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30 Issues: Does Free Trade Outsource Jobs?

Thursday, September 20, 2012

30 Issues in 30 Days is our election year series on the important issues facing the country this election year. Today: The impact of free trade on domestic employment. Visit the 30 Issue home page for all the conversations.

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Key Questions

  • Are both parties outsourcing our future?
  • How are U.S. relationships with current trade partners?

What are your key questions on this topic? Post them below and get the conversation going!

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Comments [42]

NY FED : Trade adds >2% to unemployment rate from PLEASE DISCUSS

As of 2003 - before the new depression and before
offshoring became the new normal, economists at
the NY FED estimated that our trade imbalance
adds more than 2 % to the unemployment rate.

(This is probably a very conservative estimate)

Here's the article :

http://www.ny.frb.org/research/current_issues/ci11-8.pdf

Sep. 27 2012 12:51 PM
Jack Jackson from Central New Jersey

Shouldn't the proper term here be 'offshoring'? Outsourcing is an organization opting to buy a service or good rather than produce them internally allowing them to concentrate on 'core competencies'. Some examples are : Walmart's use of 'contract workers' to do the cleaning; using Halliburton rather than in uniform servicemen to build facilities, do the laundry, cook the meals'. Offshoring implies that the goods or services purchased are from outside of the U.S. and is a subset of outsourcing.

Sep. 21 2012 10:54 AM
NABNYC from SoCal

The name "free" trade was invented by the corporations to try to disguise the true nature of these treaties. They do not create free anything for working people, and have the effect of preventing workers from being able to organize, to improve their wages, benefits and working conditions. The WTO and others who promote the treaties are nothing more than corporate front-groups.

What do corporations want? They want the unrestricted right to go anywhere, use child, prison and slave labor, pay as little as possible in wages, pollute without restriction, hire and fire at will, eliminate all benefits, turn every job into a day job with no rights, eliminate overtime pay and the 40 hour week.

They also want to import products without tariffs, which is another thing they got.

The trade agreements essentially turn control of the world over to the corporate front group. The new Trans Pacific Partnership being pushed by Obama will add further powers to corporations including the ability to declare illegal any buy-American laws. Possibly they could also ban labor laws by declaring them to be "hostile" to "free" trade.

The essence of a democracy is the right of citizens to run their own country, which includes passing laws to protect the environment and to protect labor. But these treaties take away those rights, and turn control of much of the nation over to corporate front groups.

The cost of labor and cost of living must match. U.S. workers cannot compete with third world labor, unless our entire population is crushed into poverty.

We need to rescind every trade agreement and start over. We should ban imports of all essentials, and also ban the importing of foreign labor under Hb1 visas until and unless we have full employment in this country. We should grow it, make it, use it, recycle it here, and every worker should receive a living wage. The only way we can save our country from dire poverty for the masses is to end the trade treaties and start over. Our trade should only be conducted to the extent it does not displace American workers or send our jobs to other countries. The rights of working people should come first.

Both parties have supported these trade treaties. Neither party will help the working people, which is why neither party has made any effort to create jobs for our unemployed, instead simply giving more money to banks and Wall Street and calling that a "jobs" program. It's all a lie.

The only way we can change this is to have working people organized independent of both parties and demand the trade treaties all be rescinded, and community groups be in charge of deciding what our trade policies with other countries will be, always ensuring that American workers are protected.

Sep. 20 2012 01:29 PM
Jack Jackson from Central New Jersey

@superf88 -

I'd question the "Made in America" on any item purchased at Walmart. The parts are probably manufactured out of the country and final assembly is in U.S.A.

Quality and innovation - the only way I can think of to bring manufacturing back to the U.S.

Sep. 20 2012 12:04 PM

Jack (re: cheap Chinese watches) -- sadly I would question your premise.

I tried to buy only "Made in America" stuff from Walmart over a year. Terrible, all of it, all returns, from heaters to caps. From America, the consumer items I buy are mainly just raw food and steel.

Sep. 20 2012 11:57 AM
John from NYC

Years ago there was a summer replacement show on NBC called TV Nation which was hosted by Michael Moore. I believe the co-host was Karen Duffy. He went to a factory in Mexico just across the border from Texas, which was manufacturing washing machines. The manager who was from the United States allowed him in the factory and he inquired if the workers could afford to buy one of these machines. The manager commented that these workers don't have to worry about that since most of their homes don't have running water.

