Another Texas miracle: The number of Texas jobs lost to China

 

One point not popping up in Republican debates so far is that the state of Texas ranks #2 in jobs lost to China over the past ten years. Gov. Rick Perry himself does not seem too unhappy about this, judging from his rapport with China. But the numbers jibe oddly with assertions of job creation touted by the state administration under Perry.

The nonprofit Economic Policy Institute published its findings on U.S. trade deficit with China and U.S. job loss Sept. 20.

“The U.S.-China trade deficit has eliminated or displaced nearly 2.8 million U.S. jobs since 2001, a new Economic Policy Institute (EPI) briefing paper finds. Growing U.S. trade deficit with China cost 2.8 million jobs between 2001 and 2010 by Robert Scott, EPI’s Director of Trade and Manufacturing Policy Research, finds that all 50 states, the District of Columbia and Puerto Rico suffered jobs lost or displaced as a result of the growing U.S.-China trade deficit.”

Texas ranks high up in the top ten, so to speak, states losing jobs to China:

“The trade deficit with China grew from $84 billion in 2001, when China entered the WTO, to $278 billion in 2010. It eliminated or displaced 2,790,100 jobs, or about 2% of total U.S. employment over that period. The biggest net losses, in terms of the total number of jobs displaced, occurred in California, Texas, New York, Illinois, Florida, North Carolina, Pennsylvania, Ohio, Massachusetts and Georgia.”

The only state losing more net jobs than Texas to China’s burgeoning development in technology and the computer industry is California, which also placed on the list of states where the net loss was most destructive:

“In ten states, the jobs lost or displaced exceeded 2.2% of total employment. These states are New Hampshire, California, Massachusetts, Oregon, North Carolina, Minnesota, Idaho, Vermont, Colorado and Rhode Island.”

It will be readily apparent that job loss connected to the U.S. trade deficit hits both ‘red states’ (Idaho) and ‘blue states’ (Vermont), boosted by eager brokers for outsourcing like the entity behind the advertisement shown here.

Still, it is somewhat intriguing that the sheer number of Texas jobs lost to China under Texas Governor Rick Perry has not been mentioned on the campaign trail—232,870 jobs, many of them well-paying positions in the high-tech sector, is nothing to sneeze at. This is also 2.20 percent of total Texas employment in the ten years studied, slightly over one in every fifty jobs.

This under the guy who is always ready to talk tough about adversaries abroad; who seldom has said a discouraging word against jingoism or racial prejudice; who has readily associated himself with a purported ‘Texas miracle’ in the economy; and who has repeatedly billed himself as a jobs creator as Texas governor.

To be sure, other GOP candidates might not be on entirely safe turf in this regard themselves. Mitt Romney keeps being reminded about having been governor of Massachusetts, which also places on the lists above for jobs lost to the U.S.-China trade deficit. Utah’s Jon Huntsman was recently U.S. ambassador to China.

 

More fundamentally, few GOP candidates for the White House are eager to mention the U.S. trade deficit. For one thing, it is a reminder of the consequences of outsourcing. For another, it disobliges top corporate/industry donors who are not loath to ship U.S. jobs overseas; their inclination toward unfettered privilege to do so is part of why they support the GOP in the first place. It draws attention to the supineness or inertness of tough-talking top honchos, when it comes time to bargain on behalf of the American public or on behalf of U.S. working people. It points up key weaknesses in the newest ‘job-creating’ avatar of trickle-down theory. It might draw attention to the abuses of currency speculating.

Indeed, one side benefit of GOP harping on ‘the debt’—even to disparaging sale of U.S. Savings Bonds—is that it buries key economic and political facts behind our trade deficit. Congressman Michael McCaul’s 10^th district in Texas ranks 6^th on the list nationwide of jobs lost to the trade deficit over the past ten years, but McCaul’s website does not emphasize that. Debt, yes; jobs lost, no. Rep. John Carter’s Texas 31^st district ranks fourth nationwide in jobs lost to the trade deficit with China. No focus on that on Carter’s website, but the website does offer a GOP Job Bank.

