For other versions of this document, see http://wikileaks.org/wiki/CRS-98-782 ------------------------------------------------------------------------------ 98-782 E CRS Report for Congress Received through the CRS Web NAFTA: Estimated U.S. Job "Gains" and "Losses" by State Over 5½ Years Updated February 2, 2000 Mary Jane Bolle Specialist in International Trade Foreign Affairs, Defense, and Trade Division Congressional Research Service ~ The Library of Congress ABSTRACT U.S. job "gains" and "losses" from trade with Mexico and Canada stem from changes in trade. Job "gain" data cover the North American Free Trade Agreement (NAFTA)'s first five years and job "loss" data cover a little more than NAFTA's first five and one-half years. Between January 1, 1994 and September 28 1999, approximately 259,618 workers were certified as potentially suffering NAFTA-related job "losses." These data are sorted by state. Earlier versions of this report also included a table which sorted these data within states by business, indicating for each business, its products, reason for certification, and industry. Because of its increasingly unwieldy size, this table has been dropped from this report. However, these data for any state are available from CRS by calling the author at 7-7753. In addition, between January 1994 and the end of December 1998, nearly 710,000 net jobs were "created" from new exports to Mexico and Canada. These figures are sorted by state. In all, six tables present the data from varying perspectives, including major industries of job certifications and major industries of increased exports to Mexico and Canada . This report is generally updated once or twice a year. NAFTA: Estimated U.S. Job "Gains" and "Losses" by State Over 5½ Years Summary What has been the effect of the North American Free Trade Agreement (NAFTA) on jobs in individual states? NAFTA -- the trade agreement between the United States, Mexico, and Canada -- appears to have served primarily to accelerate trade-related job trends that were already ongoing. Thus, any reference in this report to effects "of NAFTA" is really a reference to effects "since NAFTA." Since NAFTA went into effect January 1, 1994, both imports from and exports to Mexico and Canada have increased -- boosted by reductions in tariff, nontariff, and investment barriers, particularly in Mexico. U.S. job "gains" and "losses" from trade with Mexico and Canada stem from changes in trade. In 1998 the value of trade with Mexico was slightly more than half the value of trade flows with Canada. Since NAFTA went into effect through the end of 1998, exports to Mexico and Canada combined have increased 64%, while imports have increased by 78%. Between 1993 and 1998, the annual merchandise trade deficit with Canada increased from $13 billion to $24 billion, while a $1 billion surplus with Mexico evolved into a $17 billion deficit. (The U.S. trade positions with both Mexico and Canada worsened in 1998 over 1997.) "Job gain" data cover NAFTA's first five years, and "job loss" data cover NAFTA's first five-and-a-half years. Measuring "job gains" and "losses" from trade with NAFTA partners is an inexact process. "Job loss" and "job gain" data were derived from different methods and databases and, therefore, are not comparable. In addition, job loss figures represent the outside limit of, rather than actual job losses. That is, they represent total employment at plants where workers have been certified to receive NAFTA-Transitional Adjustment Assistance (NAFTA-TAA) benefits. Only 20-30% of these workers actually collect benefits. Trying to further apportion these job gains and losses by state compounds the problems. Thus, the figures come with strong caveats. Nevertheless, they provide some useful information. Moreover, estimates of NAFTA-related job "gains" and "losses" are small relative to total U.S. employment. Approximately 259,618 workers were certified between January 1, 1994, and September 28, 1999, as potentially suffering NAFTA- related job losses. This represents less than the number of jobs created in a single month in 1998. On the other hand, an estimated 1,212,357 gross jobs and 709,989 net jobs were created from new exports to Mexico and Canada between 1994 and 1998. (The net figure factors in job losses from countervailing productivity growth and inflation). States suffering the greatest potential total job losses from trade with Mexico and Canada since NAFTA went into effect are North Carolina (27,725), Texas (23,386), Pennsylvania (18,663), New York (17,487), California (14,825), Georgia (12,457), and Tennessee (12,191). States estimated to have experienced the greatest gross job gains (not reduced by productivity and inflation growth) from trade with Mexico and Canada since NAFTA went into effect are Texas (175,407), Michigan (149,382), California (147,284), Illinois (60,181), New York (56,256), Ohio (53,895), and Indiana (43,192). Contents Estimated Job "Losses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Estimated Job "Gains" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Perspective on NAFTA-Related Job Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Appendix: Data and Explanation of Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Algebraic Formula: Relationship Between Gross and Net Jobs Created from New Exports since NAFTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 List of Figures Figure 1. Quick NAFTA State Data Finder . