For other versions of this document, see http://wikileaks.org/wiki/CRS-98-783 ------------------------------------------------------------------------------ 98-783 E CRS Report for Congress Received through the CRS Web NAFTA: Estimates of Job Effects and Industry Trade Trends After 5½ Years Updated December 14, 1999 Mary Jane Bolle Specialist in International Trade Foreign Affairs, Defense, and Trade Division Congressional Research Service ~ The Library of Congress ABSTRACT During the North American Free Trade Agreement (NAFTA)'s first five and one-half years, it has served primarily to accelerate trade, plant relocation, and sectoral job "gain" and job "loss" trends that were already ongoing. This report documents five and one-half years worth of trends, and includes six tables. They track overall U.S. commodities exports, imports and trade balance; imports and exports by industry; estimates of jobs supporting those exports, by state; and industry import and plant relocation effects translated into potential job losses, both by industry and by state. A separate graph shows re-employment experience of displaced workers one to three years later. This report is updated periodically. NAFTA: Estimates of Job Effects and Industry Trade Trends After 5½ Years Summary Five and one-half years after the North American Free Trade Agreement (NAFTA) between the United States, Mexico, and Canada went into effect in January 1994, there is a continuing debate over whether it has resulted in job "gains" or job "losses." Before NAFTA, estimates were that the trade agreement could result in a maximum of one million job shifts among sectors over NAFTA's entire 10-15-year implementation period.1 In its first five and one-half years, NAFTA has primarily served to accelerate trade, plant relocation, and sectoral job gain and job loss trends that were already ongoing. Before NAFTA, no Federal agency documented specific job losses from imports or plant relocations to Mexico or Canada. Only anecdotal estimates were available. These statistical gaps make NAFTA's effects difficult to isolate. Because it is virtually impossible to discern job effects from NAFTA, this report is really about job effects since NAFTA. Moreover, job-effect estimates included in this report were developed by different agencies using divergent methods, are arguably incomplete, and may not capture all of the sectoral job gains or job losses; but they attempt to present arguments and data so far. During a little more than NAFTA's first five and one-half years (from January 1, 1994 - September 28, 1999), nearly 260,000 primary jobs were certified by the Department of Labor (DOL) in 2,346 plants as potentially threatened by increased imports from or plant relocations to Mexico or Canada. Two industries, apparel and electronics, accounted for about 40% of the NAFTA certifications. According to recent reports by the Department of Labor, perhaps 20 - 30% of those workers certified may actually have collected benefits. Others certified may never actually have lost their jobs, or may have found new jobs before beginning to collect benefits. Additional job losses may have occurred outside of these figures. These potential job losses are balanced by an estimated nearly 710,000 net job gains in the economy from increased exports to Mexico and Canada since NAFTA took effect. This represents nearly 5% of the 15 million jobs created in the U.S. economy over the same period of time. It may also account for about 98% of the 697,000 jobs gained in manufacturing over the same period of time, since slightly more than half of all jobs supporting exports to Mexico and Canada are in the manufacturing sector. 1 For a summary of pre-NAFTA job studies, see U.S. Library of Congress, Congressional Research Service. NAFTA: U.S. Employment and Wage Effects, by Mary Jane Bolle. [Washington] April 27, 1995, p. 4. (CRS Report 93-447.) Contents Overall Job Effects Under NAFTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Estimates of Job "Gains" Since NAFTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Difficulty of Making Estimates of Job "Losses" Since NAFTA . . . . . . . . . . . . . 5 How Great Have Certified Job Losses Been Under NAFTA? . . . . . . . . . . . . . . . 6 Industries of Potential Job "Losses" and Estimated Job "Gains" Under NAFTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Certified NAFTA Cases and Workers by State . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Effects of NAFTA on Jobs in Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 List of Figures Figure 1. Re-employment Experience of Displaced Workers 1 to 3 Years Later . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 List of Tables Table 1. U.S. Commodities Exports, Imports, and Trade Balance with Mexico and Canada: 1993 - 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Table 2. Estimates of "Gross" and "Net" Jobs Created from Increased Exports to Mexico and Canada Since NAFTA . . . . . . . . . . . . . . . . . . . . . . . . . 4 Table 3. Major Industries of Increased Exports to Mexico and Canada, 1993-1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Table 4. Industry Effects Since NAFTA: Jan. 1, 1994-Sept. 28, 1999 . . . . . . . 8 Table 5. Potential Job "Loss" by State: Number of Cases and Workers Certified by the NAFTA-TAA Program, Jan. 1, 1994- Sept. 28, 1999 Table 6. Appendix. Data on Trade with Mexico and Canada, 1993-1998 . . . 