policymakers must address the valid concerns of those who stand
to lose when we lower our own (already very low) trade barriers. We offer a novel compensation
mechanism to ease their adjustment.
Trade: W h a t ' s in I t f o r the U.S.?
Trade negotiations historically have resembled nuclear arms reduction talks. Other countries have
barriers; we have barriers; we'll lower ours if they'll lower theirs. Since shortly after World War II, this
logic has fueled eight rounds of multilateral trade negotiations: huge affairs, involving in the latest
round more than 100 countries. Since 1980, the United States has also negotiated free trade pacts with
Israel, Canada, and Mexico. The results have been heartening: average tariffs in industrialized countries
have fallen from over 40 percent to just 6 percent.
In strictly mercantilist terms the United States has been a big winner from these past deals, since U.S.
tariffs have been generally lower than those abroad, so we ended up reducing our tariffs by less than
other countries. In the most recent Uruguay round we lowered our tariffs by about 2 percentage points,
while other nations chopped theirs between 3 and 8 percent. Likewise in NAFTA, Mexico has reduced
its tariffs on U.S. products, which averaged about 10 percent before the agreement, while we have
eliminated the 2 percent duties levied on Mexican exports.
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eliminated the 2 percent duties levied on Mexican exports.
With tariffs now already so low, however, it would seem that little is left to negotiate. Not so. In most
developing countries, tariffs on many products range up to 30 percent and higher, while agricultural
quotas, barriers to foreign service providers, and other investment restrictions translate into
tariff-equivalent rates of 50 percent or more.
Developed countries also continue to maintain significant barriers in key sectors: although the Uruguay
round commendably converted most agricultural quotas into tariffs, tariffs on dairy items and sugar
exceed 100 percent in the EU and are nearly 100 percent in the United States, while in Japan dairy tariffs
exceed 300 percent and tariffs on wheat remain above 150 percent.
The United States has much to gain from further reductions in trade and investment barriers. America
has the world's most efficient producers of agricultural commodities and the world's leading software,
telecommunications, entertainment, and financial companies—all of whom would benefit from
enhanced access to foreign markets.
The Globaphobes
It is understandable why specific industries, such as textiles and apparel, whose trade protection could be
lifted as part of any future trade deals, may not be enthusiastic about letting the president negotiate them.
Opposition to freer trade has been considerably augmented, however, by a wide-ranging attack against
globalization—increasing trade and investment linkages among all countries.
This attack—which we call Globaphobia—comes in different versions and is found in both the left and
the right of the two major political parties. It is also increasingly found abroad, especially in Europe,
where unemployment has been high for decades.
Those whom we label pure globaphobes blame trade for both the long-term stagnation of average real
wages since the mid-1970s and much of the widening inequality of wages, especially those earned by
the lowest-income Americans. Increasingly, these low-income Americans find themselves in
competition with workers in less-developed countries earning a fraction of what they earn. This is the
basis of the sucking sound Ross Perot warned about in NAFTA: low-wage Mexicans taking the jobs of
Americans either by exporting more or benefiting from the movement of American firms to Mexico.
A second form of globaphobia—softer only because its advocates claim they are for freer trade in
principle—objects to new trade agreements with countries that look very different from ours in two
major respects: they do not protect workers or the environment as we do.
A Misdiagnosis
The continuing, and indeed even remarkable, economic expansion of the United States has masked
several disturbing trends, which have combined to fuel the globaphobics' discontent:
• Wages of the typical American worker have barely grown in more than twenty years, after
growing at about 2 percent annually from the end of World War II until the early 1970s.
• Low-wage workers in particular have suffered an erosion in their real wages since the late 1970s.
• Even highly educated workers in the United States have not been immune to the forces of
change. While they lose their jobs at a lower rate than less-educated workers, more highly skilled
workers have suffered the largest increase in the rate of job loss since the mid-1980s.
Trade looks like an easy culprit because the access of American consumers to foreign goods also
effectively expands the labor pool against which our workers must compete. With more workers and
only a limited demand for the goods they produce, shouldn't the elementary laws of economics imply
that trade must force down the wages of American workers?
A small army of economists has been busy in recent years attempting to answer this very question, using
a wide variety of sophisticated techniques. But, with a few exceptions, most have concluded that greater
trade has played only a small role in the widening inequality of wages and virtually no role in the slow
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growth of wages overall. There are several reasons why:
• We trade primarily with rich countries where wages are high, not poor ones, where wages are
low. In fact, imports from countries where wages are less than 50 percent of U.S. wages amounted
to only 2.6 percent of our GDP in 1990 (up modestly from 1.8 percent in 1960).
• Even among rich countries, the United States is a low-wage manufacturing country itself (figure
1). Clearly, European and Japanese countries cannot be bidding down our wages if they are paying
their workers.
• More fundamentally, firms pay attention not to the wage rates they pay their workers, but to the
labor costs per unit of output, or wages adjusted for productivity. Professors Dani Rodrik of
Harvard and Paul Krugman of MIT, however, have documented that poor countries pay low
wages because their workers are far less productive than ours are. Furthermore, wages in many
countries we used to think of as developing—such as the Asian Tigers—have been increasing
much more rapidly than those in this country.
Rgire 1. Hourly Condensation Costs in Manufacturing for 1996.
U.K.
Cauda
US.
Haly
France
Japan
E.U.
Nedwriands
Demiarit
Firiand
Sweden
AiBtaia
Norway
Bdgjum
Stritzeriand
Germany
20
24
28
22
VUI (Ct: IktmvailMx* VMM ha.
A related often-heard, but wrong, critique is that increasing globalization is reducing the number of jobs
in America. Trade moves jobs around, from low-paying importing-competing industries to
higher-paying export industries. But trade does not affect the total number of jobs, which depends on
how fast economic policymakers—the Federal Reserve in particular—let our economy grow. Absent
signs of rising inflation, the Fed has allowed the expansion to keep rolling, generating more jobs as it
goes, despite our rising appetite for imports. The creation of 14 million new jobs over the past five years
and an unemployment rate of less than 5 percent (a twenty-four-year low) refute claims that increasing
trade shrinks employment.
Simple economic fundamentals also explain the absence of any giant sucking sound after NAFTA. The
claim was absurd on its face since Mexico's economy is about 4 percent the size of ours, and, while
Mexico is our second largest trading partner, imports from Mexico account for just 1 percent of our total
demand for goods and services. Measuring the impact of NAFTA, meanwhile, is complicated by the
financial crisis in Mexico, which had nothing to do with the trade agreement. While estimates of the net
job impact of NAFTA conflict, all of the numbers pale compared with the more than 2 million jobs that
turn over in the economy every month.
Slow Wage Growth: Is Trade the Culprit?
If increasing globalization is not to blame for slow wage growth and rising inequality, then what is?
Since wages basically depend on how productive workers are, it is no surprise that slow productivity
growth explains slow wage growth. Some have criticized this linkage, which, as shown in figure 2,
seems to explain the rising wage growth before 1973 but not since. The fact that real wage growth has
nonetheless lagged behind productivity growth since 1973 is the result of two often overlooked factors:
• The measure of wage growth does not include fringe benefits, notably health care and pension
costs, which employers increasingly have paid to workers in lieu of increasing cash wages. With
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fringe benefits factored in, figure 2 illustrates a much closer connection between the growth of
overall compensation and productivity.
• Conventional measures of real wages use the consumer price index to correct for inflation. But to
producers, the real output of their workers is measured by output in current dollars deflated or
corrected by the growth in the prices ofthe goods they sell (not the prices of all goods and services
consumers buy).
figire 2. Wage and Productivity Growth, 1959-96
Non-farm business producthrity (NFB)
15
CompcnutionMFB implicit price deflatarV"""""^^
1.6
'
14
\2
^^t^^Cainpensatian/oaintmer price iiilex
j [ $ * \ ^ ~ ~ * * ^ ~ \ . A»wage hourly earnings
S s
S
r
1
0.8 1 1 l
ism
11111l
1969
111l l l l l
1971
1977
i i i i i
1983
1969
1995
m i C I : O U M f c e r a k l k i B S * * . Itaufcrt. HOT.
Some critics argue that a major reason for growing wage inequality is that trade and the threat of
American firms' moving offshore to low-wage countries have eroded the bargaining power of workers.
If this argument is correct, then we should expect the relative wages of less skilled workers to fall more
rapidly in trade-sensitive sectors than elsewhere in the economy. But figure 3 clearly shows that this is
not the case. Less-skilled workers have been falling behind because employers have had less need for
them, a circumstance that figure 4 shows has affected industries that are most and least affected by trade
alike. A recent study by three Harvard economists and published by Brookings confirms that trade with
developing countries contributes only minimally to growing worker inequality: it accounts for only
between 4 and 7 percent of the increase between 1980 and 1995 in the premium earned by college
graduates relative to those who have a high school education.
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Figire 3. Median Pay of FJI-Time Workers with Less
than High School Diploma as Percent of P Received
by Workers with one to three Years of College
1969
1973
1979
19S9
1999
1969
1973
1979
1989
1995
Since skills are the ultimate driving force behind wage differentials—both within and across
industries—those who are concerned about rising inequality must look for a solution to improvements in
and widened accessibility to education and training at all levels: K-12, vocational, and college.
Restricting trade is not the answer.
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figire 4 . Use of Workers with Less than High School Dipbtra
in Trade-Affected and Non-Trade-Affected Industries
S
O
40
30
20
Least trade affected '
10
1969
1973
1979
19A9
199S
n U K t : kUMonedtaifcCMItn If I f r M t r c i M a r r d b w b i t e .
Why More Trade?
The case for negotiating even lower trade barriers will not be won by playing only defense—that is,
answering the claims ofthe globaphobics. Political leaders and their constituents must be given positive
reasons to support further trade liberalization.
In the past, the positive case has traditionally been made by attempting to convince voters that freer
trade—and enhanced export opportunities in particular—means more jobs. Implicit in this argument is
that imports are an evil necessity we have to live with; we trade in order to export so that we can create
more jobs.
From an economic point of view, both these arguments are sheer nonsense. As we have already noted,
domestic demand, not how much we trade, determines total employment. In addition, the level of trade
barriers abroad has very little to do with our trade balance, which, like total employment, is determined
by macroeconomic factors—specifically, the balance (or imbalance) between saving and investment.
Nations that invest more than they save (as we do) must attract foreign capital to finance their saving;
the foreign capital is then used to buy imported goods. Trade barriers abroad are important, but only
because, by reducing our exports and the demand for dollars on international markets, they depress our
exchange rate and lower the prices on what we sell abroad.