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 List of Tables Table 1. NAFTA-TAA Certification by Reason, January 1, 1994-September 28, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Table 2. Potential Job Loss by State: Number of Cases and Workers Certified by the NAFTA-TAA Program, January 1, 1994-September 28, 1999 . . . . . . . . . . 4 Table 3. Job Gain by State: Estimated Number of Gross and Net Jobs Supporting New Merchandise Exports to Canada and Mexico Combined, 1993-98 . . . 7 Table 4. Major Industries of NAFTA-TAA Job Certification, Jan.1, 1994 -Sept. 28, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Table 5. Major Industries of Increased Exports to Mexico and Canada, 1993-1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Table 6. Merchandise Exports to Canada, Mexico, and Combined, 1993-1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Table 7. Gross and Net Jobs Supported by New and All Merchandise Exports to Mexico and Canada Combined, by State, 1993-1998 . . . . . . . . . . . . . . . . 12 Special thanks to Cathi Jones for assistance in compiling data for this report. NAFTA: Estimated U.S. Job "Gains" and "Losses" by State Over 5½ Years What has been the effect of the North American Free Trade Agreement NAFTA on jobs in individual states? NAFTA -- the trade agreement between the United States, Mexico, and Canada -- appears to have served primarily to accelerate trade- related job trends that were ongoing before NAFTA. Thus, any reference in this report to effects "of NAFTA" is really a reference to effects "since NAFTA." One broad observation that can be made is that since NAFTA went into effect in January 1994, both imports from and exports to Mexico and Canada have increased -- boosted by reductions in tariff, nontariff, and investment barriers, particularly in Mexico.1 U.S. job "gains" and "losses" Figure 1. Quick NAFTA State from trade with Mexico and Canada Data* Finder (the U.S.'s first and third largest trading partners) stem from changes in trade flows, but are also affected Job Losses from New Imports Page by domestic increases in Potential Job Losses . . . . . . . . . . . . . 4 productivity. Since NAFTA, exports to and imports from Canada Gross and Net Job Gains from New have each increased by about 55- Exports 60%. This has resulted in relatively Total, 1993-98 . . . . . . . . . . . . . . . . . . 7 suggests few net job effects from By Year . . . . . . . . . . . . . . . . . . . . . . 12 trade with Canada. Exports to and imports from Mexico, however, Exports have more or less doubled (exports Total Exports to Mexico and less and imports more than Canada . . . . . . . . . . . . . . . . . . . . . . . 11 doubled). This suggests some * State data may include data on the District of sectoral job "losses" from Columbia and U.S. territories. production shifts to Mexico. However, since about two-thirds of the increase in imports is covered by an increase in exports, net job effects are estimated to be relatively small in relation to overall U.S. employment.2 In fact, NAFTA's overall effect on the U.S. economy has been relatively small. Foreign trade itself accounts for about 14% of U.S. gross domestic product (GDP); 1 For details on exports and imports traded with NAFTA partners, by industry, see NAFTA: Estimates of Job Effects and Industry Trade Trends After Five and One-Half Years, by Mary Jane Bolle. CRS Report 98-783E. 2 See also, U.S. Library of Congress. Congressional Research Service. NAFTA, Mexican Trade Policy, and U.S.-Mexico Trade: A Longer-Term Perspective, by J.F. Hornbeck. CRS Report 97-811 E. CRS-2 and trade with Mexico and Canada represents roughly one-fifth all U.S. trade. Larger effects on the overall U.S. economy result from structural changes taking place as companies shed employment due to trade and other economic factors. At the same time, however, the U.S. economy is both dynamic and robust. As jobs are eliminated in one industry, they are added in another. The United States, as a job-creating nation, is the envy of many developed countries, particularly Canada and many European nations, where employment growth has stagnated in recent years, and where unemployment is in some cases one-and-a-half to two times the U.S. rate. This report provides estimates on NAFTA-related job effects. Included, by state, are estimates of job gains covering NAFTA's first five years, and potential job-losses covering roughly NAFTA's first five-and-a-half years. (State export data, from which job gains by state are derived, are available only annually.) Measuring job gains and losses from trade with NAFTA partners is an inexact process. Trying to further apportion these job gains and losses by state compounds the difficulties. Thus, these figures come with strong caveats: First, the terms "job gains" and "losses" are, to a certain extent, misnomers. In an economy operating at full employment, trade results in neither net job gains nor net job losses, only in relocations from less efficient to more efficient industries. Economy-wide, job gains balance out job losses. However, at the industry and firm level, job "gains" from trade