Sep. 20 2012 11:55 AM
Jack Jackson from Central New Jersey

@jgarbuz

>>I just got a nice watch with metal band and all shipped direct to me >>from China for only $4.89 cents including postage! From China direct. >>Took nearly a month to get it, but if it had been manufactured in the >>US, it would probably cost at least $25.

Great. I bet you it won't still be working in 2 years but you won't give a sh*t because you can replace it at such a low cost. Or the metal is so cheap it turns your wrist green. You just need to put up with a month without a watch. And for your $20.11 savings you evade worker protection, environmental protection, and you burned more fossil fuel getting it to your door. Same thing Bain did by destroying American office supply businesses and creating Staples. But their nominal cost was cheaper...until we are up to our arses in the unemployed.

Sep. 20 2012 11:49 AM
jgarbuz from Queens

Many companies who depend on primarily US consumption are moving some of their production back to the US, for two reasons: (1) labor costs here have declined; (b) labor costs in Asia are rising; (c) overall costs getting goods from Asia to America and the logistics are starting to tip in favor of reestablishing some production here again. So it isn't all bleak or one way.

Sep. 20 2012 11:49 AM
John from Brooklyn

President Obama sat down for a live interview with Fox News host Bill O'Reilly prior to the 2011 Super Bowl.

"My common sense focus right now is how to we out-innovate, out-educate, out-build, out-compete the rest of the world?" he said. "How do we create jobs here in the United States of America? How do we make sure that businesses are thriving? But how do we also -- making sure that ordinary Americans can live out the American dream?"

This parallels similar innovation-education "cures" put forth by Gordon Brown and Thomas Friedman. Though even cursory analysis of today’s globalized labor pools reveals this to be pathetically ineffective, they feel obliged to provide their American and European patients with a prescription.

To say that American wages are doomed to fall - and that it is nobody’s fault - is to be the skunk at the garden party. Still, it is so, and when the recession smoke screen dissipates, the smell of receding wages will remain - and intensify.

Sep. 20 2012 11:49 AM

Yes. The thing, only thing, we ought to demand from foreign countries and free trade agreements is the Environmental and Labor agreements.

This would create a level playing field -- and it would also bring a lot of the US companies that moved to China, Mexico, etc. back home.

Sep. 20 2012 11:44 AM
jgarbuz from Queens

Your protectionist guest seems to be advocating the same policies that impoverished China after the 16th century, when it closed itself off to the world. The reason why China, once the largest manufacturer on earth, became impoverished is because the Mandarin bureaucrats decided on protectionist policies to close China off from the world.

The US has to stand and compete or really go into poverty with protectionism. Protectionism will turns us into the China as it was 150 years ago. We cannot stop the world and get off. No place to hide.

Sep. 20 2012 11:43 AM
Jack Jackson from Central New Jersey

The fundamental point is what Henry Ford practiced. Pay the workers enough to make them part of your market. If your worker cannot afford the good or service that they produce than you are producing luxury goods. It is only by the grace of the really effed up distribution of income here in the U.S. that many of these 'luxury goods' markets can exist.

American needs to invest (led by government) in the domestic STEEL PLANTS that permit us to 1) rebuild our roads and bridges and 2) construct the high speed rail systems (300+ mph) to connect every major city (2M+ population) to its nearest neighbor of the same or greater size. Disinvest in air travel. Get goods and services between metro areas without increasing road traffic.

Jobs and domestic production in one initiative.

Sep. 20 2012 11:40 AM

Rejoinder to rejoinder #1 -- those foreign factories now competing with the US were built largely by Americans! With US government funding! (Exim/Opic etc, just for starters).

Sep. 20 2012 11:39 AM
Demetri from NYC

Doesn't national security suggest that we should maintain and create critical domestic industrial capability (computer chips, heavy machinery, etc.) notwithstanding the potentially less expensive offshore manufacturing costs. If cheap stuff really the most important goal?

Sep. 20 2012 11:37 AM
IndiA from nyc

a little off topic:
but the race to the bottom isn't just on the responsibility of elected officials. What we buy and where we shop says something about how individually we take responsibility for the business in our lives. I, for instance, don't like shopping at big discount stores/warehouses/amazon.com.
These guys suck the life out of small neighborhood shops, destroy communities and lead to volumes of traffic and environmental destruction.

It doesn't all have to be about China, it can also be a discussion about supporting local, independent, community businesses - paying more and knowing you are helping sustain a way of life that is vastly disappearing in this Race To The Bottom.

Sep. 20 2012 11:37 AM
sanych

What about insourcing?

I.e. jobs in this country given to cheap foreign labor. And I am not talking about agricultural jobs performed by minors. I am referring to good-paying office jobs.