13 Special thanks to Cathi Jones for assistance in obtaining data for this report. NAFTA: Estimates of Job Effects and Industry Trade Trends After 5½ Years Five and one-half years after the North American Free Trade Agreement (NAFTA) between the United States, Mexico, and Canada went into effect January 1, 1994, there is a continuing debate over whether the trade agreement has resulted in net job "gains" or job "losses." Before NAFTA, estimates were that it could result in a maximum of one million job shifts among sectors over NAFTA's entire 10-15- year implementation period. Economists believe that overall and in the long run, trade in general and NAFTA in particular results in neither net job gains nor net job losses -- only in reallocations from less efficient to more efficient industries. Job-effect estimates included in this report were developed by different methods, are arguably incomplete, and may not capture all of the sectoral job gains or job losses. Nevertheless, the purpose of this report is to present, sort out, and explain the arguments and data so far. Overall Job Effects Under NAFTA When discussing job effects under NAFTA, most economists emphasize that both production shifts caused by lowering of trade barriers and resulting job dislocations are an intermediate step to greater productivity, greater real income, and a higher standard of living. The effects of NAFTA will take many years to become fully manifest. Under NAFTA, trade barriers are being reduced gradually over 10-15 years, and resulting dynamic gains from trade and accompanying job effects will continue for all three countries, particularly as the Mexican economy evolves. In this report estimates of job gains cover NAFTA's first five years; estimates of potential job losses cover a bit more than NAFTA's first five and one-half years. In its first five and one-half years, NAFTA has primarily served to accelerate trade, plant relocation, and sectoral job gain and job loss trends that were already ongoing. Before NAFTA was approved, however, no Federal agency systematically documented specific job losses from imports or plant relocations to Mexico or Canada. Only anecdotal estimates were available: Between 1986 and 1993, for example, an estimated 25,000 jobs in electronics, 20,000 jobs in transportation, and 17,000 jobs in apparel production moved to Mexico.2 Meanwhile, expanding exports to Mexico supported increasing numbers of U.S. jobs -- an estimated 2 U.S. Library of Congress, Congressional Research Service. NAFTA: U.S. Employment and Wage Effects, by Mary Jane Bolle, op. cit., p. 10. CRS-2 538,000 jobs in 1990.3 Now, while estimates are available, hard data still are difficult to come by. In addition, because it is virtually impossible to discern job effects from NAFTA, this report is really about job effects since NAFTA. One more point about overall job effects under NAFTA: Economists argue that since total U.S. employment (as well as U.S. manufacturing employment) increased by about 15 million jobs in the 1994-1998 period, any job losses under NAFTA have, in the aggregate, been more than made up for by job gains in other industries. Job effects since NAFTA depend on trade effects. Table 1 shows changes in trade with Mexico and Canada during NAFTA's first five years. (Trade data at the industry level are included in the Appendix Table 6.) Since NAFTA went into effect, exports to and imports from Canada have each increased by roughly 55%. This suggests little net job effects from trade with Canada. Imports from Mexico, however, have increased about one and one-half times as much as exports to Mexico. This suggests some sectoral job "losses" from production shifts to Mexico. However, since about two-thirds of the increase in imports from Mexico is covered by an increase in exports to that country, net job effects over NAFTA's first five and one- half years are estimated to be relatively small. Table 1. U.S. Commodities Exports, Imports, and Trade Balance with Mexico and Canada: 1993 - 1998 (in millions) 1993 1994 1995 1996 1997 1998 MEXICO U.S. Exports $41,635 $50,840 $46,311 $56,761 $71,378 79,010 U.S. Imports 40,745 50,356 62,756 74,111 87,167 96,078 Trade Balance 891 484 (16,445) (17,350) (15,789) (17,068) CANADA U.S. Exports $100,190 $114,255 $126,024 $132,584 $150,124 154,152 U.S. Imports 113,617 131,956 148,304 159,746 171,440 178,048 Trade Balance (13,427) (17,701) (22,280) (27,162) (21,315) (23,896) Source: U.S. International Trade Commission Dataweb. http://dataweb.usitc.gov. Numbers in parentheses represent negative balances. 