will not likely equal job "losses" from trade.3 Second, it should be emphasized that job-effect estimates included in this report were developed by different methods and are arguably incomplete and incompatible. In particular, job "losses" captured by Department of Labor (DOL) certifications arguably both underestimate and overestimate the actual number of job losses from NAFTA, for reasons mentioned below. Job "gains," while perhaps reasonably reflective of actual job gains from exports at the national level, are not as accurate at the state level, for reasons discussed below. Estimated Job "Losses" 4 The DOL certifies the eligibility of workers to apply at the state level for benefits under the NAFTA-Transitional Adjustment Assistance (NAFTA-TAA) Program. The certification identifies potential dislocated workers who, if separated from their jobs, would be eligible for training and income replacement benefits because, either imports from Mexico and Canada "contributed importantly" to their job loss, or their plant relocated to Mexico or Canada. Hence, the certified NAFTA job losses are but a subset of total job losses from NAFTA; they include only those job losses for which 3 Economists continue to debate what level the full-employment rate of unemployment should be. Many believe unemployment rates below 5.5% suggest an excess demand for labor. During the past several years, unemployment rates have dipped to under 4.5% -- the lowest they have been since the late 1960s. 4 The lengthy table included in previous versions of this report that listed each certified business in each state, together with reasons for certification, has been omitted because of size. However, these data for any state are available from CRS by calling the author at 7- 7753. CRS-3 the displaced worker applied for benefits and a direct linkage to trade with Mexico or Canada, or a shift in production to either of these countries, can be verified. However, NAFTA-TAA certification figures may overestimate job losses among certified workers. This is because not all workers certified actually lose their jobs. In fact, recent data from the Department of Labor suggest that as few as 20- 30% of the certified workers actually collect NAFTA-TAA benefits. (The others who were precertified may either not have actually lost their jobs, may have found another job in lieu of needing benefits, or for other reasons may not have collected their benefits.) Table 1. NAFTA-TAA Certification by Reason, January 1, 1994-September 28, 1999 % of all certified Reason for Certification Cases Workers workers C-1 Production shift to Mexico 948 120,888 47 C-2 Production shift to Canada 233 23,010 9 C-3 Increased customer imports from 196 22,852 9 Mexico C-4 Increased customer imports from 168 14,955 6 Canada C-5 Increased customer imports not identified by source country 214 27,497 11 C-6 Increased company imports from 194 26,352 9 Mexico C-7 Increased company imports from 66 8,802 3 Canada C-8 Increased company imports not 19 3,419 1 identified by source country C-9 High and Rising aggregate imports from 141 11,843 5 Mexico and/or Canada1 TOTAL CERTIFIED 2,179 259,618 100 Source of data: U.S. DOL Office of Trade Adjustment Assistance. Compiled by CRS. 1 C-9 represents a new category in 1997. Table 1 sorts certified workers by reason for certification. The growth in the number of workers certified under the NAFTA-TAA program has leveled off in the past year. The single most important reason for certification, and with it eligibility to receive income and job training benefits under NAFTA-TAA, continues to be production shifts to Mexico. This accounts for the largest and the largest growing part of all worker certifications -- 47%. Numbers of workers potentially dislocated are sorted by state in table 2.5 5 The DOL Office of Trade Adjustment Assistance keeps several different lists of numbers reflecting workers certified under the NAFTA-TAA program. Thus, totals in table 1 do not (continued...) CRS-4 Table 2. Potential Job Loss by State: Number of Cases and Workers Certified by the NAFTA-TAA Program, January 1, 1994-September 28, 1999 Total Total Jan. 1, 1994- Jan.1, 1994- Sept. 28, 1999 Sept. 28, 1999 NAFTA-TAA NAFTA-TAA Certified Certified STATE Cases Workers STATE Cases Workers North Carolina 171 27,725 Arizona 30 2,054 Texas 252 23,386 Minnesota 20 1,921 Pennsylvania 193 18,663 New Mexico 12 1,771 New York 126 17,487 Maine 18 1,702 California 124 14,825 Kansas 13 1,364 Georgia 110 12,457 West Virginia 18 1,343 Tennessee 109 12,191 Connecticut 11 1,291 Indiana 59 9,406 Mississippi 4 1,144 Arkansas 48 8,993 Puerto Rico 2 1,090 Michigan 74 8,334 Utah 13 1,047 Wisconsin 52 7,776 Montana 24 790 Washington 85 7,351 Alaska 5 780 New Jersey 69 7,064 Wyoming 19 620 Alabama 40 6,627 South Dakota 5 566 South Carolina 46 6,551 Iowa 9 454 Virginia 64 6,513 Vermont 4 429 Ohio 53 6,074 North Dakota 4 393 Missouri 67 5,984 Maryland 3 390 Florida 72 5,756 Oklahoma 12 331 Illinois 50 5,718 Nebraska 4 283 Oregon 90 4,907 Nevada 10 257 Louisiana 18 4,688 New Hampshire 7 224 Idaho 38 3,073 Delaware 0 0 Kentucky 30 2,904 Rhode Island 0 0 Massachusetts 31 2,562 Hawaii 0 0 Colorado 28 2,359 Dist. of Columbia 0 0 TOTAL 2,346 259,618 Source: U.S. Department of Labor, Office of Trade Adjustment Assistance. Database