Meanwhile, the notion that exports are good, imports are bad is long overdue for correction. Our living
standards—what we can buy for the work we do—depend on our productivity as workers. We can
improve living standards by concentrating on producing the things we do relatively best, selling some of
them at a good price, and using the proceeds to buy from abroad the things we are least efficient at
producing. In short, we export in order to import.
Understood this way, reducing barriers to trade both abroad and at home delivers four broad benefits:
• Lower trade barriers abroad mean belter jobs (not more total jobs) for American workers because
jobs in export industries (being more productive than average) pay 15 percent more than the
average wage.
• Lower trade barriers promote faster growth in the standard of living for Americans. Broader
export markets enable U.S. companies to reap larger returns on their innovations. Lower trade
barriers here, meanwhile, enhance competitive pressure on our firms to innovate. In addition, U.S.
firms increasingly rely on imported high-tech capital equipment and know-how, which accelerate
the growth of productivity and living standards here.
• Lower U.S. trade barriers provide the equivalent of a tax cut for American consumers because
they lead to lower prices—not just on the imported items, but also on the domestically produced
goods and services with which those imports compete. According to the World Bank, consumers
around the world are expected to gain between $100 billion and $200 billion every year in
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additional purchasing power as a result ofthe Uruguay agreement, with two-thirds of the benefits
to be reaped by rich countries like ours. Once barriers to full competition in telecommunications
are dropped, in an agreement reached under the auspices ofthe WTO earlier this year, consumers
around the world stand to enjoy more than $1 trillion in savings over a fourteen-year period. In
short, broader trade is a win-win rather than a zero-sum game.
• Finally, freer trade expands the variety of goods and services available to American consumers.
Think of a world in which Americans had to make do without fax machines or video recorders,
which are overwhelmingly or exclusively made abroad—or consumers abroad could not buy the
products of Silicon Valley.
To date, most political leaders and those who advise them have not sold freer trade using these
arguments. It is time they start. The jobs argument was the way NAFTA proponents argued their case.
Yet, as events turned out, the peso crisis made a mockery in the popular media of the jobs argument and,
in the process, soured much of the public on freer trade in general, a legacy that supporters of fast-track
legislation are now fighting to overcome.
Smoothing the Way for Trade Liberalization
The advantages of trade liberalization are not without costs. While the U.S. economy as a whole, and the
vast proportion of its citizens, will be better off with more liberalized trade, some Americans will be
worse off. The typical reply to this conundrum is to advise politicians to channel some of the winnings
from freer trade to compensate the losers.
To a very limited extent, policymakers have responded by authorizing adjustment assistance for workers
dislocated by trade—but the program has never been very big and has been criticized. The original
program did not require recipients to undergo training and basically involved extending unemployment
benefits. While the special NAFTA trade adjustment program did require recipients to undergo training,
it has not been used intensively—not just because the total job losses have not been as great as many
feared, but because only about 10,000 of the 120,000 workers found to be eligible for assistance have
actually claimed benefits. One reason workers are reluctant is that if they want to obtain benefits, they
may not take an alternative job. Thus the current NAFTA program might better be described as
nonadjustment assistance.
In our view training programs or benefits targeting trade-displaced workers should be complemented
with an explicit compensation mechanism. The best indicator of the losses suffered by workers, and thus
the basis for compensation, is the difference between what workers earn in their new jobs and what they
earned previously. We would favor a wage insurance scheme in which dislocated workers who were in
their job for some minimum period (say, two years) would be compensated for half the loss of earnings
they may experience after gaining a new job. This would also strongly encourage them to locate new
employment quickly. The compensation would last for a limited period, perhaps for another two or three
years. Time is running short. While policymakers debate whether to negotiate further reductions in trade
barriers, other countries may strike their own deals, while others may be tempted to backtrack on deals
already made. The United States has invested too much in the cause of trade liberalization to sacrifice its
leadership on the issue now.
For related documents and links . . .
The authors of this policy brief are working with two coauthors (Gary Burt less of Brookings and Robert Shapiro of
the Progressive Policy Institute) on Globaphobia, a book about the economic effects of globalization, from which
many ofthe ideas in this brief are drawn. The book will be published jointly by Brookings, the Progressive Policy
Institute, and the Twentieth Century Fund in early 1998.
Robert Z . Lawrence holds the New Century Chair in International Trade and Economics at Brookings and the Albert L.
Williams chair of International Trade and Investment at the John F. Kennedy School of Government at Harvard University.
Robert E. L i t a n is Director ofthe Economic Studies program at Brookings.
The views expressed in this Policy Brief are those ofthe authors and are not necessarily those of the trustees, officers, or
other staff members ofthe Brookings Institution.
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Brookings gratefully acknowledges the generosity the Cabot Family Charitable Trust and B. Francis
Saul II for their support ofthe Policy Brief series.
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The Brookings Institution is responsible only for informxtion in documents distributed by the www.brook.edu Web server.
We arc not responsible for information derived from links to remote sources.
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�Jlrading Away Good Jobs: An Examina...979-94 - Economic Policy Institute
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Copyright © 1997 by the Economic Policy Institute. Preferred Citation: by Robert E. Scott, Thea Lee, and John Schmitt,
"Trading Away Good Jobs: An Examination of Employment and Wages in the U.S., 1979-94" (Economic Policy Institute:
1997).
Order the report.
eo o i P lc I siue
cnm oi y ntt t
c
Trading Away Good Jobs
An Examination of Employment and Wages in the U.S., 1979-94
by Robert E. Scott, Thea Lee, and John Schmitt
October 1997
For almost two decades, wages have been eroding and income inequality has been increasing in the
U.S. The push for rapid growth in foreign trade and investment has only made matters worse. Even
some of free trade's proponents admit that trade may be responsible for at least 20-25% ofthe increase
in U.S. income inequality since 1979 (Tyson 1997.
1
2
Despite this rise in inequality and the growing research that links an important portion of it to
globalization, proponents of free trade still argue that it has benefited U.S. workers. Free trade
advocates have typically built their case on two assertions: first, that trade has created jobs and spurred
job growth in the U.S; and, second, that export jobs pay significantly more than the average U.S.
wage.4 A
report will demonstrate, both claims are misleading.
3
S
As for claims of job growth, many of the analyses cited by free traders typically count only thejob
possibilities created by exports and ignore those destroyed by imports. And though it may be true that
export jobs pay more than the average job, such comparisons overlook the fact that import-competing
jobs—typically in manufacturing—also pay substantially better.
Building primarily on the work of Jeffrey Sachs and Howard Shatz for the Brookings Papers on
Economic Activity, this report analyzes the effects of trade on the demand for labor between 1979 and
1994 (the last year for which data are available). Our research examines how trade flows have affected
demographic and income groups and the wages of workers in import and export industry jobs. Unlike
much of the recent research on trade, this report comprehensively examines the relevant issues and
adheres to the most intellectually sound methodologies.
Our analysis has resulted in several key findings:
• Between 1979 and 1994, the $99.5 billion (in real 1987 dollars) increase in the U.S. goods and
services trade deficit eliminated a total of 2.4 million job opportunities. About 2.2 million of
those lost job opportunities were in the manufacturing sector. Trade accounted for fully 83% of
the total 2.7 million jobs lost in manufacturing employment between 1979 and 1994.
\
N
• Every economic group has suffered a net loss in job opportunities, including the college educated.
Although the trade deficit eliminated more employment opportunities for the non-college
educated (especially those with less than a high school degree), the 460,000 new jobs for
college-educated workers created by exports between 1979 and 1994 were offset by the 750,000
opportunities sacrificed to increased imports. The result was a net loss of 290,000 jobs for the
co lege educated.
• Only a small number of industries, representing less than 5% of total national employment,
currently import or export a large share of their output. Many more industries are subject to
rapidly growing import and export shares, however, and industries with rapidly growing import
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shares pay more than ones with rapidly growing export shares.
• Industries facing fast-growing import competition pay wages that are about 4.5% higher than
those paid in sectors with rapidly growing exports. For the economy as a whole, sectors with
rapid import growth pay 4.1% to 6.6% better than average, while sectors with rapidly growing
exports pay from slightly below average wages to 1.9% above average wages.
1 Free traders often argue that wages in export industries are higher, on average, than those in
1
import industries. This is true only when including older, import-battered industries that have had
their wages depressed with time. In reality, imports are doing more to damage wages than exports
are doing to raise them. At the economy's margins, where current rather than past trade is having
its largest impact, imports have been destroying better-than-average jobs. At the same time we
are increasingly competing in export markets using relatively low-wage labor. In debates on
expanding trade, it is important to recognize the qualitative differences between the jobs in
rapidly growing import and export industries. Even a balanced expansion of trade, with equal
growth in imports and exports, would not lead to a better, higher-paying mix of jobs, and might
even possibly lower wages.
Although this study analyzes data through 1994, the U.S. trade deficit has continued to grow through
1997, suggesting that job losses due to trade are even greater than this study's findings indicate.
Estimating the Job Costs of Expanded Trade
Tables 1 and 2 summarize the principal findings of our analysis of trade's impact on employment. The
first row of Table 1 reports our estimates of thejob changes in the whole economy due to imports and
exports over the 1979-94 period. Our calculations show that the rise in imports between 1979 and 1994
reduced U.S. employment by 4.7 million (relative to what would have happened if the share of imports
in domestic consumption had remained at its 1979 level). The rise in exports over the same period
created about 2.3 million jobs. On net, then, expanded trade cost the United States about 2.4 million
jobs during this period (see the last column for "net exports"). These jobs were lost as a result of the
$99.5 billion (in real 1987 dollars) net increase in the U.S. goods and services trade deficit.
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TABLE 1
Trade and Employmont, 1979-94 (Thousands of Jobs)
ToUil Err.sfctymenl. '.360
Job Cwiges Induced By:'
Manul
Gross Impxirls
Economy
Only
lO.ail
Net Expoits
G I O S E ExfuuLs
(2,62aj
1079 69
04
1979-04
107.9S.9
•.069-04
1979-94
•.?7f<-89
2,34U
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1.2.366;.
1.41 1
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: 1 eo;.
1.1.32:':.
:202;.
n.033;.
1.910
204
101
121
!'.376!
.; 170;
(117!
(101!
!2Bl,l
141)
135;,
133)
1 i.82b;.
•715>
1.31)
!356;
105)
114R;,
;i03)
1989-M
1079-W
ToUl
IL'U.bM
Men
B4.33D
Women
Hispa-iic
O1I10.'
11,503
ii.uau)
>:7i-1!
Iti.Oib
1.7S3
1,092
i2,UB4)
(247)
(15S1
|i.3*D!
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{Ml
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(IM:
1434;
1265)
1267)
(3621
i2.267)
<:!Z1!