3 U.S. Department of Commerce, Economics and Statistics Administration. U.S. Jobs Supported by Goods and Services Exports to Mexico, May, 1992. OIMA Research Series 2-92, p. 10, and U.S. Jobs Supported by Goods and Services Exports, 1983-94, OIMA Research Series 1-96, p. 20. CRS-3 Estimates of Job "Gains" Since NAFTA How great have the sectoral job gains been during NAFTA's first five years? The Department of Commerce (DOC), under contract with the University of Maryland, used an input-output model (incorporating output-per-worker ratios for each sub-industry) to estimate jobs added to the economy when output for any given sector increases. This model has been used to calculate the average number of jobs supported by each billion dollars worth of exports to Mexico and Canada for each year since NAFTA went into effect. The resulting figures can be used to produce two separate estimates on job gains in the U.S. economy from increased trade with Mexico and Canada since NAFTA. The two estimates are "gross" job gains and "net" job gains (which are mitigated by productivity increases). Both sets of figures are presented in Table 2, columns 6 and 7, on the following page. Table 2, in addition to showing estimates of job gains from new trade with Mexico and Canada since NAFTA went into effect, also includes other data from which these job gains were derived. In table 2, columns 2 and 3 list the value of total exports to Mexico and Canada combined, and new exports for each year since NAFTA went into effect. Column 4 includes figures from the DOC model -- the number of jobs supporting each billion dollars worth of exports to NAFTA partners for the various years. This is a number which declines each year because of productivity changes. Column 5 lists total jobs supported by merchandise exports to NAFTA partners for the respective years. Columns 6, as mentioned above, reflects "gross" jobs -- that is, the value of new exports, in billions (column 3), times the number of jobs supporting each billion dollars worth of exports (column 4). Column 7 reflects "net" jobs, which represents added jobs from increased exports for a given year, minus jobs lost over the year from increases in productivity. For any year, this is calculated as the column 5 figure minus the column 5 figure for the previous year. Estimates of the total net number for jobs "created" from "new" exports to Mexico and Canada since NAFTA went into effect (709,988) represent about 5% of the 15 million jobs created in the U.S. economy over the same time. The overall job gain figures are not sorted by specific industries, because the Department of Commerce does not publish annual figures showing, by industry, the number of jobs supported by each billion dollars worth of exports. However, Table 3 shows the major industries of increased exports to Mexico and Canada since NAFTA went into effect. Table 3 shows that most of the export gain, and therefore most of the presumed job "gains," since NAFTA went into effect would be expected in three manufacturing industries: transportation equipment (e.g., auto and some parts manufacturing), electronics, and nonelectric machinery (including computers). However, productivity gains in these industries may eliminate any actual net job gains in these industries. CRS-4 Table 2. Estimates of "Gross" and "Net" Jobs Created Each Year from Increased Exports to Mexico and Canada Since NAFTA (4) Value of Merchandise Number of Total Number of Jobs Exports to NAFTA Jobs Supporting New partners (Can. + Mex.) Supporting (5) Exports to NAFTA (in $billions) a Billion Total Jobs Partners Dollars Supported by Worth of Merchandise (2) (3) Exports to Exports to (6) (7) (1) Total New NAFTA NAFTA "Gross" "Net" Year Exports Exports Partners Partners Jobs Jobs 1993 142 -- 15,123 2,144,834 -- -- 1994 165 23 14,361 2,370,929 330,303 226,109 1995 172 7 13,774 2,373,750 96,418 2,821 1996 189 17 13,258 2,510,332 225,386 136,582 1997 221 32 12,755 2,825,258 410,175 314,934 1998 233 12 12,245 2,855,072 142,771 29,805 1999 245 12 11,755 2,877060 136,240 21,992 TOTAL 1,341,293 732,230 Source of data: Department of Commerce, Economics and Statistics Administration. Table 3. Major Industries of Increased Exports to Mexico and Canada, 1993-1998 Growth in Industry % of Total Export Value 1993-98 NAFTA Commodity SIC Industry in $billions % change Export Gain 37 *Transportation Equip 17 56 19 36 *Electronics 17 81 1819 35 *Nonelectric machinery 16 74 1818 28 Chemicals 8 72 99 33 Primary metals 4 76 54 30 Rubber 4 91 44 38 *Scientific instruments 3 48 33 26 *Paper products 3 69 23 23 *Apparel 2 132 22 20 Food 2 45 22 SUBTOTAL 76 57 84 Other Manufacturing 11 46 12 TOTAL MANUFACTURING 87 65 96 Nonmanufacturing 4 44 4 TOTAL 91 64 100 Source: DOC Office of Trade and Economic Analysis. * indicates industries that are also prominent in Table 4, which lists major industries of NAFTA- TAA certification in anticipation of possible job loss. CRS-5 Difficulty of Making Estimates of Job "Losses" Since NAFTA Some analysts have tried to count sectoral job losses under NAFTA by applying the DOC "average" (Table 2, column 4) numbers of jobs supporting each $1 billion of exports, to imports or to net imports (i.e., trade deficits) for the respective years. However, this methodology is not correct. Trade deficits cannot be used to measure net job losses because there are no net job losses as long as output and employment continue to rise. New imports are just added to domestic output, and not substituted for it. Trade deficits therefore, do not reflect aggregate jobs lost, but rather, at most, some job gains foregone (which, have no identifiable victims) in sectors affected by trade.4 Nor can trade deficits be used to measure specific job losses in various industries. This is because at even the most detailed industry levels, job losses in one operation may be balanced by job gains from increased exports or domestic demand in another. Thus, many specific job losses are hidden in sub-industries. This is not to say the job losses do not exist. They are very real, and perhaps more accurately counted directly and tallied up by industry. However, attempting to do this unveils other problems. Although the Department of Labor regularly publishes the number of job certifications (potential job losses from trade with Mexico and Canada since NAFTA), it does not publish the actual number of job losses in various industries, which may vary as a proportion of certifications, from industry to industry. 