sorted by CRS. 5 (...continued) agree precisely with totals in table 2 because of errors in the data base. (Entries for which certain data are missing are not picked up by various "sorts" of the data.) CRS-5 While certification figures may overestimate some potential NAFTA job loses, they may miss others. Other workers whose job losses may be related to NAFTA, but who are not counted in the NAFTA-TAA figures, include the following major groups: (1) primary job losers who for some reason either: (a) did not apply for NAFTA-TAA benefits; or (b) applied and were rejected because they did not meet the criterion for certification (e.g., trade with Mexico or Canada contributed "somewhat" rather than "importantly" to their job loss); (2) some secondary job losers (who typically account for more than half the total number of job losers) in supplier or distributor industries, who for reasons similar to (1) above were not certified to receive NAFTA-TAA benefits; and (3) other job losers whose job loss is less directly related to NAFTA.6 Some workers may be able to claim loss of jobs due to NAFTA even though other factors may be involved. For example, some argue that labor-intensive jobs are shifted out of the United States to Mexico because the U.S. job market is tight and Mexico has a ready supply of workers willing to work for lower wages. Estimated Job "Gains" NAFTA-related job-gain estimates are based on Department of Commerce (DOC) data. The DOC publishes data on the number of total jobs in the economy supported by exports. This figure is derived through an input-output model which incorporates output-per-worker ratios for each sub-industry. Thus, the model estimates jobs added to the economy when output for any given sector increases. DOC data on all jobs supported by total merchandise exports can be used to derive the average number of jobs supported by $1 billion in merchandise exports each year. The number of jobs supported by $1 billion in exports declines each year because of productivity gains and inflation.7 Table 3 (p. 7) includes two measures of job gains from exports. One is a gross number. It focuses only on jobs created by new exports each year. The other is a net number. It takes into consideration jobs created by new exports and jobs lost by productivity gains among workers producing for export both before and since 6 U.S. Department of Commerce, Economics and Statistics Administration. U.S. Jobs Supported by Goods and Services Exports, 1983-94, p. 27 suggests that approximately two additional jobs support each manufacturing job by producing intermediate inputs, capital goods, and transportation and other services to the goods going to market. The NAFTA-TAA program covers some workers whose job loss is indirectly linked to trade with Mexico or Canada -- for example, workers in a business which supplies a company directly affected by trade with Mexico or Canada. Others, however, whose supplier relationship is less direct, may "slip between the cracks." 7 Data published by the Department of Commerce Economics and Statistics Administration included in a November 1996 report: U.S. Jobs Supported by Goods and Services Exports, 1983-1994 and updated by a separate data release, show that the number of jobs supported by $1 billion in merchandise exports was 15,123 in 1993,14,361 in 1994, 13,774 in 1995, 13,258 in 1996, and 12,755 in 1997. The average annual decline in the number of jobs supported by a billion dollars worth of exports is about 4%; thus, the estimated figure for 1998 is 12, 245. CRS-6 NAFTA went into effect. Thus, the net figure measures the difference between all workers needed to produce exports to Mexico and Canada in 1998 and all workers needed to produce exports in 1993. Gross and net numbers would be identical if productivity gains and inflation did not reduce the number of workers required to produce a given dollar value of exports each year. (More detail on the mathematics of this is included in the appendix, p. 14.) Results of the gross and net measures of NAFTA-related job growth are shown in table 3. Figures in table 3 are derived using data from two sources: 1) DOC state export data (included in appendix table 6, p. 11); and 2) DOC averages of jobs supported by exports (listed in footnote 6). From these numbers it can be estimated that increased merchandise exports to Mexico and Canada combined during NAFTA's first five years (1994 through 1998) have created approximately 1,212,357 gross export-related jobs in the United States (table 3, TOTAL). It can also be estimated that when job losses from productivity gains among those producing for export before and since NAFTA are additionally taken into consideration, new exports since NAFTA have added to the total number of workers producing for export to Mexico and Canada combined, only about 709,988 net jobs. Estimated numbers of net jobs in each state which support total exports to Mexico and Canada for 1993, and 1998 are included in columns (5) and (6) of table 7. For the country as a whole, the net jobs-from-new-NAFTA-exports figure covering the period 1994-1998, is less than two-thirds the gross figure (59%). However, net job gains may be a much higher percent of gross job gains in specific states whose export levels started out small and