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1753)
13,956)
(050)
I'BRfi)
(S79:-
(cm)
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11,233)
(1,f.41)
(1.093)
(26Pi
l'713'l
(003)
(231!
(229!
.:296i
•457!
•537!
IMS)
1064)
1792)
11.200)
(1.026)
(120)
(2.078)
(233)
(iby)
•09!
I '•.276!
(IM!
{216!
1237)
(3.608)
|43'J)
1432)
5,735
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38,177
.•17.73R
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n7,€.?7
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13.186
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5.076
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Agrkulture
MnnuSnduring
Services
Ollie;
3,JS!
1S).S-.'.
bB.27B
31.0Bb
2.675
3,770
0.651
0.165
(3001
(•tSO)
'Aw.;irr»a»: iTpnr nrd rj^jrcri Kh.^iuA in r.iiv.:\r. iiairrtnnn *ii ftitur f fj.^il Irva; f-xcluniVh -nflci^fr.
1.362
S32
i32
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While
Back
664
H13
706
77
33
41
1,1 14
117
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71 7
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303
293
1 ,(169
424
411
ion
215
460
1.BB0
713
774
333
lOS
123
166
230
234
Ifl 7
2C2
250
361
343
315
3+0
447
620
610
12
(34)
105
244
803
•Mb
2'J7
117)
1.309
421
677
74
i-.sso;
(403!
{i"53;
(isb:
.;i65;
• us;.
•IZ-M;
12,076)
{515;
•;34>7;.
((#:>)
I'IS-S;
1.34;
(27)
•:2««;
ise .
1
i'Mo;
('370;
OS;
;i94;
{•33i;
{916?
! 127)
!473',
132
BI
•:2M>
12.246!
(163}
(117!
r..577)
(12b;
bb
(ill)
&
•,4b
wtir^K!;.^^ and rnl.iil (r:ii-t» an i ••xlcrrhi.n.j
"WIUJH tartjur. .vft nwrnnlinat thn rn.v Hi,'";! warja r:iBlrhiitir.n
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TABLE 2
Trade and Employment Shares (%), 1979-94
Jcb Changes l-ducsd By:'
Trtol E m s b y " " ' e m . 1989
W.-ote
Manul.
Economy
Only
Gross I n p o ' l s
I5S9-94
1079-fl9
1970-04
Grose Exports
197S>-69
1989-94
107904
Nal Exports
1979-89
1989-94
107^94
Total
1U0.U%
ICO.0%
•.ao.o-*.
1OC.0'%
103.0%
1':'0.0%
liO.0%
1CO.U%
57.1%
42. H%
•56.2%
61.6%
3B.4%
5a.7%
60.3%
33.7%
E6.y%
43.1%
47.8%
52.2%
£6.1 %
43 a%
?a.s%
Bi.yii
rj.9%
4.5'=,,
81..8%
9.7%
6.6%
5.7'-=
72.6%
10.G%
9.1%
7.6%
//.!%
5.4%
79.B%
9.1%
5.2%
S.9%
18.5%
81.5%
27 4 %
33 1 %
21 0%
15.9%
84.1%
I h 1%
6.0%
92.0%
14.2%
3B.3%
33.5%
12.3%
87.7%
22.0%
36 n%.
22 n%
•>3.S%
B6.2'%
75.0°..,
3C.4«.;
24,3%
11 ?%
13 0%
10 0%
28 C.%
27.7%
' 0.?%
M.8-%
v6.5%
27.1%.
34.4%.
13
13 1 %
R.S%
4.9%
70.C%
B.!Wi
7.2*%
10U.0%
100.0%
Men
Women
b'J.4%
46.6%
64.9%
35.1%
SB.i-;-.
White
Back
Hisparic
Olher
80.2'^
80.8%
9 0%
5.5%
4 ",'%
73.3%
3.4'%
Culliigi;
18.6%
Bl.4%
14.1%
flS..9%
Noncolifrje
Scn'iK Ci illiri |i i
Hifj/i :v;liuiil
US«
T'-MI.-I H 5
W a y * R.i-yjo'"
AC 59
75-8*
5C-71
21-l*)
0-20
Agncultura
Mnnujacluring
Services
Olher
4.3%
31.?%
18,9%
n 7-.-:,
11.2%
i6.<i>.
26.4%
36.1 %
25 6%
37 7%
2.6%
16 4 %
bS.0%
25. &%
| "::(1 r.ri,»i^ n :-.iit::if laiTMmtd
'"A'nrp mixitir,
rttiiir li^.''
41.8%
9.2%
5.6%
5.7%
2-6.2%
34.9%
4.a%
17.1%
B2.»!4
23,6%.
35,1%
?3.n%
11.6%.
40.3%
4 1%
S 5%
SM3%
3.7%
4.3%
5.2%
21 5%
78.5%
31 1%.
31 6%
15 R%
IS. 6%
80.4%
30.J%
33.1%
If,,^.
1 S.SK
14.;%
19.1%.
2*.9"--.
26.1%
10.0%
10.2%
27.1%
37.9%
6.!>"v
9.4%
24.9%
50.0%
9.7%
10.3%
14.6%
26.6%
38 7%
0.7%
56.1%
16.0%
24.6%.
6.7%
6D.4%
7.1%.
-3.1%
32.8%
122.2%
-3-1.1%
-20.9%
10.7%
95.0%
0.4%
-6.1%
a 6%
26.1%
36 7%
12.4%
16.8%
2«,8%
32.4%
27.2%
27.0%
14 5%
14 8%
10 0%
26.0%
25.2%
G 3%
72.9%
a. 4%
12.4%
5.0%
76.7%
<M%
9.2%
1.3%
57.9%
12.5%
26.2%.
2.0%
08.9%
21.8%
21.8%
16.0%
:»!, illH<::ls
•4.?.%
'.0.2%
12.2%
£7.8%
."?.»%
37.0%
9.7%
7.0%
6 2%
29.1%
ul Inu.ta itri:l .>::
I'.Tiflisn:]
,i(:r::cnl*pol rhd fK.V 1:1/^l w.iw milrp!ili!:n.
The finding indicates that the growth in trade deficits was responsible for both eliminating or failing to
create 2.4 million trade-related jobs in comparison to a situation in which the ratio of imports and
exports to output had remained constant at its 1979 level. The impact has been in both actual jobs and in
a shift from high-wage to low-wage jobs in the economy's labor composition. Even if one assumes that
employment levels are controlled by macroeconomic factors (such as the intervention of the Federal
Reserve), the effect of large, chronic trade deficits will still present itself in the shifting composition of
jobs (i.e., a shift from manufacturing to service sector jobs) and in deteriorating job quality (i.e., falling
wages for large segments of the workforce).
Of these lost job opportunities, a net 2.2 million occurred in the manufacturing sector. The reason the
vast majority of the jobs sacrificed came from manufacturing was due to an increase in net exports from
other industries (such as mining, construction, and transportation) that created 145,000 net jobs, which
offset smaller losses in other sectors. Trade explained fully 83% of the total 2.7 million job decline in
manufacturing employment between 1979 and 1994, representing a much larger share than indicated by
Sachs and Schatz (1994), who used a similar methodology but examined a shorter and slightly different
period of time.
The remaining rows of Tables 1 and 2 demonstrate who lost and who won. Across the board, almost all
groups lost, regardless of sex, race, or educational background. High- and low-paid workers and those
in agriculture, manufacturing, and services sectors all lost more jobs through import competition than
they gained through higher levels of exports.
Tables 1 and 2 also show that some disadvantaged workers suffered disproportionately from the
reallocation of jobs from import-competing to export-competing industries. Hispanics and other
minorities as well as workers with less than a high school degree lost a higher share of the jobs
sacrificed to imports and suffered a disproportionately high net loss of jobs relative to their share of
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total employment (Table 2). For example, workers with less than a high school education accounted for
23% of the jobs lost due to imports, but filled only 17% of the jobs created by exports. Overall, these
workers experienced 29% of thejob loss due to trade although they made up only 19% of the labor
force (Table 2).
The tables also clearly reveal that the effects of trade were not limited to manufacturing industries.
Increased imports between 1979 and 1994 cost 254,000 jobs in agriculture and 9,000 jobs in services,
while creating 145,000 jobs in other nonmanufacturing industries such as mining, construction, and
transportation. Export expansion over the same period replaced only a fraction of these
nonmanufacturing jobs. Agricultural export shares, particularly after 1989, fell below their 1979 level,
meaning that export developments actually reduced employment in that sector by 17,000 jobs between
1979 and 1994 (Table 1).
One of our most strikingfindingswas the large net loss of highly skilled, highly paid jobs, summarized
in Table 1 and Table 3. Increased import shares over the past 15 years have displaced almost twice as
many high-paying, high-skilled jobs as increased export shares have created. Between 1979 and 1994,
rising import penetration reduced employment of college-educated workers by 750,000; rising export
shares, however, created only 460,000 new jobs for the college educated, for a net loss of 290,000 of
these jobs (Table 1). High-paying jobs fare about the same. Imports cut employment in the
highest-paying jobs—those in the top 10% of the 1979 wage distribution (labeled 90-99 in the
tables)—by 545,000 between 1979 and 1994. At the same time, exports created only 315,000
high-paying jobs, for a net loss of 230,000 high-wage jobs. Even relatively well-paid jobs in the top
25% of the 1979 wage distribution were lost—exports created 655,000 jobs while imports eliminated
1,129,000 job opportunities, for a net loss of 475,000 well-paid jobs (Table 3). Every group considered
in Table 3, regardless of income or education level, suffered a net loss in jobs between 1979 and 1994.
Losses are proportionately larger for low-paying jobs and for non-college-educated workers (net losses
are a larger share of total losses, and much larger in proportion to export gains). This is one of the
reasons that globalization has been considered a factor in the growth of wage inequality.
5
TABLE 3
Trade and Job Quality (Thousands of Jobs)
1979-89
1939-94
1979-94
229
(578)
(349)
399
(460;.
(61)
655
{1.129)
(475)
234
(903)
(1570)
343
(537)
(134)
610
(1.526)
(916!
148
(362)
(215)
233
(324)
400
(750)
1290)
717
12.267)
f 1.560)
1.069
(1.425)
(a ) Wages
Won Paid"
Expons
hnoorts
Totai
Low P a y "
Exp-ons
imports
Total
(b) Education
Colloge
Exporls
Imports
Total
Non-collogo
Expons
Imports
Total
•ai)
'
L)fi:l'.l<K'i t'lf*Oti Lit *.tlQ(e<e*v rtlrj I«IA| tl&Uf Sflfl ^ l l w I i S i ' t J i .