4 An example helps illustrate: If there is a trade balance, then exports equal imports. A subsequent trade deficit means either that net imports have increased or net exports have decreased. If net imports have increased, then extra imported goods consumed in the United States are being made abroad in jobs held by workers in other countries. Some would argue that these specific jobs held by foreigners are actually U.S. jobs foregone (gone to other countries before they were able to become U.S. jobs) -- and thus have no identifiable U.S. victims. However, not all these imported goods represent jobs that could be held in the United States for two reasons: First, because countries tend to import goods that are relatively costly to produce domestically (and to export goods which they can produce most efficiently) imported goods, in all likelihood, could not be produced as cheaply at home. Therefore, if the imports were not available, U.S. consumers would presumably buy a lower additional quantity of domestically produced goods, which would employ a smaller number of additional workers in the United States than are employed abroad in manufacturing the actual level of extra goods produced for import into the United States. Second, if the United States is at "full employment" when there is a trade deficit (as is currently the case) then there would be a limited supply of available workers to shift into domestic production of these goods. However, some unknown number of workers would likely be willing and able to shift into jobs producing these import substitutes if wages were greater than in their current employment, and if their education and training qualified them for the jobs. Their shifting would leave other less desirable jobs unfilled. CRS-6 How Great Have Certified Job Losses Been Under NAFTA? The Department of Labor (DOL) certifies potential job losses from trade with Mexico and Canada under the NAFTA-Transitional Adjustment Assistance (TAA) Program. The certification identifies those eligible for training or income replacement benefits because imports are expected to "contribute importantly" to the potential for job loss, or the plant is relocating to Mexico or Canada. Hence, NAFTA certifications cover an unknown number of actual job losses which are a subset of total job losses from NAFTA. The NAFTA certifications include only those job losses for which the worker or an employer applied for certification and a direct linkage to trade with or a shift in production to Mexico of Canada can be verified. However, NAFTA-TAA certification figures may overestimate job losses among certified workers. Not all workers certified actually lose their jobs. Rather, certification numbers represent the total number of workers at the plant which has applied for certification. Data from the Department of Labor suggest that as few as 20-30% of the certified workers actually collect NAFTA-TAA benefits. (Therefore, the others certified may either actually not have lost their jobs, may have found another job in lieu of needing benefits, or for other reasons may not have collected benefits.) The DOL has certified roughly 259,618 job losers from 2,179 plants under the NAFTA-TAA Program in a little more than five and one-half years (January 1, 1994 - September 28, 1999.) These potential job losers are distributed by industry in Table 4 and by state in Table 5. A common question relates to the identity of NAFTA-related job losers outside the NAFTA-TAA subset. Other workers whose job losses may be related to NAFTA 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 criteria for certification (e.g., imports from Mexico or Canada contributed "somewhat" rather than "importantly" to their job loss); (2) secondary job losers (who typically equal about twice the number of primary job losers) in supplier or distributor industries who did not apply or were not approved for NAFTA-TAA benefits;5 and (3) other job losers whose job loss is less directly related to NAFTA and who did not apply or were not eligible for NAFTA benefits. 5 U.S. Department of Commerce, Economics and Statistics Administration. U.S. Jobs Supported by Goods and Services Exports, 1983-92, p. 13 suggests that approximately two additional jobs support each manufacturing job by producing intermediate inputs, capital goods, and transportation and other services to the goods to market. CRS-7 Industries of Potential Job "Losses" and Estimated Job "Gains" Under NAFTA Table 4 shows NAFTA-certified "cases"6 and job losses by industry (columns 1, 2, and 3) in a broader context. For each industry, Table 4 also shows overall industry employment changes (columns 6 and 7), and trade levels and growth rates (columns 8 and 9) over NAFTA's first two years, as well as longer-term output (column 4) and employment (column 5) projections. During NAFTA's first five and