increased since NAFTA went into effect. See, for example, in table 3, Alaska, (right hand column) where the net figure is 76% of the gross figure. For Alaska, exports, initially at a low level, grew by 172% between 1993 and 1997 (as can be seen in appendix table 6, p. 11). It should be emphasized that estimates of jobs supporting exports in each state (in table 3) are only very rough estimates, and not an accurate reflection of actual jobs supporting exports, for two reasons. First, state export data on which these figures are based reflect total sales, not value added by each state. Second, the jobs- supporting-each-billion-dollars-worth-of-exports figure includes jobs both directly and indirectly involved in manufacturing the merchandise. Since more than half the jobs are indirect -- either "upstream" (primarily supplier) or "downstream" (primarily distribution) -- and indirect jobs can be carried out anywhere in the country, they are not necessarily attached to the state which the export figures represent. CRS-7 Table 3. Job Gain by State: Estimated Number of Gross and Net Jobs Supporting New Merchandise Exports to Canada and Mexico Combined, 1993-98 Jobs added in export industries Jobs added in export industries 1993-1998 1993-1998 (3) (3) NET jobs added NET jobs added (2) GROSS adjusted for (2) adjusted for (1) jobs productivity as a % of (1) GROSS productivity as a %of STATE added changes* gross jobs STATE jobs added changes* gross jobs Texas 175,407 116,816 67 Connecticut 8,990 3,237 36 Michigan 149,382 79,304 53 Colorado 8,402 4,312 51 California 147,284 101,406 69 Louisiana 6,594 4,858 74 Unallocated1 79,859 27,713 35 Delaware 5,802 3,124 54 Illinois 60,181 37,389 62 Vermont 5,501 (996) (18) New York 56,256 28,387 50 Mississippi 5,262 3,991 76 Ohio 53,895 24,583 46 Arkansas 5,123 3,207 63 Indiana 43,192 24,591 57 Oklahoma 4,784 2,812 59 Pennsylvania 38,565 23,261 60 Puerto Rico 4,296 2,186 51 N. Carolina 35,298 24,559 70 N. Hamp. 4,229 2,623 62 Minnesota 27,733 19,206 69 Nebraska 4,163 2,775 67 Wisconsin 23,119 14,798 64 Maryland 4,115 2,019 49 Kentucky 20,636 15,112 73 W. Virginia 3,297 2,217 67 Tennessee 20,506 12,212 60 Utah 2,947 1,598 54 New Jersey 20,049 8,775 44 Nevada 2,526 1,903 75 S. Carolina 19,652 14,157 72 N. Dakota 2,387 1,479 62 Arizona 19,128 12,861 67 Maine 2,126 763 36 Georgia 19,036 12,701 67 Alaska 2,075 1,584 76 Missouri 14,860 8,791 59 Idaho. 1,973 1,195 61 Mass. 14,474 4,304 30 D. of Col. 1,799 1,481 82 Washington 13,672 6,833 50 Rhode Island 1,392 428 31 Virginia 13,437 8,692 65 Montana 1,387 877 63 Florida 12,525 5,365 43 S. Dakota 1,005 576 57 Louisiana 11,938 8,190 69 Wyoming 544 366 67 Alabama 11,760 8,132 69 Hawaii 128 23 18 Oregon 10,084 6,991 69 New Mexico (7) (407) 5,758 Kansas 9,664 6,719 70 V. Islands (67) (106) 158 TOTAL 1,212,357 709,988 59 1 Unall: unallocated among states. * Net jobs added takes into account estimates of people already working to produce exports who would have lost their jobs to productivity improvements between 1994 and 1998, and subtracts this from the number of jobs added from new exports. Thus, a negative net jobs added number generally means either very slowly growing exports, or an actual decline in exports to Mexico and Canada combined. Source of data: calculated by CRS from DOC data. This table is a condensation of appendix table 7, p. 12. See footnotes to that table. For explanation of difference between gross and net jobs, see discussion on p. 5, and discussion of the algebraic formula beginning on p. 14. CRS-8 Perspective on NAFTA-Related Job Effects As mentioned, data on job losses and job gains due to trade are derived from different methods and data bases. They are therefore incompatible and comparisons between the two could be inaccurate. Estimates presented above on NAFTA-related job losses are relatively small. The more than 259,618 workers certified as of September 28, 1999 as potentially suffering NAFTA-related job losses represent less than the number of U.S. jobs created in a single month in 1998. According to the Department of Commerce,8 roughly half of all jobs supporting exports are included in the manufacturing sector. This suggests that of the approximately 710,000 estimated net jobs gained from trade with Mexico and Canada between 1993 and 1998, about 355,000 would be in manufacturing. After four straight years of decline just prior to NAFTA, during NAFTA's first four years, manufacturing jobs increased from about 18 to almost 18.7 million. The NAFTA- related estimated job gain in manufacturing represents about 50% of all manufacturing jobs gained between 1993 and 1998. Therefore, it can be argued that NAFTA may have made a significant contribution to the manufacturing employment turnaround. To complete the larger picture, tables 4 and 5 identify major industries of potential job loss and export gains since NAFTA. (Job gains from increased exports have not been estimated for specific industries because the number of jobs supported by each billion dollars worth of exports varies by industry.) Several industries [identified by boldface type and by an asterisk (*)] are included on both lists. These are: electronics, transportation equipment, nonelectrical machinery, apparel, paper products, and scientific instruments. This suggests that certain