"
\V;*#.((r>. i r '*'^1 |.iMtt! t'.lirt
1,880
<3.956)
•12.076)
HI u t*i.t;;vt> I'u^ y!':lli j;..!i:^iliV..
1f>7>} WHO.' i l i s t i l i u l l c i t (in f.^jl (VMI * I
Uiw-l.Myrii; j t O i Jil ft :H1 V U A w t'n> . - W i lA'n.tj'ilU.. h \Ui' l ^ ' y Av+i|*? tflMnl'MltsP ' j r ' M l lei ! i > |
In conclusion, rising trade deficits have resulted in a net loss of high-paying job opportunities between
1979 and 1994. The greatest losses occurred between 1979 and 1989, when the dollar was often
overvalued, but job losses have continued to accumulate since 1989. (The losses mount to this day. The
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U.S. deficit in goods and services trade has continued to grow between 1994 and 1996, and is up
sharply in the first two quarters of 1997. ) These findings contrast sharply with frequent assertions that
trade has created good jobs. The effects of increased imports and diminishing export growth mean that
more high-paying jobs were lost than gained in the push for more trade.
6
Throughout this section we have discussed trade's impact on workers by examining data from 1979 to
1994 for 183 industries in all sectors of the economy. Like the important work of Sachs and Shatz
(1994), we calculate changes in net exports (exports minus imports) by industry and then use
industry-level "input-output" analysis to estimate the number of jobs associated with a given change in
trade flow. Our analysis builds upon that of Sachs and Shatz in several respects. First, we extend the
period analyzed from 1978-90 to 1979-94 (with the data from the early 1990s providing some pertinent
contrasts to earlier periods). Second, we take into account more demographic characteristics in each
industry. While Sachs and Shatz focus solely on trade's impact according to workers' skills (measured
roughly by distinguishing between production and non-production workers), we examine trade's impact
according to education, race, and gender. Finally, we report the impact of gross exports and gross
imports separately and then consider the impact of exports minus imports. Import growth displaces a
different set of workers than those employed by growth in exports, making it more illuminating (and
relevant to policy discussions) to examine these effects separately.
In terms of methodology, our analysis of trade's effect on employment has three stages. First, we
determine how changes in international trade have altered demand for output from domestic industries.
Second, we estimate how these changes in demand affect domestic employment, both directly in
trade-competing industries and indirectly in other industries. Finally, we use job and worker data in
affected industries to draw some inferences about how job quality and workers benefit and suffer from
expanded trade.
In the first stage we identify the impact of trade on domestic industries. The simplest way to measure
the effect of trade would be to assume that exports and imports were frozen at a given level (e.g., their
level in 1979) and calculate how much domestic demand would have changed if all subsequent exports
were lost and all subsequent imports were met with domestic production. However, in a complex,
growing economy, where some industries expand while others contract, it might be inappropriate to
assume that trade levels could be frozen at a particular dollar amount. Instead, we assume for our
analysis that the share of exports and imports in total domestic production remained constant at their
1979 level throughout the 1979-94 period. To determine the impact of trade on domestic demand since
1979, we first calculate the difference between export and import levels in 1994 and then determine
what they would have been in 1994 if they represented the same proportion of domestic output as they
did in 1979. Since the share of both exports and imports expanded considerably over the 1979-94
period, our calculations generally show that export changes over the period increased demand for
domestic output, while import changes reduced domestic demand. The data used in our analysis of
imports and exports include both goods and services, expressed in constant dollars.
7
8
Next, we determine how employment is directly and indirectly affected by the previously estimated
changes in exports and imports. To do this, we rely on "input-output" and related tables produced by the
Bureau of Labor Statistics. These tables summarize the output and employment connections across all
major industries in the economy. For 1993, the base year in the input-output analysis, the BLS covered
all aspects of economic activity by dividing the economy into 183 industries in agriculture, mining,
construction, manufacturing, services, or government. The BLS then calculated the number of jobs
generated directly in each of the 183 industries for every $1 million increase in industry output. Next,
the BLS conducted a more complicated analysis of how that same $1 million expenditure affected
demand and employment indirectly in the economy's other 182 industries. A $1 million expenditure in
aerospace, for example, creates jobs in the steel industry and in some services, as well as in aerospace.
9
Given the industry-by-industry changes in exports and imports and the implied impact on employment,
we can then proceed to the third stage of the analysis, which involves estimating the effect of trade
changes on different types of workers and jobs. Since we know the number of jobs lost and gained in
each of the 183 industries and the characteristics of those industries, we can draw some inferences about
the actual job changes. For example, we know each industry's average wage as well as its workers'
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education level, sex, and race. If we assume that trade-induced changes in demand affect the workers in
an industry proportionally, we can draw some conclusions about which workers gain and lose from
trade. In keeping with Sachs and Shatz (1994), our analysis removes the net effects of trade on
wholesale and retail trade and advertising." The implicit assumption in this analysis is that distribution
of imported, exported, and domestically produced goods generates equivalent amounts of activity in
these particular sectors, so the decision to source or sell products internationally should have no effect
on direct or indirect employment in these industries.
10
Job Quality in Export and Import Intensive Industries
In this section, we examine the quality of jobs currently exposed to import and export competition.
Adopting Bednarzik's methodology (1993), we measure import and export sensitivity in two ways.
First, we select industries with high import or export penetration ratios—those where imports or exports
represent more than a fixed percentage of total industry consumption (in the case of imports) or output
(in the case of exports). We use two percentage-point cutoffs, a more inclusive 20% share of
consumption or output, and a more exclusive 30% share. Examples of industries with high import
penetration include metalworking machinery and motor vehicles and parts (at the 20% level); computer
and office equipment and home audio and video equipment (at the 30% level). On the export side,
industries with high shares include measuring and controlling devices and watches and clocks (at the
20% level); computer and office equipment and aerospace products (at the 30% level).
Another means of determining whether industries are sensitive to foreign trade involves the growth of
the import and export shares. Again, we employ two cutoff levels: industries where the average annual
growth in import or export share is 1% or greater, and those where growth is 2% or greater. This
measure of trade sensitivity shows where trade's impact is growing the fastest. We measure job quality
in both trade-sensitive and nontrade-sensitive industries in two ways: first, by the industry's average
wage; and, second, by the industry's share of college-educated workers.
12
TABLE 4
Characteristics of Jobs in Import and Export Competing Industries
(1996 Dollars)
liK!i.?ilrii:3 W t t i :
V.'kikf
A.via;ji> m i . " : H
1TIXI1! Sl-.rcCiioai* l l w l ' .
A r n w J Orf.vll i n
f r p c i l t Sridrii. 1S7S.11I
GIIVIILH l l
(a) All Indualrles
Avorage Wacje
$14.15
••"•<
$iB.afi
518.23
S14.(K>
27S%
2i.i":,.
19.?^
19.8":-.
U ?
8.4
•3.5
fl 5
21.8
8.7
8.1
10.5
S.fi
R.1
IC- 7
12.8
7 2
7 1
14.3
18 2
10,3
28,5
15,3
10.2
25.5
1B3
1,1.3
163
183
-.83
153
183
irc>
in.7V
22.8°.
2,8°.
n.9 .:.
30. f/'..
45.1';.
S '8,07
SI 0.30
16
?2.S
77
•rj.9
IrdlHlCl
TYjtnl
an 5
M u ut liuls,
1B3
ICO.O-'o
1I'.:IM'
??.«.,
Sii.en
1 7.C^:
St:Jiiii
GILMII*
22. Z%
$1 3.32
?:>.(•!%
l-'^ip
ii'l
Anm;il (iiawlli ir
L;«l.-jil. 5l-<iii?. W i - i M
w>>
20 l i
Cnll£-gD Snare
A w r n i i c l-ILV y 1
L J I I ' J I * St wile
7.5
1 T.i.
l^i
4 1%
6 1 * . 73
$is.ag
4
$14.41
(b) M a n u f a c t u r i n g
Average W a g *
SI 5.38
SI 3.39
Sl 0.3-3
£15.62
S18.17
$14.91
Collage Shore
10.3%
16.2%
iS/Z-i
1 5.8'':
10.8V,
28.?%
24 7%
10.1%
l 5.0%
Jcfc'S o e r S I n
DiriSCl
6.7
17.5
n.3
8.4
20.2
8.8
8.2
17.0
9 0
6.2
17.2
8.8
8.3
16.9
G 7
0.7
12.4
8.3
6 -1
13.*
8.9
8.1
1H.0
8.8
8.7
••7.3
Hd
y
20
6B
77
!i
14
Su
73
V
I- *:1iiec1
Toial
No. of Inds.
E.-np. Sl-are
7 of 12
es
16.4%
'i:2%
23.2%
62.ll--.
1 1 .li-'/-.
ia. 7 n
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As Table 4 reveals, the industries characterized by high import and export shares represent a very small
portion of total U.S. employment. The nine industries exporting 30% or more of their output, for
example, make up just 2.0% of total domestic employment; even the 19 industries with a 20% or
greater export share account for only 3.8%) of U.S. jobs. Industries where the import share is 30% or
greater represent 1.7% of all employment; industries with a 20% share or greater represent 4.1% of the
total. When viewing these data, it is important to note that trade estimates used in this report include
both goods and services. Thus, for example, there are a number of service industries that have large
import and export penetration ratios, which explains why the number of industries affected by trade in
the whole economy (panel a in Table 4) is larger than the number of industries affected within
manufacturing (panel b).
Although currently only a small share of the economy's jobs are in industries with high import or
export shares, a much larger share of workers are in industries where imports and exports are growing
rapidly in importance. For example, industries where the export share is growing more than 2% per year
account for 39.5% of all employment and about 63.7% of manufacturing employment; industries where
the import share is growing at the same pace make up 19.7% of total employment and 73.0% of
manufacturing (Table 4). These industries experiencing such rapid import and export growth may tell us
more about how further expansion of trade will affect the U.S. wage and skill structure.
13
In some sense, the industries currently experiencing a high level of import or export competition
represent "past" trade expansion. Highly technological, capital-intensive export industries tend to pay
high wages and also tend to compete well in world markets. Import-competing industries, often with
lower technology and capital demands (such as footwear, apparel, and toys) have already seen wages
eroded by decades of import competition, particularly from low-wage countries.
14
Table 4 also summarizes our analysis of job quality in trade-sensitive industries. When we focus on
industries with high shares of imports or exports, we find, as other researchers have demonstrated
(Richardson and Rindal 1996; Bernard and Jensen 1995), that jobs in high-export industries pay wages
above the national average. For example, industries in which 20% or more of output is exported pay an
average hourly wage of $18.23 versus a national average of $14.15; the average wage in industries that
export 30% or more of output is even higher ($18.86). (All figures in this section are expressed in 1996
dollars). These same high-export industries also employ a somewhat larger-than-average share of
college-educated workers (from 24.4% to 27.5% of total industry employment, compared to 21% for
the economy as a whole). (Table 4.)
