Trade seems like a simple proposition in Washington. But nationally, American workers are often on the losing end.
Trade. We like it. And why not? Washington ranks third among the states in merchandise exports and first in selling to China. Few could credibly say this is not a net winner state.
But there’s a catch. Last year, more than 57 percent of Washington’s $90.5 billion in goods exports came in the form of “transportation equipment.” In other words, mostly Boeing and its vendors.
Without this aerospace cluster’s contribution, Washington would have booked $38.7 billion in merchandise exports last year, knocking us down below No. 1o Georgia.
This highlights the importance of BA to Washington, and especially the Puget Sound. This is trade that creates well-paying jobs. But without Boeing, or with less Boeing, with a Boeing disrupted by Chinese competition…Washingtonians might have a different view of trade.
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University of Oregon economics professor Mark Thoma has a thoughtful new essay on trade winners and losers in the Fiscal Times. At issue is whether the loss of jobs in America is a worthwhile price to pay to lift billions out of poverty worldwide. It’s worth reading even by — perhaps especially by — trade triumphalists in our state.
Thoma writes: “Real wages for the middle and lower classes have been flat, economic insecurity has been rising, and inequality has gotten worse and worse as the gains from trade have been captured by those at the very top. All boats have not been lifted, and far too many households have ended up underwater from the accumulated weight of the economic changes over these decades.”
“We could have and should have enacted policies to ensure that the gains from trade (and from technological change) are broadly distributed. But instead we moved in the other direction with policies such as tax cuts, diminished trade adjustment assistance, minimum wages that did not keep pace with inflation, and legislation to weaken unions that helped to concentrate the gains in the hands of a small group of very large winners.”
Another cautionary look comes from the Federal Reserve Bank of St. Louis, where a new paper examines the effect of trade on jobs. It found that manufacturing exposed to Chinese competition was most likely to lose jobs. Where do the jobs grow? In low-paid services.
So these are reminders that Washington is not the rest of the United States. Washington is getting its money’s worth for the tax incentives given to Boeing, however much they grate. But until the United States strikes a better balance with trade policy, our long-term future could be rough.
Today’s Econ Haiku:
St. Louis layoffs
Pay for new InBev merger
Nip jobs in the Bud