Trade and Pennsylvania: Distorted Trade Patterns Translate Into Job Loss for Commonwealth

David Bradley
Publication Date: 
October 1, 2002

Over the past decade, trade has been one of the most hotly contested dimensions of U.S. economic policy.

In light of continuing controversy, KRC evaluates the impact of trade on jobs in Pennsylvania since 1994, the year in which the North American Free Trade Agreement (NAFTA) went into effect. We estimate this impact at the state level and within nine regions of Pennsylvania, each containing one or more U.S. Congressional districts.

Key findings include the following:

  • From 1994 to 2000, Pennsylvania lost an estimated 142,221 jobs due to a rising trade deficit, 2.9 percent of total 1994 employment in the state.

  • In manufacturing, Pennsylvania lost an estimated 106,142 jobs from 1994 to 2000, more than one out of every nine manufacturing jobs.

  • The estimated annual average wage of the manufacturing jobs that Pennsylvania lost equals $39,328.This exceeds by over $7,000 the state’s average non-manufacturing wage ($32,192). $39,328 is as much as three times the annual average wage of Pennsylvania service industries in which many displaced workers would find re-employment.

  • The hardest hit part of Pennsylvania was the Capital region encompassing the new 17th Congressional District, which lost nearly 10,000 jobs, including nearly 8,000 in manufacturing.

  • The second hardest hit part of Pennsylvania was the Lehigh Valley spanning the 11th and 15th Congressional Districts, which lost an estimated 9,325 jobs each.

  • Other hard hit areas include Congressional Districts 9 (Rural Southern Pennsylvania) and 10 (in the Northeast including Scranton), each of which lost at least 8,281 jobs, including 6,766 in manufacturing.

  • The least hard hit areas include seven Congressional Districts that fall in the Philadelphia metropolitan area and four that fall mostly in the Pittsburgh metropolitan area.

Job Loss in the United States, Pennsylvania, and Other States

Proponents of current U.S. trade policies often point to the rapid growth over time in U.S. exports and the jobs created by these exports. For example, U.S. exports ballooned from $583 billion in 1994 to $942 billion in 2000 (in constant 2000 dollars). Many U.S. exports, however, do nothing to create U.S. jobs: they are simply processed in other countries and then come back into the U.S. domestic market.

In the case of Mexico, University of California-Berkeley Professor Harley Shaiken estimates that such “revolving door exports” account for an estimated 60 percent of U.S. exports. Overall, U.S. imports from 1994 to 2000 jumped from $765 billion to $1,381 billion, i.e., by $257 billion more than U.S. exports increased over the same period.

To evaluate the overall impact of trade on U.S. employment, Robert Scott of the Washington-based Economic Policy Institute look at both imports and exports. Scott estimates the jobs gained due to exports, the jobs lost due to imports, and the net job loss resulting from the excess of imports over exports.

For the period 1994-2000, Scott generates estimates for 31 industries in the United States, including each of 20 manufacturing industries.2 Industry-level job impacts were also generated for each of the 50 states. Scott’s findings follow.

  • The United States lost an estimated 3.044 million net jobs, including nearly 2 million in manufacturing due to a rising trade deficit from 1994 to 2000.

  • With 142,221 net jobs lost, Pennsylvania experienced the fifth-highest job losses of any state, behind California, Texas, New York, and Michigan. Pennsylvania’s net job losses represents 2.9 percent of Pennsylvania employment in 1994.

  • Pennsylvania also experienced the fifth-highest manufacturing net job losses due to trade, 106,142. This equals 11.4 percent of 1994 manufacturing employment in Pennsylvania, more than one out of every nine manufacturing jobs.

  • The jobs lost in Pennsylvania averaged $39,328 in annual wages. This exceeds the statewide average annual wage of $32,192 by over $7,000. It equals as much as three times the annual average wage in Pennsylvania service industries -- such as distribution, business services, and retail -- in which many displaced workers would find re-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 © 2001 Keystone Research Center