Many industries facing high levels of import competition also pay wages above the national average.
Industries with a 30% or greater import share pay a few cents an hour less than the national average,
while the larger group of industries with a 20% or higher import share pay, on average, $15.63 per hour,
or $1.48 above the national hourly average. Thus, while industries with high export shares do pay high
wages, many jobs in import-competing industries also pay high wages.
Trade sensitivity, however, can be measured in other ways. When considering the much broader range
of industries that have seen the fastest expansion of trade, the evidence in Table 4 shows that industries
where the export share is growing rapidly pay only average wages. Industries where the export share is
growing faster than 2% per year pay only $14.09 per hour, or 0.4% less than the $14.15 average.
Industries that have achieved growth in export share above 1% per year are little better at $14.41 per
hour (1.9% above average). One reason that wages are not very high in export-expanding industries is
that much recent export expansion is taking place in low-wage industries outside of manufacturing,
particularly agriculture and some services. Even when the analysis is limited to manufacturing
industries, jobs in export-expanding industries pay wages less than or no different from manufacturing's
average.
At the same time, industries where the import share is rising rapidly pay above-average wages.
Industries where the import share is growing faster than 2% per year pay, on average, $14.73 per hour,
or about $0.58 (4.1%)) more than the average job; when the analysis is limited to manufacturing, the
industries experiencing the fastest increases in import competition still pay only $0.05 (0.3%) less than
the average manufacturing job. Thus, industries where imports are growing rapidly pay more than
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industries where exports are growing rapidly. Among all trade-sensitive industries, those facing the
fastest increases in import share pay about $0.64 (4.5%) an hour more than those industries where
export shares are growing fastest. Among manufacturing industries, the difference is slightly smaller
(about $0.52 per hour or 3.6%) but still in favor of import-competing industries. A similar pattern holds
when we look at the education level of workers in trade sensitive jobs. Industries where import shares
are growing employ a higher share of college-educated workers than industries where the export share
is growing.
This analysis suggests that popular assertions claiming "jobs in exporting sectors pay 13% to 16% more
than the average U.S. wage" must be qualified in at least three ways. First, many jobs in
import-intensive industries also pay above-average wages. Second, only a small number of industries,
with less than 5% of total national employment, have high levels of import or export penetration.
Finally, a much larger range of industries are subject to rapidly growing import and export shares, and
when comparing these industries, those with rapidly growing import shares pay more than those with
rapidly growing export shares.
As the trade deficit and globalization of U.S. industries have grown, we have lost more good jobs in
industries with rapidly growing import shares than we have gained in the lower-paying sectors
experiencing rapid export growth. Consequently, trade has had a negative effect on the distribution of
wages and job opportunities in the U.S. between 1979 and 1994. In addition, our analysis suggests that
if we are to debate expanding trade, it is important to pay attention to the very different job profiles in
industries where exports and imports are growing rapidly. Even a balanced expansion of imports and
exports would not lead to a better, higher-paying mix of jobs and might even lower wages.
Conclusion
Between 1979 and 1994, the $99.5 billion (in real 1987 dollars) increase in the U.S. goods and services
trade deficit eliminated a total of 2.4 million job opportunities. About 2.2 million of the lost job
opportunities occurred in the manufacturing sector, primarily because net exports of services and some
commodities increased in this period. Trade accounted for fully 83% of the total 2.7 million job decline
in manufacturing that occurred between 1979 and 1994.
While wages are higher than the national average in industries that export a large share of output, they
are also higher in industries with large import shares (both exports and imports are dominated by
manufactured goods). However, only a small number of industries, employing fewer than 5% of all
workers in each case, are highly sensitive to trade in this way. The number of industries in which the
shares of imports and exports in output are growing rapidly is much larger, and these sectors involve
20% to 57% of total employment. In these sectors on the cutting edge of globalization, wages in
import-competing industries are 3.6% to 4.5% higher than they are in sectors with rapidly growing
export shares. At the margin, where trade is having its largest impact, imports have been destroying
better-than-average jobs, while exports increasingly compete in markets using low-wage labor.
Trade has eliminated proportionately fewer job opportunities for college-educated workers, and
relatively more opportunities for non-college-educated workers (especially those with less than a high
school education). In the end, however, no group has been spared: increasing trade deficits have
resulted in a net decline in demand for both college-educated and non-college-educated workers.
Endnotes
1. Since 1973, U.S. production workers have experienced an almost steady decline in their real wages
and earnings. After rising steadily at an average rate of 22.2 cents per hour (in 1996 dollars) through
1973, real compensation began to decline thereafter at a rate of 5.5 cents per hour. Workers in the
bottom 10%) of the labor force fared even worse—losing $1.10 per hour between 1979 and 1995 (a 17%
decline). These declines contrast sharply with the continued growth in real hourly earnings ofthe top
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10% of the labor force, which has been maintained throughout the 1980s and 1990s. As a result,
earnings inequality, the gap between the top, the middle, and the bottom of wage earners, has increased
sharply—the ratio between the top and the bottom deciles of workers increased 21 percentage points
between 1979 and 1995 (Mishel, Bernstein, and Schmitt 1997, 163.
2. See Lee (1997) for a recent review and synthesis of this literature and its policy implications.
3. See, for example, the Journal of Commerce (1997), which claimed in an editorial that "one-third of
all growth is due to trade."
4. See, for example, the Executive Office of the President's report to Congress titled Study on the
Operation and Effects of the North American Free Trade Agreement (1997), which claims that "jobs in
exporting sectors pay 13 to 16 percent more than the average U.S. wage."
5. Note that the wage quintiles are defined according to the 1979 wage distribution. This explains why
there appears to be a disproportionate concentration in the bottom quintile. To illustrate: suppose that a
worker in 1990 earns $6 an hour. She may be in the second quintile in 1990, but in 1979, that wage
would have put her among the lowest-earning 20% of U.S. workers.
6. U.S. Commerce News, "National Income and Product Accounts, Second Quarter 1997 GDP," BEA
97-23, July 31, 1997. In 1996, the real net export deficit was 9.4% higher than in 1994, and the deficit
for the first two quarters of 1997 (at an annualized average rate) was 20% higher than in 1996 (annual
total).
7. While exports contributed to growth in both of the subperiods considered below (1979-89 and
1989-94), growth in export share was greatly reduced in the earlier period because of the dollar's
overvaluation in the early- and mid-1980s. Most employment growth due to increased exports occurred
between 1989 and 1994, as shown in Table 1. Our model uses changes in shares of exports and imports
at the sectoral level to estimate the employment impact of trade. The export share of output was 4.14%)
in 1979, 5.29% in 1989, and 6.96% in 1994. The import share of output was 4.30% in 1979, 6.15%) in
1989, and 8.12% in 1994.
8. Data were obtained via the Internet from a site maintained by the Bureau of Labor Statistics, Office
of Employment Projections (file outdem.zip in directory macro/demand/io). Data for industry output
were also obtained from the same file.
9. The input-output data are prepared by and available from the BLS, Office of Employment
Projections.
10. Industry characteristic data are drawn from the 1% public use microdata sample of the 1990
decennial census.
11. These are BLS industries 120, 121, and 136, respectively. All direct and indirect effects of trade on
these sectors were ignored in our analysis. Because this revision was done after calculating the
employment effects of trade, it produces slight inconsistencies in the totals of imports, exports, and net
exports in Table 1.
12. Note that Bednarzik uses both the import or export level and the growth rate to determine which
industries are export- and import-sensitive. He also uses less inclusive measures for exports (cutoff of
20% share and 1% growth). We chose instead to keep all four categories separate, as we felt this was
more illuminating in the present context. In addition, three industries (BLS industries 27, 149, and 166,
respectively, nonferrous foundries; producers, orchestras, and entertainers; and research and testing
services) had initial exports shares of 0 in the data set, but shares of 0.5% or more in the final period.
These cases were arbitrarily assigned to the Wo growth group if the final exports share exceeded 0.5%
of output, and to the 2% group if the final share exceeded 1.0%.
13. Examples of service industries with rapid import share growth include research and testing services
(exceeding 1% per year) and engineering and architectural services (at the 2% level); on the export side
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those with rapid growth include depository institutions (where growth exceeds 1% per year) and motion
pictures and a wide range of other services, including accounting, health, legal, and educational services
(at the 2% level).
14. Some proponents of expanded trade argue that exporting, in and of itself, raises wages, and if we
could somehow get particular industries or plants to export more, then wages in those industries would
improve. This might be possible through export subsidies or a directed industrial policy, but seems
highly unlikely if left to the market alone. It is not that exports produce high wages, it is that, given the
U.S. comparative advantage, high-wage industries export. This does not rule out the possibility that
exporting could lower the wages of workers in export-sensitive industries, since workers must now
compete on price in markets where other workers may be cheaper because of foreign government
subsidies, exchange rate fluctuations, lower labor, health, safety, and environmental standards, or other
reasons that may or may not have to do with the free workings of the market. Recent cost-cutting
pressures at successful U.S. exporter Caterpillar are one example. Strong pressures to lower labor costs
in Germany, which has been extremely successful in export markets, are another.
Bibliography
Bednarzik, Robert W. 1993. "An Analysis of U.S. Industries Sensitive to Foreign Trade, 1982-87."
Monthly Labor Review. Vol. 116, No. 2, pp. 15-31.
Bernard, Andrew B., and J. Bradford Jensen. 1995. "Exporters, Jobs, and Wages in U.S.
Manufacturing: 1976-1987." Brookings Papers on Economic Activity: Microeconomics, pp. 67-119.
Executive Office of the President. 1997. Study on the Operation and Effects of the North American Free
Trade Agreement. Report to Congress.
Journal of Commerce. 1997. "Labor's Choices," Sept. 24, 1997.
Lee, Thea. 1997. "Trade and Inequality." In Ray Marshall, ed., Restoring Broadly Shared Prosperity.
Washington, D.C: Economic Policy Institute.
Mishel, Lawrence, Jared Bernstein, and John Schmitt. 1997. The State of Working America 1996-97.
Economic Policy Institute Series. Armonk, N.Y.: M.E. Sharpe.
Richardson, J. David, and Karin Rindal. 1996. Why Exports Matter: More! Washington, D.C: Institute
for International Economics and The Manufacturing Institute.
Sachs, Jeffrey D., and Howard J. Shatz. 1994. "Trade and Jobs in U.S. Manufacturing." Brookings
Papers on Economic Activity. No. 1, pp. 1-84.