less efficient parts of these industries are being shifted to Mexico and Canada while more efficient parts are expanding domestically. The apparel industry is the biggest potential job loser, with 28% of all NAFTA-related potential job losses. Electronics is second, with 13%. As mentioned at the beginning of this report, in an economy operating at full employment, trade results in neither net job gains nor net job losses, only in relocations from less efficient to more efficient industries. Job gains from trade with Mexico and Canada under NAFTA do not necessarily have to equal job losses from such trade under NAFTA. Even before NAFTA went into effect there were some estimates that job losses would be concentrated in early years after NAFTA was adopted. Tables 4 and 5 document mid-term industry relocations. 8 U.S. Jobs Supported by Goods and Services Exports, 1983-94, op. cit., p. 27. CRS-9 Table 4. Major Industries of NAFTA-TAA Job Certification, Jan.1, 1994 -Sept. 28, 1999 % of all No. of jobs NAFTA-TAA SIC Industry certified certified jobs 23 *Apparel 73,568 28 36 *Electronics 33,684 13 37 *Transportation equip. 17,090 7 34 Fabricated metals 15,372 6 22 Textiles 14,150 5 35 *Nonelec. Machinery 11,747 5 24 Lumber 9,826 4 38 *Scientif. instruments 9,433 4 26 *Paper products 8,982 3 30 Rubber 7,722 3 31 Leather 7,521 3 SUBTOTAL 209,095 81 Other Manufacturing 35,171 14 ALL MANUFACTURING 244,266 95 Non-Manufacturing 15,352 6 TOTAL 259,618 101 SIC: Standard Industrial Classification codes. Manufacturing includes 20 2-digit codes which span numbers 20-39. Source: NAFTA-TAA database, sorted by CRS. See also text footnote 5. * indicates industries listed in both tables 4 and 5. Table 5. Major Industries of Increased Exports to Mexico and Canada, 1993-1998 Growth in Industry Export Value 1993-98 % of total NAFTA % change commodity SIC Industry in $billions 93-98 export gain 37 *Transportation Equip 16 56 18 36 *Electronics 17 81 18 35 *Nonelectric machinery 16 74 17 28 Chemicals 8 72 9 33 Primary metals 4 76 5 30 Rubber 4 81 5 38 *Scientific instruments 3 48 3 26 *Paper products 2 69 3 23 *Apparel 2 100 2 20 Food 2 45 3 SUBTOTAL 74 -- 82 Other Manufacturing 12 -- 13 TOTAL MANUFACTURING 87 66 95 Nonmanufacturing 4 44 4 TOTAL 91 64 100 Source: DOC Office of Trade and Economic Analysis. * indicates industries listed in both tables 4 and 5. CRS-10 Appendix: Data and Explanation of Methodology This appendix includes supplemental data and explanations. Table 6 includes state exports to Canada, Mexico, and the two countries combined for 1993, 1997, and 1998, and also shows growth rates for exports for 1993-98. Table 7 includes calculations supporting job gain figures in table 3. In table 7, column (4) lists gross job gains, by state during NAFTA's first five years. The same figures also appear in table 3, p. 7, column (2). In table 7, column (7), lists net job gains. The same figures also appear in table 3, p. 7, column (3). Net job gains are gross job gains from new exports minus job losses from productivity growth and inflation in manufacturing and services. Actual calculations are explained in the table 7 footnotes. In table 7, estimates of the total number of workers supporting all exports to Mexico and Canada combined for 1993 and 1998, are included in columns (5), and (6), respectively. Pages 14 and 15 include an algebraic formula showing how the numbers were calculated. CRS-11 Table 6. Merchandise Exports to Canada, Mexico, and Combined, 1993-1998 U.S. Exports to U.S. Exports to U.S. Exports to Mexico and Canada Canada Mexico Combined (in $millions) (in $millions) (in $millions) %ª STATE 1993 1997 1998 1993 1997 1998 1993 1997 1998 93-98 U.S. 100,190 150,124 154,151 41,635 71,378 79,010 141,826 221,503 233,161 62% TOTAL Ala. 622 1,251 1,281 185 814 380 807 2,065 1,661 106% Ak. 84 305 229 1 2 5 85 307 234 175% Ariz. 533 1,072 1,059 1,087 1,963 1,993 1,621 3,035 3,052 88% Ark. 421 820 688 69 141 179 490 961 867 77% Calif. 7,158 11,492 12,644 5,117 9,942 10,798 12,274 21,434 23,442 91% Colo. 595 672 729 604 1,418 1,105 1,200 2,090 1,834 53% Conn. 1,407 1,848 1,872 336 530 544 1,743 2,377 2,417 39% Del. 628 788 938 159 308 290 788 1,097 1,228 56% D.C. 36 142 158 17 17 29 53 159 187 253% Fla. 1,572 1,928 2,058 770 1,221 1,272 2,341 3,149 3,330 42% Ga. 1,469 2,000 2,116 324 686 1,136 1,793 2,685 3,252 81% Hi. 14 33 17 0 1 2 14 34 19 36% Idaho 157 278 280 36 44 56 193 322 336 74% Ill. 4,860 8,044 7,943 1,364 2,190 2,798 6,224 10,234 10,741 73% Ind. 4,265 5,060 5,672 1,168 2,573 3,046 5,432 7,634 8,718 60% Iowa 919 1,569 1,742 78 168 158 997 1,737 1,900 91% Ks. 473 834 879 187 449 485 660 1,284 1,364 107% Ky. 1,058 2,369 2,325 190 345 451 1,248 2,714 2,776 122% La. 372 663 736 61 133 196 433 796 932 115% Maine 362 557 528 29 18 17 391 576 545 39% Md. 601 653 690 96 199 337 698 752 1,027 47% Mass. 2,541 3,677 3,388 374 468 564 2,915 4,145 3,952 36% Mich. 11,434 19,760 19,666 5,630 6,458 7,888 17,065 26,218 27,554 61% Minn. 1,950 3,190 3,390 229 823 870 2,179 4,013 4,260 96% Miss. 306 430 493 25 127 242 331 558 735 122% Mo. 1,113 1,490 1,570 540 1,042 1,190 1,653 2,532 2,760 67% Mont. 145 236 193 1 21 59 146 257 252 73% Neb. 296 529 524 61 142 143 357 671 667 87% Nev. 123 272 301 13 60 23 137 332 324 136% N.H. 377 672 643 40 74 86 417 746 729 