one-half years, NAFTA-certified job losses (Table 4, column 3) have occurred in 19 out of a total of 20 manufacturing industries (column 1) with approximately 41% of the total job loss occurring in two industries: apparel and electronics. Many of these transitional losses have fallen more harshly on workers in declining7 industries and declining sectors of growing industries. Declining industries are indicated by a "D" in column 4 -- e.g., leather manufacturing. In these industries, current and projected output (column 4) and employment during NAFTA's first five and one-half years are declining absolutely (indicated by a negative number in column 6). Declining portions of expanding industries are not identified. However, the fact that many of the same industries appear in both Table 3, which identifies major industries of increased exports, and high up on Table 4, which lists industries of potential job "loss" from new trade with Mexico and Canada, in descending order, suggests that certain portions of the same industries are declining, and relocating to Mexico or Canada, while other parts are increasing their exports. Industries included in both Tables 3 and 4 are listed in bold typeface and marked with an asterisk (*). Longer-term output and employment projections have been included in Table 4 (columns 4 and 5) because some observers argue that if NAFTA were repealed, both output and jobs could be preserved in the United States. Since merchandise exports to Mexico and Canada combined represent only about 2.7% of U.S. GDP, repeal of NAFTA would likely have very little effect on these longer-term trends in most industries.8 These trends show clearly that even though output is expected to increase in most industries, employment is not expected to increase appreciably. 6 "Case" refers to a group of workers applying for NAFTA certification. It may represent a plant or a production operation. 7 Declining industries are typically those at the end of their product life cycle, a concept authored by economist Raymond Vernon. He hypothesized that, as each product moves through its natural life cycle from a fledgling product requiring constant research, development, and refining to a mature product with standardized technology, it likely experiences changes in the geographical location of its production. After production technologies are perfected, the product can be manufactured wherever production and distribution costs are lowest. This frees scarce labor resources for work on other, newly emerging products. 8 U.S. Library of Congress. Congressional Research Service. NAFTA: Economic Effects on the United States, by Arlene Wilson. [Washington] April 12, 1996. CRS Report No. 96- 336E. CRS-8 Table 4. Industry Effects Since NAFTA: January 1, 1994-September 28, 1999 Cases and Workers Certified and Trade Changes against a Backdrop of Overall Domestic Output and Employment Trends Domestic Trends Trade Trendsd Projected Actual Trade with Mexico 1994-2005b 1993-6/1999 and Canada 1/1/94- Certified combined: 1998 level 9/28/99 workers in $billions; and (%) Industry Cases Workers as a % change 1993-98 % Employ- of total (SIC) Certified Certifieda Output Change Employment Change ment Change job loss in (6) Exports Imports (1) (2) (3) (4) (5) (6)c (7) (8) (9) MANUFACTURING 1,698 244,266 S D 43 220 (66%) 274 (78%) *Apparel (SIC 23) 645 73,568 S R/D -23 33 4 (132)% 9 (206%) *Electronics (36) 280 33,684 R/E D 12 37 (81%) 35 (117%) *Trans. equip.(37) 92 17,092 S D 7 46 (56%) 74 (70%) Fab. metals (34) 114 15,372 S D 12 11 (56%) 7 (126%) Textiles (22) 105 14,150 N D -11 18 4 (100%) 2 (217%) *Nonelec. mach. (35) 99 11,747 R/E D 14 37 (74%) 21 (132%) Lumber (24) 146 9,826 S D 15 2 (21%) 11 (55%) *Scientif. inst. (38) 85 9,433 R/E D -3 34 9 (48%) 6 (106%) *Paper products (26) 59 8,982 R/E N -2 53 6 (69%) 12 (37%) Rubber/Plastics (30) 64 7,722 R/E S 11 9 (91%) 5 (103%) Leather (31) 68 7,521 D R/D -29 22 1 (62%) 1 (65%) Misc. (39) 48 6,909 S N 4 3 (55%) 2 (114%) Primary metals (33) 43 6,321 N R/D 4 10 (76%) 15 (59%) Food (20) 40 6,043 S N 4 8 (45%) 8 (84%) Stone/clay/glass (32) 43 5,995 N D 9 3 (43%) 3 (91%) Furniture (25) 26 4,130 S N 7 3 (41%) 6 (149%) Chemicals (28) 40 3,493 S N -3 9 19 (72%) 10 (67%) Prnt./publishing (27) 21 1,995 R/E S 3 3 (25%) 1 (108%) Petroleum prods. (29) 3 285 R/E N -7 3 3 (65%) 3 (0%) Tobacco (21) 0 0 D R/D -7 * (21%) * (-92%) NON-MANUFACTURING S Commodities 100 7,549 -- -- -- -- 13 (44%) 43 (48%) Services 49 6,234 -- -- -- -- -- -- -- -- Unallocated 142 1,569 TOTAL 1,989 259,618 -- S 16 220 (66%) 274 (78%) SIC: Office of Management and Budget Standard Industrial Classification codes. Manufacturing industries are represented by SIC Codes 20-39. a "Cases certified" includes a group of workers who may represent a plant or a production operation. Source for plant closings and job losses: U.S. Department of Labor, Office of Trade Adjustment Assistance. b Source: Franklin, James. Industry Output and Employment Projections to 2005. Monthly Labor Review, November 1995, p. 45-59. For output change for the period 1994-2005: D= declining (4-19% decline); N= no change (-2%-+2%); S= slow-growing (3-25% growth); R/E= rapidly expanding (26-50% growth). For employment change: R/D= rapidly declining (21-38% decline); D= declining (2-20% decline); N= neutral growth (-3%-+3%) S= slow-growing (4-8% growth). c Source: U.S. Department of Labor, Employment and Earnings, all workers d Detailed trade data are included in appendix Table 6. *less than 0.5 billion. CRS-9 Therefore, for most industries these projections include only a very marginal job effect from trade with Mexico and Canada, and an even smaller effect specifically from NAFTA. To what extent is NAFTA exacerbating absolute employment declines in certain industries? During NAFTA's first five and one-half years industry employment declined absolutely (column 6) in seven out of 19 manufacturing industries that show potential NAFTA job loss. Within these seven industries, potential NAFTA job loss accounted for 3% to 53% of total job loss (column 7). In other industries where employment did not occur overall, much of the job loss was presumably attributable to productivity gains or non-NAFTA-related declines in output. Overall, between 1994 and June of 1999, an increase in manufacturing jobs in the U.S. economy has more than made up for NAFTA job losses. Between January 1994 and June, 1999 manufacturing employment grew by 478,000 jobs or about 2.6%. To what extent will NAFTA-related job gains occur in the manufacturing sector in the coming decade? As mentioned briefly earlier in this report, productivity gains in manufacturing are expected to greatly mitigate job opportunities in this sector. Little future job growth is expected in any of the four industries that currently account for 63% of manufacturing exports to Mexico and Canada (Table 4, column 8: transportation equipment, electronics, nonelectrical machinery, and chemicals), even though two of these industries (electronics and non-electrical machinery) anticipate rapidly expanding output, and all four industries anticipate expanded trade with NAFTA partners. Only two industries (rubber/plastics and printing/publishing -- see column 5) anticipate employment growth above 3% for the 11-year period 1994-2005, even though 15 out of 20 industries (column 4) anticipate output growth. All this means that NAFTA-related job gains in the manufacturing sector could be very small, and most job gains related to NAFTA will likely occur in other industries. Certified NAFTA Cases and Workers by State Table 5 shows the number of cases and workers certified, by state. Three groups of states have chalked up more than 80% of the NAFTA-related job loss: (1) some of the more traditional industrial states (i.e., New York, Pennsylvania, Michigan, Wisconsin, New Jersey, Illinois, Ohio, and Indiana); (2) some of the southern states which represent some labor-intensive industries as well as some border retail establishments (i.e. North Carolina, Texas, Georgia, Arkansas, Florida, and Tennessee), and (3) some of the high-tech states (i.e., Washington and California). CRS-10 Table 5. 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. 1994-Sept. 28, Jan. 1994-Sept. 28, 1999 NAFTA-TAA 1999 NAFTA-TAA Certified Certified STATE Cases Workers STATE Cases Workers North Carolina 171 27,725 Arizona 30 1,354 Texas 252 23,386 Minnesota 20 1,343 Pennsylvania 193 18,663 New Mexico 12 1,260 New York 126 17,487 Maine 18 1,234 California 124 14,825 Kansas 13 1,184 Georgia 110 12,457 West Virginia 18 842 Tennessee 109 12,191 Connecticut 11 780 Indiana 59 9,406 Mississippi 4 753 Arkansas 48 8,993 Puerto Rico 2 631 Michigan 74 8,334 Utah 13 483 Wisconsin 52 7,776 Montana 24 399 Washington 85 7,351 Alaska 5 390 New Jersey 69 7,064 Wyoming 19 371 Alabama 40 6,627 South Dakota 5 319 South Carolina 46 6,551 Iowa 9 300 Virginia 64 6,513 Vermont 4 280 Ohio 53 6,074 North Dakota 4 220 Missouri 67 5,984 Maryland 3 211 Florida 72 5,756 Oklahoma 4 157 Illinois 50 5,718 Nebraska 5 83 Oregon 90 4,907 Nevada 1 1 Louisiana 18 4,688 New Hampshire 0 0 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 Col. 0 0 TOTAL 2,346 259,618 Source: U.S. Department of Labor, Office of Trade Adjustment Assistance. Database sorted by CRS. Note: Totals in Table 5 do not agree with totals in Table 4 because certain entries which lack SIC code identifications were not picked up in the Table 4 sort. CRS-11 Effects of NAFTA on Jobs in Perspective While NAFTA has resulted in job loss in certain import-sensitive industries, it may have also resulted in job gains in some export-oriented industries. While parts of many industries are growing as a result of NAFTA, some have lost jobs primarily because of trade with Mexico and Canada. All the estimated 259,618 workers certified under NAFTA-TAA are eligible for retraining benefits through local state employment agencies for up to 18 months, if they actually lose their jobs. Data are not available to show specific subsequent job history of job losers under NAFTA. However, a DOL study showing how 3.6 million full-time wage and salary workers displaced from their jobs between January 1995 and December 1997 had fared one to three years later in February 1998 offers a possible scenario (see Figure 1).9 Of all workers displaced Figure 1. Re-employment Experience of from wage and salary jobs, after Displaced Workers 1 to 3 Years Later one to three years, 29% were 29% confirmed to have found new Re-employed full-time at full-time wage and salary jobs same or earning the same or higher higher 37% earnings: salary. Another 37% were re- Re-employed: employed at lower earnings, full-time at lower