Tyson, Laura. 1997. "Inequality Amid Prosperity." Washington Post, July 8.
Go to Idea Central's "Economics and Politics" page
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�Issue Brief #123 - Fast Track and the Global Economy
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cnm P lc I siue
o o i oiy ntt t
c
Issue Brief #123
November 4, 1997
FAST TRACK AND
THE GLOBAL ECONOMY
by Jeff Faux
The core economic claim for the version of "fast track" rules being pushed by
President Clinton and Rep. Bill Archer is that the benefits of expanded trade
and overseas investment will be so large that they justify the abandonment of
worker, environmental, and public health safeguards. But the financial crisis in
Southeast Asia reminds us how volatile world markets are, and that any policy
based on rosy predictions of future trends in foreign economies is extremely
dangerous.
A short time ago, the nations of Southeast Asia now in crisis were the darlings
of the international financial markets. The countries were promoted by the U.S.
Department of Commerce as immensely profitable "emerging markets." Their
governments were applauded for welcoming foreign capital, deregulating their
banks, and linking their currencies to the U.S. dollar to suppress inflation.
Today, those same nations are being denounced for borrowing too much
foreign capital, not regulating their banks sufficiently, and failing to break the
link of their currencies with a rising U.S. dollar.
Similarly, four years ago the Mexican government of Carlos Salinas was hailed
in Washington as representing a new breed of honest, competent reformers.
Mexico was the international investor community's poster child for sound
economic development, largely because Salinas had deregulated Mexico's
fragile financial system and opened it up to global capital. The provisions of
NAFTA required Mexico to further abandon regulation of speculative capital.
As a result, U.S. government officials confidently predicted that NAFTA would
immediately create a huge, prosperous middle-class market for U.S. goods.
A year later, Salinas fled his own country when Mexico's boom went bust. As
in Southeast Asia, much of Mexico's surface prosperity was the result of
over-borrowing of short-term capital that had entered the country in search of
quick speculative profits. When stocks and other assets became too inflated, the
money left just as quickly. The peso plummeted, the economy collapsed, and
the government was revealed as corrupt and incompetent.
The stock market recovered, but the Mexican people still have not. Massive
unemployment, lower incomes, bankrupted businesses, and social disorder
were left in the wake of the peso's crash. The small U.S. trade surplus with
Mexico turned into a $16 billion trade deficit, costing jobs and putting
downward pressure on U.S. wages. Now, the cycle is starting over. Despite the
fall in the last week, the Mexican peso is still overvalued. We don't know when,
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but we can expect another drop.
Today in Southeast Asia, domestic interest rates are being driven up, slowing
internal growth and increasing pressure to export even more. The devaluation
of their currencies and the reduction in wages and incomes will automatically
make their goods more price competitive in the U.S., which is the largest open
market for third world goods. The experience with Mexico suggests that this
rise in exports will cause further job loss in U.S. manufacturing and further
downward pressure on wages — particularly for non-college graduates (who
represent three-quarters of the U.S. workforce).
Those who promoted the Mexican and the East Asian "miracles" learned
nothing from the experience. If anything, the Archer-Clinton fast track proposal
will make things worse. For example, their version has dropped the provision
of the previous fast track authority that established coordination of monetary
policy as a negotiating objective. This omission effectively prohibits any effort
to prevent the kind of financial instability that wrecked NAFTA's rosy scenario
for Mexico.
The over-promotion of the global economy has left the impression that the
world financial markets are simply larger multilingual versions of the New
York Stock Exchange. This is not the case. The United States has the most
efficient money markets in the world in part because of the Federal Reserve
Board, the Securities and Exchange Commission, and other regulatory agencies
that reduce risk and volatility. The U.S. has also developed systems of
self-regulation that, for example, allowed officials of the stock market to
suspend trading to prevent a downward spiral of price deflation and panic. We
have learned that financial market booms and busts can play havoc with the
"real" economy that produces jobs and income for the vast majority of the
population. Whenever we have allowed government supervision of the banking
system to lapse, financial disasters — such as the savings and loan crisis of the
1980s — have been the result.
There are no such safeguards in the international marketplace, which is why we
need to be cautious.
Since NAFTA we have learned that no one can predict the future of the fragile
economies of Mexico, Thailand, Indonesia, or any other developing nation. No
one would have predicted that Japan would still be suffering from the aftermath
of a financial deflation that is now seven years old. What we know for sure is
that we don't know, which is why we need to build into these agreements
enforceable safeguards to protect living standards, the environment, and the
public's health.
The Archer-Clinton proposal ignores that lesson, reflecting a naive insistence
on rushing into even more complicated trade and investment deals for their own
sake. Giving the administration another blank check to pursue this reckless
course will put American workers, and businesses that want to produce in
America, at increasingly perilous risk.
Go to Idea Central's "Economics and Politics" page
Go to the Economic Policy Institute's home page
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a project of The American Prospect
2 of 3
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��i ^ B M %
THE SECRETARY OF TRANSPORTATION
WASHINGTON, D.C. 20590
March 11, 1996
Mr. President:
I released a report showing the economic impact of the U.S.-Canada open skies agreement
on its first anniversary, and thought you might want to use it as a good news trade story in
your speeches. Even The Wail Street Joumai had nice things to say about it (see
enclosures).
The results are better than we ever imagined:
The agreement pumped over $2 billion into our economies in 1995. By the
year 2000, the cumulative economic benefits will be $15 billion.
One million additional passengers travelled between our countries, just in the
last half of 1995.
The airlines are pleased: flights are up 40 percent.
Fourteen U.S. cities, which never had service before the agreement, now have
non-stop service to Canada. They indude cities in California and the South not just the border states. In all, 34 U.S. cities now have non-stop service to
Canada.
Last week, we signed an open skies agreement with Germany, which means 40 percent of
Europe is now wide open for competition. Since you have been in office, we have signed 32
aviation agreements.
Sincerely,
Federico Pefla
Enclosures
cc:
D. Baer
M. Waldman
�T E WL S R E J UNL
H AL T E T O R A
© 1996 Dow Jones & Company, Inc. All Rights Reservrd
TUESDAY, MARCH 5, 1996
9
a tiny increase in scheduled flights with a
decline in passenger business.
The Transportation Department numbers show that Northwest benefited the
most among U.S. carriers, largely because
of new Canadian routes from its northern
U S. hubs in Minneapolis and Detroit. It
became the No. 4 carrier in the market,
edging out rival United. Northwest's
scheduled service jumped 72%, but passenger traffic grew only 31%. United had a 15%
increase in scheduled service and a 7
%
increase in passenger traffic.
USAir, which has been slashing overall
capacity, had decreases in both are is, and
lost its No 6 slot to Canadian A rimes.
Partly because of switches to scheduled
service from charter flights. Canadian had
a huge 128% increase in flights and an 84%
increase in passenger service.
'Open-Skies Pact Propels U.S.-Canada Flights
By ASRA Q. NOMANI
Staff Reporter of T H E W A L L S T R E E T J O U R N A L
WASHINGTON - Dropping restrictions
on Hights between the U.S. and Canada
has led to a big boos! in the number of
nights for Canadian carriers and U.S.
carriers Northwest Airlines and American
Airlines, but increases in passenger traffic
haven't kept pace.
In releasing results of the "open-skies"
arrangement at a Federal Aviation Administration airline-industry economic forecasting conference today, the Clinton administration will press its case for opening
access to other inlemalional airline markets. The year-old open skies agreement
with Canada, which the administration
estimates generated $2.2 billion in passenger and cargo business, eliminated most
regulatory barriers for flights between the
world's two biggest trading partners. The
agreement, which is to be phased in over
three years, brought with it discount fares
and a pitch to draw American consumers
to Canada.
Picking Up After Slow Start
The report shows thai flight schedules and travel between the two countries picked up after a slow start, resulting
in an increase of 1.15 million scheduled
passengers jetting between the two countries during the last six months of 1995.
compared with the similar 1 t period.
9M
Scheduled passenger traffic increased
about 13% for all of 1995, compared with
earlier annual Increases that averaged
around 3%.
In the final six months of the year, after
a sluggish start, the number of flights rose
43% (mm the 1 9 level. But the sched
94
uled passenger traffic for that period rose
only 22%, suggesting Ihat reluctant American < onsumers - lempted by European vacation bargains - and business travelers
still have to be persuaded to make the trip
skies agreement with Germany, setting
the stage for more lies between UAL
Total sctnduM IBQtits and p s 6 Q? betwent Corp.'s United Airlines and German flag
&&n t s
the U.S and Canada. y«ar-ov«f-^«tf percentage carrier Lufthansa AG. That follows last
change
year's agreement with nine small Euro
(0%
pean countries, including Norway, Austria
and Luxembourg, a pact that led to an
effort by Delta Air Lines to coordinate
operations with marketing partners Swis
sair, Belgium's Sabena and Austrian Airlines. In 1992, the U.S. signed an open skies
agreement with the Netherlands, leading
to closer cooperation between Northwest
and KLM Royal Dutch Airlines.
In the Canada market, AMR Corp.'s
American Airlines is seeking antitnist
immunity to coordinate schedules and
operations with Canadian Airlines International of Calgary. Alberta.
The biggest beneficiaries appeared to
to their northern neighbor. The disparity
be Canada's two major airlines. Air Canpartly reflects airlines' use of smaller
ada and Canadian Airlines, which both
planes on some start up flights. But some
look to the U.S. to boost financial recover
airlines have already given up: Valulet
ies. The agreement itself gives more rights
recently canceled its Washington-Monto Canadian carriers Initially and phases
treal service because too many seats
In rights for U.S. carriers. During the last
were empty.
six months of 1995, the Canadians whittled
Recent Pact With Germany
away at the U.S. carriers' share of the
Transportation Secretary Federico
market. U.S. carriers had 62.4% of the
Pena Is expected today to raise the U.S.scheduled passenger traffic between the
Canada agreement as a template for
two countries, compared with 66% during
reshaping aviation relations with other
the year earlier period.
countries. The U.S.-Canada market Is
the world's largest In terms of passengers
During thai same period, Montreal
flown. Qinton administration officials see based Air Canada remained the No. I
open skies arrangements as setting the
carrier between the two countries, posting
stage for closer global links between U.S. a 55% Increase in scheduled flights and a
carriers and foreign flag carriers, something airlines are trying to achieve by ap- 24% increase in passenger Iraffic. Ameri
can. meanwhile, had a 31% increase in
plying for antitrust immunity lo coorscheduled service and a 1 % boost in
9
dinate their pricing, marketing and other
passenger traffic, remaining the market's
business.
No. 2 carrier. Delta, the No. 3 carrier, had
Last week, the U.S. reached an open-
Flying High
�if.