75% N.J. 2,539 3,837 3,873 789 884 954 3,328 4,721 4,827 45% N.M. 47 56 68 106 87 87 152 142 155 2% N.Y. 6,581 10,616 9,957 1,171 1,805 1,936 7,752 10,421 11,893 53% N.C. 2,289 3,748 3,719 365 1,321 1,565 2,654 5,069 5,284 99% N.D. 227 428 387 3 18 18 230 445 405 76% Ohio 7,672 10,472 10,669 927 1,584 1,959 8,598 12,055 12,628 47% Okla. 426 670 656 158 240 295 584 910 951 63% Ore. 871 1,082 1,329 109 89 452 980 1,170 1,781 82% Penn. 3,730 5,616 5,857 627 1,140 1,425 4,358 6,756 7,282 67% R.I. 286 330 372 42 77 68 328 407 440 34% S.C. 1,009 1,621 1,711 293 936 1,054 1,303 2,557 2,765 112% S.D. 108 167 166 4 11 19 112 179 185 65% Tenn. 1,679 2,389 2,589 650 1,188 1,288 2,329 3,577 3,874 66% Texas 3,811 8,118 8,506 12,861 18,864 21,627 16,672 26,982 30,133 81% Utah 343 514 505 30 73 87 374 587 592 58% Vt. 2,075 2,310 2,486 12 9 11 2,087 2,319 2,497 20% Va. 1,052 1,536 1,836 302 430 547 1,355 1,966 2,383 76% Wash. 1,723 2,457 2,360 208 272 583 1,931 2,730 2,943 52% W.Va. 285 479 503 21 34 56 306 513 559 83% Wis. 1,947 3,096 3,457 288 427 512 2,235 3,524 3,969 78% Wyo. 38 88 76 4 5 6 42 93 82 95% P.R. 387 690 657 129 217 160 517 906 817 58% V.I. 10 4 3 0 4 1 10 8 4 -60% Unall. 15,163 17,162 17,658 3,744 9,288 7,958 18,907 26,451 25,616 74% Source: DOC, Office of Trade and Economic Analysis. Website: http://www.ita.doc.gov. Go to "Trade Statistics" and then to "State Export Data." %ª = % change. CRS-12 Table 7. Gross and Net Jobs Supported by New and All Merchandise Exports to Mexico and Canada Combined, by State, 1993-1998 (See column explanations at end of table) NET Jobs (after compensating for NET as GROSS Jobs Added Each Year by New Exports to Mexico Productivity Growth and inflation) % of and Canada from All Exports to Mexico and Canada: GROSS (4) 1 (7) (8) (1) (2) (3) TOTAL (5) (6) TOTAL Col. (7) STATE 1994 1997 1998 1994-1998 1993 1998 1993-1998 /Col. (4) ALL U.S. 334,167 410,175 142,777 1,212,357 2,144,834 2,854,823 709,989 59% Alabama 2,939 7,175 (4,947) 11,760 12,205 20,337 8,132 69% Alaska 534 1,589 (894) 2,075 1,281 2,865 1,584 76% Arizona 3,304 5,651 208 19,128 24,508 37,369 12,861 67% Arkansas 1,800 3,114 (1,151) 5,123 7,409 10,616 3,207 63% California 24,953 39,157 24,586 147,284 185,618 287,024 101,406 69% Colorado (556) 7,367 (3,134) 8,402 18,143 22,455 4,312 51% Conn. 2,580 3,211 478 8,990 26,357 29,594 3,237 36% Delaware 1,686 901 1,616 5,802 11,912 15,036 3,124 54% D.C. 1,399 615 343 1,799 809 2,290 1,481 82% Florida 2,256 9,957 2,216 12,525 35,408 40,773 5,365 43% Georgia 4,635 3,464 6,930 19,036 27,116 39,817 12,701 67% Hawaii 78 (463) (184) 128 210 233 23 18% Idaho 709 106 171 1,973 2,919 4,114 1,195 61% Illinois 19,598 20,687 6,208 60,181 94,124 131,513 37,389 62% Indiana 9,392 6,045 13,285 43,192 82,152 106,743 24,591 57% Iowa 3,665 4,455 1,996 11,938 15,074 23,264 8,190 69% Kansas 3,980 (707) 992) 9,644 9,982 16,701 6,719 70% Kentucky 7,970 6,741 759 20,636 18,877 33,989 15,112 73% Louisiana 1,790 1,369 1,665 6,594 6,553 11,411 4,858 74% Maine 738 951 (367) 2,126 5,910 6,673 763 36% Maryland 341 1,584 2,143 4,115 10,556 12,575 2,019 49% Mass. 6,900 3,437 (2,363) 14,474 44,084 48,388 4,304 30% Michigan 155,574 (5,334) 16,358 149,382 258,067 337,371 79,304 53% Minnesota 3,724 3,904 3,024 27,733 32,953 52,159 19,206 69% Miss. 1,243 1,004 2,179 5,262 5,008 8,999 3,991 76% Missouri 6,722 1,981 2,792 14,860 25,002 33,793 8,791 59% Montana (11) 642 (61) 1,387 2,208 3,085 877 63% Nebraska 1,140 1,075 (49)5 4,163 5,392 8,167 2,775 67% Nevada 386 729 (98) 2,526 2,064 3,967 1,903 75% N.Hamp. 704 510 (208) 4,229 6,303 8,926 2,623 62% N.Jersey 9,822 8,446 1,298 20,049 50,327 59,102 8,775 44% N.Mexico (157) (114) 147 (7) 2,305 1,898 (407) (5758%) New York 15,213 27,566 (6,456) 56,256 117,231 145,618 28,387 50% N.C. 8,929 7,986 2,632 35,298 40,138 64,697 24,559 70% N.Dakota 320 701 (502) 2,387 3,480 4,959 1,479 62% Ohio 19,045 14,411 7,004 53,895 130,034 154,617 24,583 46% Oklahoma 753 2,040 502 4,784 8,832 11,644 2,812 59% Oregon 2,323 2,901 7,469 10,084 14,816 21,807 6,991 69% Penn. 8,262 14,073 6,440 38,565 65,900 89,161 23,261 60% R.Island (452) 778 404 1,392 4,959 5,387 428 31% S.C. 5,748 5,314 2,547 19,652 19,698 33,855 14,157 72% S.Dak. 352 87 86 1,005 1,689 2,265 576 57% Tennessee 5,740 5,918 3,636 20,506 35,221 47,433 12,212 60% Texas 36,236 60,951 38,581 175,407 252,132 368,948 116,816 67% Utah 746 865 61 2,947 5,650 7,248 1,598 54% Vermont (101) (857) 2,179 5,501 31,569 30,573 (996) (18%) Virginia 3,329 3,409 5,106 13,437 20,485 29,177 8,692 65% Wash. 4,836 479 2,620 13,672 29,201 36,034 6,833 50% W.Va. 651 1,480 563 3,297 4,627 6,844 2,217 67% Wisconsin 8,839 6,218 6,461 23,119 33,798 48,596 14,798 64% Wyoming 151 260 (135) 544 638 1,004 366 67% P.R. 4,185 1,321 (1,102) 4,296 7,817 10,003 2,186 61% V.I. 16 (139) (49) (67) 155 49 (106) 158% Unalloctd (70,790) 115,159 (10,211) 79,859 285,929 313,642 27,713 35% For explanation of calculations, see next page. Numbers in parentheses are negative. Numbers may not total exactly because of rounding. 1 Figures for 1995 and 1996 are not shown [(between columns (1) and (2)] because of space constraints. Explanation of columns in table 7: (Export data are taken from table 6). CRS-13 Columns (1)!