Trade Deficit with China Will Accelerate Job Destruction in the Next Decade

by Stephen A. Herzenberg

Last year the United States Congress passed legislation that granted China Permanent Normal Trade Relations (PNTR) status, easing China’s entry into the World Trade Organization.

A report by the Washington-based Economic Policy Institute (EPI), China and the States, projects job losses at the national, state, and industry level that would result from expanded trade with China over the period 1999 to 2010 as a result of Congressional approval of PNTR.

The KRC policy brief summarized here supplements the EPI report by detailing the impact on Pennsylvania. It breaks the statewide job loss down into job losses within nine regions of Pennsylvania, each containing one or more U.S. congressional districts.

The brief also examines some of the Pennsylvania industries that would be most affected and the average annual wages of the manufacturing jobs that would be lost.

Key findings include the following:

• By the year 2010, Pennsylvania is projected to lose 45,824 jobs as the result of a widening trade deficit with China.
• Pennsylvania would lose 40,752 manufacturing jobs, 4.3 percent of state manufacturing employment in 1998.
• The estimated annual average wage of the manufacturing jobs that Pennsylvania is projected to lose is $32,357. Although below the state’s average manufacturing wage, this is:
  • -- almost $3,000 above the state’s annual average non-manufacturing wage ($29,553), and
  • -- from $10,000 to $20,000 above the annual average wage in lower-wage service industries in which many displaced workers would find re-employment.

The hardest hit part of Pennsylvania, measured by job loss as a share of total 1998 employment, would be the Northwest Central region (5th Congressional District). This area would lose 2,744 jobs, 1.3 percent of the region’s overall 1998 employment. (This and the other eight regions of the state would each lose an estimated 4.3 percent of their manufacturing jobs.)

Northwest Pennsylvania (21st District) and Southern Metropolitan Pennsylvania (19th District) are projected to lose the largest numbers of jobs – between 3,100 and 3,200 jobs in each district.

In the Capital Region defined by the 17th Congressional District, 2,711 lost jobs are projected. Although this is only 0.9 percent of total area employment, the Capital Region is expected to suffer the fourth largest number of job losses per congressional district (out of the state’s nine regions).

A conservative estimate indicates that Pennsylvania has already lost over 190,000 jobs due to trade since 1979. Adding the consequences of an expanding trade deficit with China would bring the total to roughly 240,000, including about 215,000 in manufacturing. This equals over a fifth of current Pennsylvania manufacturing employment.

This document is an on-line summary of a Keystone Research Center report. The entire report is available for download as a PDF file at the KRC Web site www.keystoneresearch.org © 2001 Keystone Research Center