4
The Impact of the New
US-Canada Aviation Agreement
At Its First Anniversary
Office of International Aviation
March 1996
�TABLE OF CONTENTS
AND
DESCRIPTION AND HIGHLIGHTS OF CHARTS AND TABLES
The statistics contained in this report are based on the Department's T-100 statistics. This
report contains only statistics derived from greater than 60-seat aircraft except that the
operations of Air Canada's regional jets are included.
SUMMARY
SERVICE HIGHLIGHTS
~ Changes in Nonstop Scheduled Passenger Operations
-This table highlights the changes in nonstop scheduled passenger operations for the
month of December 1995 compared to December 1994.
-Forty-five nonstop routes were added (12 by US carriers, 27 by Canadian and six jointly).
-Service was completely deleted on eight routes.
-Competitive service was added on 14 existing routes.
-Fourteen new US cities were served as well as one new Canadian city.
-In December 1995, 90 nonstop markets were served compared to 53 in December 1994,
a whopping 70 percent increase!
CHARTS
-Monthly Percent Changes in Total Scheduled Flights and Passengers
-This chart presents the monthly percent changes in scheduled flights and passengers for
combined US and Canadian flag operations. The percent change compares the relative
change for a specific month from 1994 to 1995.
-The rate of passenger and flight increases accelerated the last half of the year.
-November 1995 experienced both the highest percent increases inflightsand passengers.
-The rate of flight increases is considerably higher than the rate of passenger gains.
�-Monthly Percent Changes in US Flag Flights and Passengers
-After a traffic decline of three percent in March, USflagoperations have steadily
increased.
-US carriers recorded traffic advances of 18 percent in both September and October.
-Monthly Percent Changes in Canadian Flag Flights and Passengers
-In November and December, Canadian airlines recorded staggering passenger percent
increases of 66 and 58 percent, respectively.
- The difference between the percent increase in flights and passengers has narrowed
considerably in November and December.
-The Canadianflagincreases inflightsand passengers, as expected, surpassed the relative
increases of US airlines in every month of the year.
—US and Canadian Flag Changes in Passenger Volume
-This chart presents the diflferences in scheduled, charter and total passengers for both US
and Canadian airlines for the July-December 1995 period compared to July-December
1994.
-The gain in scheduled passengers for the six-month period was over a million
(1,151,000). The increase in total passengers (scheduled and charter) was slightly below
a million (959,000).
-Although the Canadian airlines realized a greater increase in scheduled traffic, US airlines
achieved a greater increase in total (scheduled and charter) passenger volume (512,000
vs. 447,000).
-US and Canadian Percent Changes in Passenger Traffic
-This chart is based on the same information as the preceding chart, but presents the
statistics in percent terms rather than on an absolute basis.
-The combined scheduled passenger growth of the bilateral carriers was 22 percent for the
six-month period. Therisein total passengers was 16 percent.
-Canadian airlines recorded a 35 percent gain in scheduled traffic, but sustained a large
decrease in charter passengers as they switched several charter operations to scheduled
service. Their overall traffic gain was 19 percent.
/
-US carriers registered a 15 percentrisein both scheduled and total passengers.
�TRAFFIC HIGHLIGHTS
-Summary of Scheduled Flights and Passengers for Selected Time Frames
-This table shows statistics for US and Canadianflagsfor several 1994 and 1995 periods.
- On a Calendar Year basis, Canadian carriers increasedflights44 percent. Their
passenger traffic growth was half that rate~22 percent. US flag recorded 22 and nine
percent rises in flights and passengers, respectively. The total market posted a 30
percent advance inflightsand a 14 percent jump in passengers.
-During thefirsttwo months of the year prior to implementation of the new agreement,
traffic performance in the market was sluggish (two percent increase).
-Scheduled, Charter and Total Passengers for July-December 1995 versus July-December 1994
-This table presents data regarding scheduled, charter and total passengers for both US
and Canadianflagsfor the two six-month periods.
-US carriers sustained less than a one percentage point drop in total passenger market
share during the period.
-Despite a large drop in charter traffic, Canadian carriers still dominate that market.
�SUMMARY
�SUMMARY
At the first anniversary of the new "open-market" aviation agreement between Canada and the
United States, traffic growth has exceeded one million passengers, an astounding increase.
Never, in commercial aviation history, has a new bilateral aviation agreement spurred growth
of a million passengers in the first year. This is the world's largest aviation market in terms
of passengers transported. While complete results are not yet available, it appears that the
market will have grown over 15 percent in the first year. Passenger traffic growth will have
exceeded by five-fold the historical annual rate of approximately 3 percent.
Forty-five city-pair markets have receivedfirst-timescheduled service: sixteen of them had
been served by seasonal charter operations only. Fourteen city-pair markets have received
additional airline competition.
President Clinton noted, at the signing of this historic agreement on February 24, 1995, that
this agreement would lower fares, expand service, stimulate employment and enhance
economic growth between the two countries. Some U.S. cities estimated, during preparations
for the negotiations, that such an agreement would spur more than $15 billion in new
economic activity between the two countries and create thousands of jobs in the process. All
of these forces are at work although their early measurement is difficult at this time.
The President and Secretary Pena also stressed at the agreement signing that the largest, most
open bilateral trading relationship in the world finally has a new cross-border aviation
agreement to match it. They emphasized that the breakthrough accord is a free-trade
landmark, giving U.S. and Canadian airlines virtually unlimited access to cities in either
country in transborder service.
�Traffic and airiine service changes have been dramatic
since the new agreement was signed February 24,1995
U.S.-Canada scheduled air services grew over 13 percent in Calendar Year 1995. This
compares to a sluggish historical growth that has averaged about 3 percent per year for
decades.
The new agreement has led to an avalanche of applications from both U.S. and Canadian
airlines. New service growth was modest in March and even April, but as winter faded and
additional equipment became available, new scheduled services blossomed all across the U.S.Canada border. Airlines of both countries went all-out to stimulate passenger traffic growth
by aggressively expanding transborder scheduled services.
The agreement gave airlines of both countries unrestricted rights to transborder markets, with
the exception of temporary limitations on new U.S.-airline services to Toronto, Montreal and
Vancouver. New services to Montreal and Vancouver are being phased in over two years,
and to Toronto over three years, after which all transborder route restrictions end.
A Comparison of July-December 1995 With July-December 1994
Our measurement of the agreement's impact focuses on the six-month period, July - December
1995, compared to the same period in 1994 under the old regime . We believe that this
period best reflects the new competitive environment measurable at thisfirstanniversary.
Canadian airlines increased scheduledflightsan astounding 61 percent and U.S.
airlines, while limited by agreed phase-ins at Canada's major gateways
(Toronto, Montreal and Vancouver), increasedflightsan impressive 32 percent.
The combined services of the airlines of both countries have increased
transborder flights 43 percent.
Canadian airlines have experienced a 35 percent growth in scheduled
passengers, U.S. airlines 15 percent. Overall passenger growth (charter and
scheduled) is up 16 percent in the six-month period ending December 31, 1995.
This is five times the historical annual transborder growth rate of approximately
3 percent.
U.S. airline growth, even while constrained by the phase-in limitations of the
new agreement actually exceeded Canadian airline growth, 512,000 passengers
to 447,000, primarily because much of the Canadian airlines' growth came from
converting charter operations to scheduled services.
�SERVICE
HIGHLIGHTS
�CHANGES IN US-CANADA AVIATION MARKET
NONSTOP PASSENGER OPERATIONS WITH LARGE AIRCRAFT
MONTH OF DECEMBER 1995 VS. MONTH OF DECEMBER 1994
CATEGORY
NEW ROUTES
US CARRIERS
1
2
3
4
5
6
7
8
9
10
11
12
CITY
CALGARY
CALGARY
EDMONTON
HALIFAX
MONTREAL
OTTAWA
SASKATOON
TORONTO
VANCOUVER
VANCOUVER
VANCOUVER
VANCOUVER
N CARRIERS
CALGARY
1
2
CALGARY
CALGARY
3
4
EDMONTON
HALIFAX
5
HALIFAX
6
7
MONTREAL
MONTREAL
8
OTTAWA
9
OTTAWA
10
11
OTTAWA
12
TORONTO
TORONTO
13
14
TORONTO
TORONTO
15
TORONTO
16
17
TORONTO
TORONTO
18
TORONTO
19
20
TORONTO
VANCOUVER
21
22
VANCOUVER
VANCOUVER
23
24
25
26
27
kDIAN
1
2
3
4
5
6
TOTAL 45