(4): GROSS jobs supported by new NAFTA-related exports (i.e., additional exports to Mexico or Canada since NAFTA). Column (1): Total number of gross jobs supported by new exports to Mexico and Canada in 1994: Value of export growth in 1994 (in $billions) times 14,361 (the estimated number of workers supported by each $billion in exports in 1994). Not shown are figures for 1995 and 1996: the value of export growth times 13,774 and 13,258, respectively. Column (2): Same figure for 1997: Value of export growth in 1997 times 12,755. (The number representing additional workers supported by each $billion in exports each year takes into consideration both productivity changes and inflation since the previous year.) Column (3): Same figure for 1998: Value of export growth in 1998 times 12,245. Column (4): Total number of gross jobs supported by new NAFTA-related exports during NAFTA's first five years (94 + 95 + 96 + 97 + 98). Columns (4)!(8): NET jobs supported by NAFTA-related exports Column (5): Total estimated number of net jobs supported by exports to Mexico and Canada combined in 1993: Value of exports in 1993, in $billions, times 15,123 (number of workers supported by $1 billion in exports). Column (6): Same figure for 1998: Value of exports in 1998 times 12,245. Column (7): Net job growth from new NAFTA-related exports, 1993-1998: Columns (6)-(5). Column (8): Net NAFTA-related job growth as a percent of gross NAFTA-related job growth: Column (7)/column (4). NOTE: See p. 14 for the algebraic formula by which these figures were calculated. CRS-14 Algebraic Formula: Relationship Between Gross and Net Jobs Created from New Exports since NAFTA This section sets forth the equation that quantifies the relationship between the gross and net methods for calculating job changes from trade with Mexico and Canada since NAFTA went into effect. (Gross and net job changes are included in table 3, p. 7, and table 7, p. 12.) The estimated gross number looks only at the increase in the dollar value of exports each year, in billions, and multiplies it by the number of workers required to produce a billion dollars worth of exports. It ignores any decline in employment of those already working to produce exports, which occurs because productivity growth renders them "redundant" or no longer necessary. The net number looks at the total value of exports each year, in billions of dollars, and multiplies that by the number of workers required to produce a billion dollars worth of exports. The estimated number of net workers added to the payrolls to produce exports for each state calculated in this way reflects three things: 1. Additions to the number of workers because of an increase in exports; 2. Subtractions to the number of workers from: a. productivity gains that occurred during that year; and b. inflation (meaning that fewer items produced would represent the same value as the previous year.) For any state, the difference between the two numbers (gross and net) is equal to the sum, for each of the years (1994, 1995, etc.) of: the value of exports (in $billions) to Mexico and Canada combined in that year times the number of jobs supporting each billion dollars worth of exports which are lost to productivity and inflation in that year. MATHEMATICS of CALCULATION: Let symbols represent values as follows: Lg = gross jobs supporting new exports to NAFTA partners, 1993-1998. Ln = net number of jobs supporting new exports to NAFTA partners, 1993-1998. Xi = value of exports in initial year "i" in billions of dollars (numbers listed in table 6 divided by 1,000) CRS-15 Ji = number of jobs estimated to produce a billion dollars worth of exports in initial year; and Jf = number of jobs estimated to produce a billion dollars worth of exports in final year ("f"). Where, for both X and J: i = 1993; i+1 = 1994; i+2 = 1995; i+3 = 1996; i+4 = 1997; and i+5 = f = 1998. And in actual numbers, J i = J93 = 15,123; J i+1=J94 = 14,361; J i+2=J95 = 13,774; J i+3=J96 = 13,258; J i+4=J97 = 12,755; J i+5= Jf =J98 = 12,2459 The gross number of jobs supporting new exports to NAFTA partners can be represented by multiplying the number of jobs supporting a billion dollars worth of exports in a given year by the growth in exports for that year: (1) Lg =Ji+1 (Xi+1--Xi)+Ji+2(Xi+2--Xi+1)+Ji+3(Xi+3--Xi+2) . . . J f (X f--X f-1). The net number of jobs supporting new exports to NAFTA partners can be represented by the following equation showing the difference between the number of jobs supporting a billion dollars worth of exports and the value of exports for the beginning and end years: (2) Ln = JfXf--JiXi. To find the difference between the gross and net numbers of new jobs created from trade with Mexico and Canada since NAFTA went into effect equation (2) is subtracted from (1): Thus, for any state, for any year, the difference between the gross and net estimates of jobs created from new exports to Mexico and Canada combined since NAFTA went into effect represents the sum total of the number of jobs held by previously employed workers producing exports which are subsequently lost to productivity growth. 9 The figure for 1998 is a CRS estimate based on Department of Commerce estimates for the previous 5 years. ------------------------------------------------------------------------------ For other versions of this document, see http://wikileaks.org/wiki/CRS-98-782