A new International Trade Commission (ITC) report on the distributional effects of trade points out that import competition has negative and disproportionate effects on minority workers, workers without college education, and workers in manufacturing.
In October 2022, the ITC published a report entitled “Distributional Effects of Trade and Trade Policy on U.S. Workers.” (https://www.usitc.gov/publications/332/pub5374.pdf) The ITC is a bipartisan federal agency charged with evaluating trade policies and making subsequent recommendations to congress with regards to their findings. The report, conducted based on a series of roundtables and literature reviews with subject matter experts and members of the public, outlined significant adverse effects brought about by the shift of manufacturing from the U.S. to other countries. After thoroughly analyzing academic and industry literature concerning manufacturing, the ITC came to a few firm conclusions concerning the offshore manufacturing shift. The dangers and adverse effects of free trade have been made very clear. There have been strikingly reduced employment opportunities in the manufacturing sector, particularly affecting low-skill individuals and minority groups.
The effect on minority communities is very stark. “The limited literature shows that, in the face of trade shocks, Black and other Nonwhite workers fare worse than their White counterparts… import competition had a large and disproportionately negative effect on wages of minority workers.” When minority workers are less likely to obtain higher education and get the skills necessary to escape a low-skill workforce, it isn’t surprising that offshoring disproportionally hurts these community members. This disparity in adverse effects facing black and Hispanic workers more severely than their white counterparts is not surprising considering the report’s subsequent finding: “Several studies find that import competition-induced transitions between industries and occupations significantly reduce earnings for workers. These adverse wage effects are especially pronounced for non-college-educated workers or those previously employed in manufacturing jobs. Conversely, college-educated and non-production manufacturing workers such as managers experience lower or no wage or income loss following trade-induced employment transitions.” In the race for cheap production that U.S. companies have found themselves in, they claim to seek lower prices to help the consumer. In reality, their profits stand on the American worker’s backs.
One academic suggested that discrimination caused black workers to experience job losses at a disproportionally high rate. White workers are often better able to find union jobs with benefits than their minority counterparts, and antidiscrimination laws are not being enforced. Although there is a lot of focus given to the issues above of educational disparity, the academic emphasized the importance of not letting it distract from discriminatory practices still in effect. This idea was furthered by a union representative from a predominantly black community. He explained that the workforce in the steel industry did not reflect [the city’s racial makeup] because Black workers were often last to be hired in the steel mills. Another representative furthered this, noting that although Black workers have become a rising portion of the labor force, their manufacturing employment proportion has dropped where it previously remained about equal with overall employment. Many companies claim to be allies of minority communities, but they shed no tears when their profit-motivated offshoring hurts those very people.
Minority community leaders have spoken highly of manufacturing job opportunities. As outlined in the ITC report, leaders view manufacturing jobs, often connected to associated unions, as a unique pathway out of poverty for blue-collar workers. The guaranteed healthcare benefits, among others, are a key to entering the middle class. For decades, the military was seen as an escape from poverty for low-income groups and minorities. Manufacturing, however, offered an alternative escape. Now, the loss of manufacturing careers which have been integral to minority communities, are being sold overseas.
The importance of manufacturing jobs has been established in the literature. One NGO representative reported that “[in the] 1970s and 1980s, U.S. regions with a lot of manufacturing jobs (e.g., the Midwest) had smaller racial wage gaps than other regions, but wage gaps increased in these regions as manufacturing jobs declined and eventually equaled those seen in the South, where wage gaps had been the largest.” She further explained that manufacturing jobs were replaced with service sector jobs, paying half of what the equivalent manufacturing careers paid. Employment statistics do not always paint a clear picture, and it is clear that the replacement of manufacturing work has not been with better-paying jobs, as free traders claim.
“This is an official government refutation of the core globalist lie,” commented Coalition for a Prosperous America CEO Michael Stumo. “Globalists said trade liberalization is win-win with efficiency, prosperity, and increased productivity for all. None of that was or is true. Instead, the ITC report reveals that free trader policies are a silent attack by multinationals on tens of millions of working-class citizens with special weaponry targeting minority workers trying to achieve the middle-class dream.”
Free trade’s benefits have long been touted as a universal truth. A bipartisan agency, the ITC itself used to be a staunch proponent of free trade policies. This new report signals that they have recognized their past errors. As businesses shift their production overseas, free trade advocates have proclaimed that there will be a rise in skilled jobs to replace the low-skilled manufacturing positions that are rapidly disappearing. Unfortunately, reality paints a very different picture. Although manufacturing careers used to be a beacon of stability, benefits, and upward mobility, they have rapidly disappeared. Low-skill and minority workers are left in the dust with no plans for rescue. The faulty assumption that the market, left to its own devices, will create the best possible outcomes for everyone is folly. Manufacturing workers have no say in their jobs being stripped away, yet they suffer directly.