VANCOUVER
WINNIPEG
WINNIPEG
WINNIPEG
CARRIERS
MONTREAL
MONTREAL
OTTAWA
TORONTO
TORONTO
VANCOUVER
NEW ROUTES
PAIR
MINNEAPOLIS
SEATTLE
SEATTLE
DETROIT
MINNEAPOLIS
DblROIT
MINNEAPOLIS
MILWAUKEE
DALLAS
MINNEAPOLIS
PHOENIX
SALT LAKE CITY
HOUSTON
LAS VEGAS
PHOENIX
LAS VEGAS
ORLANDO
TAMPA/ST. PETE
FT. LAUDERDALE
ORLANDO
ORLANDO
TAMPA/ST. PETE
WASHINGTON
DENVER
FT. LAUDERDALE
FT. MYERS
LAS VEGAS
MINNEAPOLIS
ORLANDO
SARASOTA
ST. LOUIS
WEST PALM BEACH
DENVER
KAHULUI
LAS VEGAS
PALM SPRINGS
LAS VEGAS
ORLANDO
PALM SPRINGS
ATLANTA
WASHINGTON
CHICAGO
ATLANTA
WASHINGTON
RENO
CARRIER (S)
NORTHWEST
HORIZON
HORIZON
NORTHWEST
NORTHWEST
NORTHWEST
NORTHWEST
MIDWEST EXPRESS
AMERICAN
NORTHWEST
AMERICA WEST
DELTA
AIR CANADA
CANADIAN INTL
CANADIAN INTL
CANADIAN INTL
CANADIAN INTL
CANADIAN INTL
AIR CANADA
AIR CANADA
CANADIAN INTL
CANADIAN INTL
AIR CANADA
AIR CANADA
CANADIAN INTL
CANADIAN INTL
AIR CANADA
AIR CANADA
CANADIAN INTL
CANADIAN INTL
AIR CANADA
CANADIAN INTL
AIR CANADA
AIR CANADA
CANADIAN INTL
CANADIAN
CANADIAN
CANADIAN
CANADIAN
AIR CANADA
AIR CANADA
AIR CANADA
AIR CANADA
AIR CANADA
AIR CANADA
INTL
INTL
INTL
INTL
AIR CANADA
AIR CANADA
AIR CANADA
DELTA
USAIR
AMERICAN
AIR CANADA
AIR CANADA
CANADIAN INTL
DELTA
USAIR
RENO AIR
�CHANGES IN US-CANADA AVIATION MARKET
NONSTOP PASSENGER OPERATIONS WITH LARGE AIRCRAFT
MONTH OF DECEMBER 1995 VS. MONTH OF DECEMBER 1994
CATEGORY
CITY
DELETED ROUTES
US CARRIERS
1 CALGARY
2 MONTREAL
3 TORONTO
4 TORONTO
5 TORONTO
6 VANCOUVER
7 VANCOUVER
SPOKANE
BALTIMORE
CLEVELAND
NASHVILLE
ROCHESTER
SAN JOSE
SPOKANE
UNITED
USAIR
USAIR
AMERICAN
USAIR
AMERICAN
NORTHWEST
CANADIAN CARRIERS
1
CALGARY
NEWARK
AIR CANADA
PAIR
CARRIER (S)
EIGHT DELETED ROUTES
NEW SERVICE (ADDmONAL CARRIER ON EXISTING ROUTE)
US CARRIERS
1 CALGARY
CHICAGO
AMERICAN
2 CALGARY
SAN FRANCISCO
UNITED
3 REGINA
MINNEAPOLIS
NORTHWEST
4 TORONTO
NEWARK
CONTINENTAL
5 TORONTO
PITTSBURGH
USAIR
6 WINNIPEG
CHICAGO
AMERICAN
CANADIAN CARRIERS
1 CALGARY
2 MONTREAL
3 TORONTO
4 TORONTO
5 TORONTO
6 VANCOUVER
7 VANCOUVER
DENVER
BOSTON
CHICAGO
NEW YORK
TAMPA/ST. PETE
CHICAGO
LOS ANGELES
AIR CANADA
AIR CANADA
CANADIAN INTL
CANADIAN INTL
CANADIAN INTL
CANADIAN INTL
AIR CANADA
US/CANADIAN CARRIERS
1
VANCOUVER
SAN FRANCISCO
AIR CANADA
UNITED
TOTAL 14 ROUTES WITH NEW CARRIER SERVICE ON EXISTING ROUTES
DELETED SERVICE (CARRIER DELETIONS ON ROUTES WTTH REMAINING CARRIERS
1
REGINA
MINNEAPOLIS
TIME AIR
NEW CARRIERS
1
AM WEST (SERVED CANADA MARKET PREVIOUSLY)
2
CO (SERVED CANADA MARKET PREVIOUSLY)
3 MIDWEST EXPRESS
4
RENO AIR
�CHANGES IN US-CANADA AVIATION MARKET
NONSTOP PASSENGER OPERATIONS WITH LARGE AIRCRAFT
MONTH OF DECEMBER 1995 VS. MONTH OF DECEMBER 1994
CATEGORY
CITY
PAIR
CARRIER (S)
NEW NONSTOP CITIES SERVED
US CITIES
1 ATLANTA
2
FT. LAUDERDALE
3 FT. MYERS
4
KAHULUI
5
LAS VEGAS
6 MILWAUKEE
7 ORLANDO
8
PALM SPRINGS
PHOENIX
9
10 RENO
11 SARASOTA
12 ST. LOUIS
13 WASHINGTON, DC
14 WEST PALM BEACH
CANADIAN CITY
1
SASKATOON
TOTALIS NEW CITIES SERVED NONSTOP
NONSTOP CfTIES DELETED
1
CLEVELAND
2
NASHVILLE
3
ROCHESTER
4
SAN JOSE
5
SPOKANE
TOTAL 5 CITIES DELETED NONSTOP SERVICE
H
TOTAL ROUTES SERVED
DECEMBER 1995 THE BILATERAL CARRIERS SERVED 90 NONSTOP MARKETS
DECEMBER 1994 THE BILATERAL CARRIERS SERVED 53 NONSTOP MARKETS
INCREASE OF 70 PERCENT IN NONSTOP ROUTES
NOTE: LARGE AIRCRAFT (OVER 60 SEATS) EXCEPT AIR CANADA'S OPERATIONS WITH 50-SEAT
REGIONAL JET INCLUDED.
�CHARTS
�United States-Canada Aviation Passenger Market
Total Scheduled Flights and Passengers
Monthly Percent Changes - 1995 vs. 1994
Percent Change (%)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Flights
— 8 7 10 11 27 33 41 42 41 42 48 45
Passengers + 4 0 0 5 8 12 14 18 20 23 33 28
�United States-Canada Aviation Passenger Market
US Flag Scheduled Flights and Passengers
Monthly Percent Changes - 1995 vs. 1994
Percent Change (%)
40
30
/
20
10
0
-10
Flights
—
Passengers \-
^
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2
2
1
-2
3
-3
5
2
22
6
31
11
36
14
32
16
32
18
32
18
29
15
28
11
�United States-Canada Aviation Passenger Market
Canadian Flag Scheduled Flights and Passengers
Monthly Percent Changes - 1995 vs. 1994
Percent Change (%)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Flights
— 17 18 21 20 25 40 51 52 54 59 77 70
Passengers H 6 4 6 10 14 17 17 19 25 33 66 58
-
�US and Canadian Flag Changes in Passenger Volume
July-December 1995 vs. July-December 1994
Passenger Change (000)
-400
US Flag
Canadian Flag
Scheduled
Charter U Total
Total
�US and Canadian Flag Percent Changes in Passenger Traffic
July-December 1995 vs. July-December 1994
Percent Change (%)
US Flag
Canadian Flag
Scheduled H Charter U Total
Total
�TRAFFIC
HIGHLIGHTS
�UNITED STATES-CANADA AVIATION MARKET
SUMMARY OF SCHEDULED FLIGHTS AND PASSENGERS FOR SELECTED 1995 AND 1994 TIME FRAMES
JANUARY-FEBRUARY, MARCH-DECEMBER, JULY-DECEMBER, JANUARY-DECEMBER
FLAG
US FLAG
YR
95
94
JAN-FEB TOTAL
PAX
FLTS
12852
940843
MAR-DEC TOTAL
FLTS
PAX
85992 6354344
JUL-DEC TOTAL
PAX
FLTS
54334 3983110
41225 3453030
JAN-DEC TOTAL
PAX
FLTS
98844 7295187
12659
940649
68561
5727927
1.52
0.02
25.42
10.94
95
8659
539562
61708
94
7363
513543
17.60
5.07
95
21511
1480405
147700 10023368
95718 6384823
169211 11503773
94
20022
1454192
110039
8650445
66927 5233617
130061 10104637
7.44
1.80
34.23
15.87
PCT. CHG.
CANADIAN FLAG
PCT. CHG.
BILATERAL TOTAL
PCT. CHG.
81220
6668576
15.35
21.70
9.40
3669024
41384 2401713
70367
4208586
41478
2922518
25702 1780587
48841
3436061
48.77
25.54
61.01
44.07
22.48
31.80
43.02
34.88
22.00
30.10
13.85
�UNITED STATES-CANADA AVIATION MARKET
SCHEDULED PASSENGERS, CHARTER PASSENGERS AND TOTAL PASSENGERS
JULY-DECEMBER 1995 VS. JULY-DECEMBER 1994
1995
FLAG
UNITED STATES
SCHEDULED
PAX
1994
MARKET
SHARE (%)
PAX
MARKET
SHARE (%)
PERCENT
CHANGE (%)
3,983,110
58.29
3,453,030
58.78
15.35
21,902
0.32
39,672
0.68
-44.79
U.S. TOTAL
4,005,012
58.61
3,492,702
59.46
14.67
CANADIAN
SCHEDULED
2,401,713
35.15
1,780,587
30.31
34.88
426,267
6.24
600,843
10.23
-29.06
CANADIAN TOTAL
2,827,980
41.39
2,381,430
40.54
18.75
TOTAL
SCHEDULED
6,384,823
93.44
5,233,617
89.10
22.00
448,169
6.56
640,515
10.90
-30.03
6,832,992
100.00
5,874,132
100.00
16.32
CHARTER
CHARTER
CHARTER
BILATERAL TOTAL
NOTE: TABLE INCLUDES OPERATIONS WITH AIRCRAFT GREATER THAN 60 SEATS EXCEPT
AIR CANADA'S TRAFFIC WITH THE 50-SEAT REGIONAL JET IS INCLUDED.
�
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Michael Waldman
Description
An account of the resource
<p>Michael Waldman was Assistant to the President and Director of Speechwriting from 1995-1999. His responsibilities were writing and editing nearly 2,000 speeches, which included four State of the Union speeches and two Inaugural Addresses. From 1993 -1995 he served as Special Assistant to the President for Policy Coordination.</p>
<p>The collection generally consists of copies of speeches and speech drafts, talking points, memoranda, background material, correspondence, reports, handwritten notes, articles, clippings, and presidential schedules. A large volume of this collection was for the State of the Union speeches. Many of the speech drafts are heavily annotated with additions or deletions. There are a lot of articles and clippings in this collection.</p>
<p>Due to the size of this collection it has been divided into two segments. Use links below for access to the individual segments:<br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0469-F+Segment+1">Segment One</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0469-F+Segment+2">Segment Two</a></p>
Creator
An entity primarily responsible for making the resource
Michael Waldman
Office of Speechwriting
Date
A point or period of time associated with an event in the lifecycle of the resource
1993-1999
Identifier
An unambiguous reference to the resource within a given context
2006-0469-F
Extent
The size or duration of the resource.
Segment One contains 1071 folders in 72 boxes.
Segment Two contains 868 folders in 66 boxes.
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Format
The file format, physical medium, or dimensions of the resource
Adobe Acrobat Document
Text
A resource consisting primarily of words for reading. Examples include books, letters, dissertations, poems, newspapers, articles, archives of mailing lists. Note that facsimiles or images of texts are still of the genre Text.
Original Format
The type of object, such as painting, sculpture, paper, photo, and additional data
paper
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Trade March 11
Creator
An entity primarily responsible for making the resource
Office of Speechwriting
Michael Waldman
Is Part Of
A related resource in which the described resource is physically or logically included.
Box 6
<a href="http://clinton.presidentiallibraries.us/items/show/36404"> Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/7763296">National Archives Catalog Description</a>
Identifier
An unambiguous reference to the resource within a given context
2006-0469-F Segment 2
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Format
The file format, physical medium, or dimensions of the resource
Adobe Acrobat Document
Medium
The material or physical carrier of the resource.
Preservation-Reproduction-Reference
Date Created
Date of creation of the resource.
6/3/2015
Source
A related resource from which the described resource is derived
7763296
42-t-7763296-20060469F-Seg2-006-017-2015