part-time, or were self- earnings; employed. Another 24% were part-time; or self-employed unemployed or dropped out of 10% the labor force. The remaining Re-employed 24% 10% were re-employed full- full-time; no Unemployed or wage data: time but no wage data were dropped out of labor force: available for their previous Data source: see foonote at bottom of page. employment, so it can not be determined whether they gained or lost wage ground. What is happening to U.S. jobs as a result of NAFTA is part of a larger picture of job changes in the American landscape: Although manufacturing's real (inflation- adjusted) output as a percent of real GDP has remained relatively stable, manufacturing's employment level and employment share has been shrinking: Between 1972 and 1998 manufacturing lost 2% of its jobs, while its share of total U.S. jobs declined from 26% to 15%. Productivity growth and downsizing have helped some manufacturing industries become more competitive in the international marketplace. Between 1992 and 1997, manufacturing employment has actually grown by 3%. In the future, however, as manufacturing employment continues to shrink from additional productivity gains, most employment gains elsewhere in the economy that balance out small NAFTA-related job losses will tend to occur in non- manufacturing sectors. 9 Source of data: BLS Finds Risk of Displacement Higher Even as Job Losses Ease in 1995-97 Period. Bureau of National Affairs' Daily Labor Report, August 20, 1998, p. D-5 -- D-13. CRS-12 In conclusion, the estimates reported here provide a medium-term perspective on possible trade-related effects since NAFTA. An analysis of the complete employment effects from NAFTA must include many more years of data and more comprehensive analysis. An accurate assessment of employment effects under NAFTA would have to separate out from raw data, such non-NAFTA influences as business cycles, productivity growth, pre-NAFTA-trends, and post-NAFTA fluctuations in currencies. CRS-13 Table 6. Appendix. Data on Trade with Mexico and Canada, 1993-1997 (in $millions) TRADE BALANCE with MEXICO EXPORTS to MEXICO (f.a.s. value) IMPORTS from MEXICO (c.i.f. value) (exports minus imports) TRADE WITH % % chng chng % chng MEXICO 1993 1996 1997 1998 93-98 1993 1996 1997 1998 93-98 1993 1996 1997 1998 93-98 ALL COMMODITIES 41,635 56,761 71,378 79,010 90 40,745 74,111 87,167 96,078 136 891 (17,350) (15,789) (17,068) (2,018) MANUFACTURING 39,096 52,312 67,306 74,524 91 31,848 61,035 71,573 82,754 160 7,247 (8,723) (4,267) (8,230) (214) 20--Food products 1,996 2,000 2,385 2,830 42 941 1,499 1,733 2,016 114 1,055 500 652 814 (23) 21--Tobacco 22 38 23 11 (50) 4 11 25 11 175 18 27 (3) 0 (100) 22--Textiles 643 1,035 1,293 1,697 164 123 495 710 735 498 520 540 583 962 85 23--Apparel 1,167 1,986 2,510 2,966 154 2,468 4,708 6,325 7,746 214 (1,300) (2,722) (3,814) (4,780) 267 24--Lumber 484 256 300 378 (22) 326 411 457 422 29 158 (155) (157) (46) (129) 25--Furniture 696 527 650 789 13 915 1,552 1,919 2,290 150 (219) (1,025) (1,269) (1,501) 585 26--Paper 1,376 1,821 2,063 2,298 67 112 247 283 323 188 1,264 1,574 1,780 1,975 56 27--Printing 263 341 329 380 44 75 190 223 258 244 187 151 106 122 (35) 28--Chemicals 3,036 4,574 5,631 6,069 100 810 1,454 1,628 1,598 97 2,225 3,120 4,003 4,471 101 29--Petroleum 813 1,162 1,624 1,504 85 627 431 345 327 (48) 186 731 1,278 1,177 533 3X--Exprts, unident. 1,538 2,108 2,675 3,241 111 -- -- -- -- -- 1,538 2,108 2,675 3,241 111 30--Rubbr & plast. 1,632 2,625 3,314 3,865 137 368 711 899 1,067 190 1,264 1,914 2,414 2,798 121 31--Leather 197 243 319 360 83 351 529 617 596 70 (153) (286) (298) 236 53 32--Stone, clay,glass 364 478 561 635 74 618 1,016 1,141 1,329 115 (254) (537) (580) 694 173 33--Primary metals 1,892 2,796 3,239 3,809 101 1,289 2,789 3,140 3,503 172 602 7 99 306 (49) 34--Fabricatd metls 1,977 2,874 2,879 3,166 60 951 1,699 2,199 2,560 169 1,025 1,175 680 606 (41) 35--Nonelec. mach. 5,210 6,859 9,547 10,270 97 2,031 5,389 7,185 8,598 323 3,179 1,471 2,362 1,672 (47) 36--Elec machinery 8,191 12,522 16,292 17,458 113 11,222 18,542 21,550 25,434 127 (3,031) (6,019) (5,259) (7,976) 163 37--Transprt. equip. 5,112 5,693 8,359 9,298 82 6,446 15,613 16,972 18,816 192 (1,334) (9,920) (8,613) (9,518) 613 38--Scientific instr 1,941 1,797 2,462 2,679 38 1,507 2,584 2,926 3,694 145 434 (787) (464) (1,015) (334) 39--Misc. 547 577 854 833 52 663 1,167 1,295 1,431 116 (117) (589) (441) (598) 416 AGRICULTURE 1,716 3,457 2,857 3,412 99 2,376 3,134 3,304 3,611 52 (660) 322 (447) (199) (70) MINING 290 458 475 424 46 4,635 6,862 8,705 5,496 19 (4,345) (6,404) (8,231) (5,072) 17 OTHER 534 534 741 650 22 1,886 3,080 3,585 4,217 124 (1,351) (2,545) (2,844) (3,567) 164 CRS-14 TRADE BALANCE WITH CANADA TRADE EXPORTS TO MEXICO (f.a.s. value) IMPORTS FROM CANADA (c.i.f. value) (exports minus imports) WITH % % chng chmg % chng CANADA 1993 1996 1997 1998 93-98 1993 1996 1997 1998 93-98 1993 1996 1997 1998 93-98 ALL COMMODITIES 100,190 132,584 150,124 154,152 54 113,617 159,746 171,440 178,048 57 (13,427) (27,162) (21,315) (23,896) 78) MANUFACTURING 93,460 124,110 140,672 145,271 55 93,437 131,266 141,030 148,079 58 23 (7,156) (358) (2,808) (12,309) 20--Food products 3,462 4,298 4,819 5,058 46 3,295 4,767 5,293 5,770 75 167 (469) (475) (712) (526) 21--Tobacco 11 21 24 29 164 518 27 28 33 (94) (507) (6) (4) (4) (99) 22--Textiles 1,254 1,725 1,999 2,089 67 497 931 1,105 1,229 147 757 794 893 860 14 23--Apparel 676 1,027 1,221 1,304 93 622 1,199 1,448 1,719 176 54 (172) (227) (415) (869) 24--Lumber 1,165 1,330 1,653 1,619 39 6,638 9,204 10,118 10,369 56 (5,473) (7,874) (8,465) (8,750) (60) 25--Furniture 1,266 1,519 1,794 1,980 56 1,513 2,748 3,255 3,758 148 (247) (1,229) (1,461) (1,778) (620) 26--Paper 1,936 2,894 3,140 3,301 71 8,307 11,165 10,957 11,243 35 (6,371) (8,270) (7,817) (7,942) 25 27--Printing 1,789 2,048 2,207 2,186 22 530 774 881 998 88 1,259 1,273 1,326 1,188 (6) 28--Chemicals 7,977 11,052 12,397 12,847 61 5,443 8,239 9,080 8,825 62 2,534 2,813 3,317 4,022 59 29--Petroleum 734 995 1,111 1,052 43 1,905 2,940 2,916 2,216 16 (1,170) (1,945) (1,805) (1,164) (1) 3X--Exprts, unident. 1,961 2,504 2,062 1,736 (11) -- -- -- -- -- 1,961 2,504 2,062 1,736 (11) 30--Rubbr & plast. 2,873 3,805 4,344 4,762 66 2,325 3,490 3,968 4,408 90 548 314 376 354 (35) 31--Leather 217 270 311 309 42 101 155 169 149 48 115 115 141 160 38 32--Stone, clay,glass 1,426 1,702 1,837 1,928 35 949 1,482 1,603 1,662 75 477 219 235 266 (44) 33--Primary metals 3,833 5,132 6,471 6,294 64 8,053 11,057 11,675 11,394 41 (4,220) (5,925) (5,204) (5,100) 21 34--Fabricatd metls 4,911 4,965 5,538 7,585 54 2,044 3,443 3,731 4,216 106 2,867 1,522 1,807 3,369 18 35--Nonelec. mach. 16,038 22,360 26,263 26,619 66 6,881 10,357 11,085 12,041 75 9,157 12,003 15,178 14,578 59 36--Elec. machinery 12,369 17,446 18,993 19,738 60 4,988 8,167 8,872 9,729 95 7,381 9,279 10,121 10,009 36 37--Transprt. equip. 24,358 32,416 36,978 36,802 51 37,111 48,492 51,995 55,352 1,392 (12,752) (16,076) (15,017) (18,550) (190) 38--Scientific instr. 3,883 4,951 5,664 5,962 54 1,227 1,746 1,900 1,930 57 2,656 3,205 3,765 4,032 52 39--Misc. 1,321 1,653 1,844 2,070 57 491 884 949 1,038 111 830 769 895 1,032 24 AGRICULTURE 2,910 3,204 3,409 3,428 18 2,998 3,906 4,266 4,257 42 (87) (701) (857) (829) 842 MINING 1,065 1,531 1,957 1,950 83 10,393 14,561 15,565 12,809 23 (9,328) (13,029) (13,608) (10,859) 16 OTHER 2,755 3,738 4,087 3,503 27 6,790 10,014 10,579 12,903 90 (4,035) (6,276) (6,493) (9,400) 133 CRS-15 TRADE TRADE BALANCE WITH MEXICO & CANADA WITH EXPORTS TO MEXICO & CANADA COMBINED IMPORTS FROM MEXICO & CANADA COMBINED COMBINED (f.a.s. value) (c.i.f. value) (exports minus imports) MEXICO & CANADA % % chng chng % chng COMBINED 1993 1996 1997 1998 93-98 1993 1996 1997 1998 93-98 1993 1996 1997 1998 93-98 ALL COMMODITIES 141,826 189,345 221,503 233,162 64 154,362 233,857 258,607 274,126 78 (12,536) (44,513) (37,104) (40,964) (227) MANUFACTURING 132,556 176,422 207,978 219,795 66 125,286 192,301 212,603 230,833 84 7,270 (15,879) (4,625) (11,038) (252) 20--Food products 5,458 6,298 7,203 7,888 45 4,236 6,266 7,026 7,786 84 1,222 32 177 102 (92) 21--Tobacco 33 59 47 40 21 522 38 53 44 (92) (489) 21 (6) (4) (99) 22--Textiles 1,896 2,759 3,291 3,786 100 620 1,426 1,815 1,964 217 1,277 1,334 1,476 1,822 43 23--Apparel 1,843 3,013 3,732 4,270 132 3,089 5,907 7,773 9,465 206 (1,246) (2,894) (4,041) (5,195) 317 24--Lumber 1,648 1,586 1,953 1,995 21 6,964 9,615 10,575 10,791 55 (5,315) (8,029) (8,622) (8,796) 65 25--Furniture 1,962 2,046 2,444 2,769 41 2,429 4,300 5,175 6,048 149 (466) (2,254) (2,731) (3,279) 604 26--Paper 3,312 4,715 5,203 5,599 69 8,419 11,411 11,240 11,566 37 (5,107) (6,696) (6,037) (5,967) 17 27--Printing 2,052 2,389 2,536 2,566 25 605 964 1,104 1,256 108 1,466 1,424 1,432 1,310 (9) 28--Chemicals 11,013 15,625 18,029 18,916 72 6,254 9,692 10,708 10,423 67 4,759 5,933 7,320 8,493 78 29--Petroleum 1,547 2,156 2,735 2,556 65 2,531 3,371 3,262 2,543 0 (984) (1,215) (527) 13 (101) 3X--Exprts, unident. 3,500 4,612 4,737 4,977 42 -- -- -- -- -- 3,500 4,612 4,737 4,977 42 30--Rubbr & plast. 4,505 6,430 7,658 8,627 91 2,692 4,201 4,867 5,475 103 1,813 2,228 2,790 3,152 74 31--Leather 414 512 630 669 62 452 684 787 745 65 (38) (171) (157) (76) 100 32--Stone, clay,glass 1,790 2,180 2,398 2,563 43 1,567 2,498 2,743 2,991 91 223 (318) (345) (428) (292) 33--Primary metals 5,724 7,928 9,709 10,103 76 9,342 13,846 14,815 14,897 59 (3,618) (5,919) (5,106) (4,794) 33 34--Fabricatd metls 6,887 7,839 8,417 10,751 56 2,996 5,141 5,930 6,776 126 3,892 2,697 2,486 3,975 2 35--Nonelec. mach. 21,248 29,219 35,811 36,889 74 8,912 15,746 18,270 20,639 132 12,336 13,473 17,540 16,250 32 36--Elec. machinery 20,560 29,968 35,285 37,196 81 16,210 26,709 30,423 35,163 117 4,350 3,260 4,862 2,033 (53) 37--Transprt. equip. 29,471 38,110 45,337 46,100 56 43,557 64,106 68,967 74,168 630 (14,086) (25,996) (23,630) (28,068) (245) 38--Scientific instr 5,825 6,748 8,126 8,641 48 2,735 4,330 4,825 5,624 106 3,090 2,418 3,301 3,017 (2) 39--Misc. 1,868 2,230 2,698 2,903 55 1,154 2,050 2,245 2,469 114 713 180 454 434 (39) AGRICULTURE 4,626 6,661 6,266 6,840 48 5,374 7,040 7,569 7,868 46 (747) (379) (1,304) (1,028) 37 MINING 1,354 1,989 2,432 2,374 75 15,028 21,423 24,270 18,305 22 (13,673) (19,434) (21,838) (15,931) 17 OTHER 3,289 4,273 4,827 4,153 26 8,675 13,094 14,164 17,102 97 (5,386) (8,821) (9,337) (12,967) 141 Source of data: U.S. International Trade Commission. Website: http://Dataweb.usitc.gov. ------------------------------------------------------------------------------ For other versions of this document, see http://wikileaks.org/wiki/CRS-98-783