Could your job go to China?
While U.S. employment leaps ...
By Porter Anderson
(CNN) -- Just as Friday's new Labor Department report shows the United States unemployment rate soaring in August to 4.9 percent from 4.6 percent, a newly released, federally funded study reveals that a significant number of production jobs are shifting from the American workplace to China.
Labor Department statistics suggest that U.S. employers cut far more jobs in August than private economists had anticipated -- 113,000 non-farm positions. And this is after American layoffs passed the 1-million mark in July.
But what concerns Stephanie Luce, Ph.D., about her research data is not just her figure of at least 34,900 jobs -- and maybe twice that -- moving from the States to China in a seven-month period as a result of warming Washington-Beijing trade relations.
"What makes it worse," she says, "is that some of these are higher-wage jobs, the type jobs that U.S. cities have been fighting to win. And now they're leaving. Many of those jobs were held by people who'd been working in them for many years, and in some cases their whole lifetimes."
In April, the U.S.-China Security Review Commission -- chaired by C. Richard D'Amato of the Maryland House of Delegates -- was joined by the U.S. Trade Deficit Review Commission in funding a special pilot study on the impact of Washington-Beijing trade relations on workers, wages and employment.
"The results were surprising," Luce says. "We thought there'd be job loss to China, but we didn't expect it to be higher than job movement to Mexico in the same period. When we started the project, we have no idea what we were actually going to find, even though we were hearing anecdotally that jobs were moving."
What Luce -- along with Kate Bronfenbrenner, Ph.D. of Cornell University's School of Industrial and Labor Relations -- would find was that the same period of time would see 26,267 U.S. jobs move to Mexico and 9,061 go to Asian countries other than China. The surprise was that so many American workers would be out of work that went to the People's Republic.
Luce and Bronfenbrenner were joined in the project by six other Cornell and University of Massachusetts faculty members, Luce says, along with a dozen research associates. They began gathering data in February and worked through July.
Based on data from media research, the team discovered that more than 80 United States-based corporations had announced their intentions to shift production to China between October 1, 2000, and April 30 of this year. What's more, because there are few mechanisms in place to require and facilitate the reporting of such employment moves, Luce says the actual figures may be twice those the study could nail down.
"We do feel very definitely that this study has underestimated how many jobs are moving. For one thing, we were going to a lot of foreign-language media sources" to track announcements of corporate moves. "Even the pronunciation of firm names may not compare to pronunciations in English. In fact, many companies go under different names" in their international locations.
"Part of what we're doing in our report is calling on the commissions to push the idea that there should be more standardized reporting by firms of their movements. There are laws about people moving across borders, so it seems that it's possible that we could require firms to report as well. But there's not any standardized reporting for this type of shifting of production.
"A lot of the companies like to advertise moves like this because it's good for stock prices," Luce says, "but a lot of other companies like to keep it quiet. We can find it in an annual report -- but they don't have to put it there."
And these are not small companies. The complete pilot study report -- which has been delivered to the two commissions and is expected to be addressed with this week's resumption of the Congressional session -- is accompanied by an executive summary, which reads: "The U.S. companies that are shutting down and moving to China and other countries tend to be large, profitable, well-established companies, primarily subsidiaries of publicly-held, U.S.-based multinationals including such familiar names as Mattel, International Paper, General Electric, Motorola and Rubbermaid. Most have been in operation for nearly half-a-century. However, a third have had new ownership in the last 10 years."
And one of the features of the study results that concerns Luce, she says, is that much of the production moving to China may not be for Chinese consumption. "The idea has been," she says, "that these would be goods available to Chinese consumers. But that seems not to be the case."
Again from the executive summary: "The media-tracking data also suggest that the majority of the U.S.-based multinational corporations shifting production to China are not simply targeting a Chinese market. Companies such as La Crosse Footwear (winter boots), Lexmark (printers), Motorola (cell phones), Rubbermaid (cookware and storage products), Raleigh (bicycles), Cooper Tools (wrenches), Mattel Murray (Barbie doll playhouses) and Samsonite (luggage) may have moved their production to China, but still intend to serve a U.S. and global market."
Fourth-largest trading partner
- China is the United States' fourth-largest trading partner today, following Canada, Mexico and Japan. Direct international investment in China by U.S. firms has increased from some $200 million in 1989 to more than $7.8 billion in 2000.
"But contrary to the high expectations that China's 1.2 billion population would provide an ever-expanding market for U.S. goods," reads Luce and Bronfenbrenner's summary, "by 2000 the value of goods imported to the U.S. from China exceeded the value of U.S. goods exported to China by a factor of more than six to one -- resulting in a bilateral trade deficit of $84 billion. Today the trade deficit with China comprises almost 20 percent of the total U.S. trade deficit and is the largest trade deficit the U.S. has with any single nation."
- "Our preliminary macroeconomic analysis of the employment effects of the U.S.-China trade balance estimates (that) as many as 760,000 U.S. jobs have been lost in the U.S.-China trade deficit since 1992."
- "Our media-tracking data suggest that an increasing percentage of the jobs leaving the U.S. are in higher-paying industries producing goods such as bicycles, furniture, motors, compressors, generators, fiber optics, clocks, injection molding and computer components. As our data show, it is these higher-end jobs that are most likely to be unionized and therefore more likely to have a much larger wage and benefit package. Many of those who lost their jobs were high-seniority, top-of-the-pay scale employees, who have a great deal invested in their jobs and in their communities."
- "The employment effects of these production shifts go well beyond the individual workers whose jobs were lost. Each time another company shuts downs operations and moves work to China, Mexico or any other country, it has a ripple effect on the wages of every other worker in that industry and that community, through lowering wage demands, restraining union organizing and bargaining power, reducing the tax base and reducing or eliminating hundreds of jobs in the related contracting, transportation, wholesale trade, professional and service-sector employment in companies and businesses."
- "In conclusion, our research suggests that the U.S. and other countries have moved ahead with trade policies and global economic integration based on faulty arguments and incomplete information. ... The findings point to the critical need for government-mandated corporate reporting on production, trade and investment flows in and out of the U.S, and for further research on the impact of those trade and investment flows on workers, unions, families and communities in the U.S. and around the globe."
As for the role of the researchers now that their pilot study has been delivered to the commissions, Luce says, "I think that most of us on the project feel comfortable in advocating caution in our trade agreements."
Luce and her associates point out that legislation was enacted by Congress last fall to establish a bipartisan commission to evaluate and report on the economic and security implications of evolving Beijing-Washington trade relations. But no commission at this point holds that mandate, hence the contract from the U.S.-China Security Commission to Cornell and University of Massachusetts for this study.
"We should push for better reporting mechanisms," Luce says, "more information-sharing before we jump into things like the FDI (foreign direct investment) and giving President Bush fast-track," which the White House tends to term "trade promotion authority."
"The public should have more information," Luce says, "about how these decisions may impact our communities."
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