Look around, look at who is on your train in the morning. It is all young Indians.

Do you really think they are smarter or better educated?

Sep. 20 2012 11:36 AM
Tom P

Who buys watches anymore these days? Thanks to cell phones, etc., they are a thing of the past. And a cheap on at that. Maybe that's our problem. No one to blame but ourselves.

Sep. 20 2012 11:36 AM

Suspending WTO obligations -- are you NUTZ?

You do realize that the growth in the US Stock Market can thank China for much of its growth, right?

Ford, Citi and others count on China for both sales and production.

This morning when I heard American Airlines is firing US mechanics, I could almost feel the ground quake of the Chinese and other cheap workers jumping in the air for the new work. Money in their pocket -- and AA's (and your own, if you are a shareholder).

Suspending trade deals hurt US companies first, and helps nobody in the end.

Sep. 20 2012 11:35 AM
amalgam from NYC by day, NJ by night

As a longtime student and professional researcher of globalization researcher, it's so interesting to me that free-marketeers and Neoliberals, like Marshall, have changed their tune. We have always chosen our economic policy - even if piecemeal - and despite the rhetorical talk of the inevitability of Neoliberal globalization, we have seen different economic models and patterns emerge to counter it's hegemony.

Too bad they weren't listening 25-30 years ago.

Because of the negative results of Neoliberal globalization, imposed by both parties, Americans may now be ready for a change in work structures and patterns.

Sep. 20 2012 11:34 AM
jgarbuz from Queens

I just got a nice watch with metal band and all shipped direct to me from China for only $4.89 cents including postage! From China direct. Took nearly a month to get it, but if it had been manufactured in the US, it would probably cost at least $25.

Sep. 20 2012 11:30 AM
John from NYC

Maybe the guest could define "protectionist". Isn't that what the countries in Asia and Mexico doing as well to protect manufacturing jobs with low wages and negligible benefits to employees.

Sep. 20 2012 11:29 AM
Amy from Manhattan

What bothers me most about "free trade" agreements is that they have excluded any consideration of environmental & labor conditions, based on the idea that doing that would level the playing field among the countries making the agreements. This is part of what has led to outsourcing of jobs from countries with laws protecting workers & the environment & to deterioration of working conditions & environmental protection in the countries where those jobs are going.

And overall, I'm sorry to see so few of this year's 30 issues dealing w/environmental issues. At least, not directly: some of them, like this one, do have to do w/ecological effects. When China makes so many of its products in coal-powered plants, the particulate pollution may stay mostly in China, but the effects of the CO2 added to the atmosphere contribute to climate disruption all over the world.

Sep. 20 2012 11:28 AM
Dan from San Diego

The essential point being overlooked is that as manufacturing jobs are decreasing, manufacturing productivity has been dramatically rising. There is no "problem" here, simply an adjustment relative to technological innovation and a shift in the demand for the type of goods produced--very technologically advanced goods require fewer, more highly skilled labor.

Bad news for traditional manufacturing, but overall the country is responding as it should.

Sep. 20 2012 11:27 AM
foodaggro from Brooklyn

A while back, a guest on Brian's show mentioned a company or two who are bringing jobs back to the States. Can we get an update on that? Thanks.

Sep. 20 2012 11:26 AM
Paul from Greenpoint

Perot's main point in that speech was (he went on to say) that jobs would come back here when wages were equivalent to Mexico's. So here we are.

Sep. 20 2012 11:26 AM
jgarbuz from Queens

WE don't sell a lot of the advanced goods that we manufacture, and so wealth is wasted. For example, we don't sell Mars land rovers to anyone. We don't sell nuclear submarines to anyone. We don't sell heavy stealth bombers to anyone. So we have plenty of manufacturing, but of goods that cannot be sold for security reasons.

Sep. 20 2012 11:25 AM
John from NYC

The guest comments that in the 1990's there were high-end information technology jobs He went on to suggest that these jobs helped offset the loss of manufacturing jobs and then the DotCom bubble burst.
He should've added that these very same high-end information technololgy were also outsourced but it was during the 2000s. There really seemed to be a quick window of time when many of these jobs were sent to Asia by the Fortune 500 companies.

Sep. 20 2012 11:22 AM
foodaggro from Brooklyn

They took our jobs! Dey turk err jurrbz! Theeey durrrka duuuuurrr, durka durrr ...!

Sep. 20 2012 11:20 AM
Jack Jackson from Central New Jersey

Ross Perot got the analogy backwards! The giant sucking sound - manufacturing jobs moving south of the border - was drowned out by the great WHOOSH! of Mexican and Central American agricultural workers moving to El Norte as they were surplussed by American agribusiness.