As the EPI summarizes,

“Increases in U.S. exports tend to create jobs in the United States, and increases in imports tend to lead to job loss. Thus, a growing trade deficit signifies growing job loss.  The trade deficit with China is exacerbated by the currency manipulation. Because China has pegged its currency to the U.S. dollar instead of allowing it to fluctuate freely, the yuan has remained artificially low, effectively subsidizing Chinese exports and artificially raising the cost of U.S. exports. U.S. goods are less competitive in China and in countries where U.S. exports compete with those from China.”

MSNBC reported the EPI study with a lede focused on the typical labor argument:

“China is taking American jobs, labor unions, politicians and economists, have accused for some time. The logic is simple. While a manufacturing job in the U.S. may pay $50 an hour, when salary and benefits are factored in, Chinese factory laborers make little more than a few hundred dollars a month.”

 

Fortunately the MSNBC article does go on to discuss currency, up to a point:

“Cheap labor may well be the main reason for China’s manufacturing advantage, but currency manipulation could be another, the EPI states. While the cost of labor affected China’s exports, the currency manipulation, which happened despite China joining the World Trade Organization in 2001, distorted its imports. American policymakers have long assumed that as China’s huge middle class grew, U.S. companies’ sales to these new consumers would also grow. But it did not work out that way, the EPI reports: “as a result of China’s currency manipulation and other trade distorting practices, including extensive subsidies, legal and illegal barriers to imports, dumping and suppression of wages and labor rights, the envisioned flow of U.S. exports to China did not occur.” Added to its labor cost advantage, this currency manipulation has been devastating to many U.S. companies.”

The key point never, ever emphasized in GOP debates and other like-minded venues is the intrinsic relationship between cheap labor and cheap currency. Labor is cheap in China not only because the Chinese government has often held human labor cheap in formulating economic policy, but also because of the basic arithmetic of currency disparity itself.

Is there some rule against mentioning this?

At today’s spot currency rates (Sept. 29, 2011), one U.S. dollar is equal to 6.90 CNY (Chinese yuan). One yuan, conversely, is equal to 16 U.S. cents.

This simple fact should obviate GOP or Blue Dog attacks on health benefits or retirement, especially attacks that use unemployment in the U.S. as the pretext.

Try the hypothetical: Subtract every dollar in compensation paid for health benefits—admittedly costly, since the insurance companies are allowed to gouge ever-rising rates from their corporate/union customers along with their other customers. Subtract every dollar paid for retirement. In fact, just for fun subtract every dollar paid to keep the base wage or salary above the minimum wage, which currently in Maryland is $7.25 per hour and in Georgia is $5.15 per hour (for workplaces where the rate is not set by federal minimum).

First, only arguably can a working person live in Georgia on $5.15 per hour. But setting aside if one could the facts on the ground, translate that $5.15 into yuan-determined pay, call the basic unit of currency a yuan, and the $5.15 becomes 82 cents per hour. Just to lean over backward, let’s round that up to 83 cents per hour.

Let’s put this in simple language: There is no such thing as being ‘competitive,’ or even ‘more competitive,’ against 83 cents per hour. There is no way to ‘compete’ in cheapness of labor, at least no way short of starvation, work camps and epidemic. To claim otherwise is simply to undermine the very concept of economic policy or social policy, at least in a democracy.

The very idea that our current GOP leadership is somehow legitimately allowed to set the tone, or determine the terms, for talking about U.S. labor, jobs, and unemployment is lunacy.

 

Speaking of historical fact, one sector not suffering from the U.S. trade deficit vis-à-vis China over the past decade is the extended Bush family. Bush human and political capital began quietly accruing portfolio interests early in the new century from human-capital-rich China, where George H. W. Bush was a U.S. ambassador, and Taiwan, atop earlier ties to oil-rich Persian Gulf Saudi Arabia and Kuwait. Another factoid that does not pop up in GOP debates.