Double whammy to the American worker. Can't understand what the counter-worker at your fast food eatery is saying? Thank NAFTA.

Sep. 20 2012 11:19 AM
Truth & Beauty from Brooklyn

Mitt Romney is an idiot. It's difficult enough to understand him with both his feet in his mouth. Let's just take him out of the equation.

The fact is that it is manufacturers in this country who are outsourcing jobs. If you can get your product produced by people whom you are not obligated to provide benefits for, then your product is that much cheaper. If you want American citizens to be employed, and to remain healthy enough to remain employed and to produce a quality product for you, you have to pay a living wage and provide benefits - the same benefits you'd want for yourself: health insurance, paid sick leave, vacation, child care, etc. Of course, the ultimate product will be more expensive, but it will be of infinitely higher quality.

This outsourcing results in a vicious cycle. If American workers can't get jobs, they can't afford to buy quality products, so they shop at Chinese owned 99 cent stores and buy inferior Chinese goods that were originally products that were outsourced.

I guess the issue is really neither Democratic nor Republican but Common Sense. We do want to have international relationships, but we need to take care of our own people FIRST. When our citizens are healthy, wealthy and wise, we will be in a position to sell quality goods to our international neighbors and they will be happy to buy them knowing that American manufacture is the BEST.

Sep. 20 2012 11:18 AM
Thomas Pinch

"When it joined the World Trade Organization in 2001, China's average manufacturing wage was 58 cents an hour."

What is the average wage now? I bet it's not $.58.

When they get up to 7.50/hr, we'll be selling them stuff at a much faster clip than we are now. Until they make more money there, we won't make more money here.

Sep. 20 2012 11:14 AM
fuva from harlemworld

Isn't this criticism of China's protectionist policies hypocritical given how mercantilist the U.S. was early on?

Sep. 20 2012 11:14 AM
jgarbuz from Queens

Free trade in theory is supposed to OPTMIZE the world economy, where every region specialized in what it can do best. When the Americas were discovered, first the Europeans got pelts, silver and gold from Mexicao, and tobacco and later cotton from the southern areas, and soon cheaper native energy like coal and oil. The North built up industry by using TARIFFS to protect our industries until they were big enough to compete with the British, Germans and others. But it was mainly the world wars that turned the US into the major industrial power it became for a long while. While Europe and later Asia were engaged in destroying itself, the US was providing arms as well a food stuffs. Communism essentially crippled those countries economically, and the US has no trade with communist countries. But after the fall of Communsim, the US suddenly had increased markets but also increased competition it gotten unused to. Now we compete with the whole world again, and we are still not fully mentally used to it yet.

Sep. 20 2012 11:13 AM
jg8912 from CT

Can anyone really doubt that opening up our markets to countries where workers are paid less than a dollar a day is going to cause us to lose jobs here? When it joined the World Trade Organization in 2001, China's average manufacturing wage was 58 cents an hour. How can the US compete against that?

Sep. 20 2012 11:09 AM
Seth Pickenstiff

The businesses in this country cannot make money exporting until the people in other countries have the money to buy our stuff. Free trade and out sourcing jobs is the way we'll ever be able to get their money back through exporting.

Sep. 20 2012 11:02 AM
Gerald Fnord from Palos Verdes, Ca

I think some economists may still insist that it does not outsource jobs as long as none of the jobs it outsources were economists'.

Sep. 20 2012 10:47 AM
Kate from Washington Heights

Hi Brian - PLEASE PLEASE PLEASE "free" trade must never be discussed unless it is clearly stated that free trade is a lie if there is not also free immigration. It is a basic economic principle that a "free" economy REQUIRES complete true information and complete ability to make the choice. So, if a person cannot CHOOSE where to work and shop, there IS NO FREE ECONOMY. And billions of people cannot choose to work in the US.

Sep. 20 2012 10:47 AM
Jack Jackson from Central New Jersey

Free trade is great in theory but bad in practice if you don't back it up with re-education and training to prepare the domestic workforce to do the new (presumably better paying) work.

If you free up resources to do nothing, free trade hurts the domestic economy.

Sep. 20 2012 10:05 AM
g from staten island

Outsourced jobs? of course. The U.S. doesn't manufacture much clothing anymore-- and very little of that is Union work. Recently there was a major fire in a clothing factory-- I think it was in Pakistan. Doors locked, workers junping from upper story windows, many dead. No union of course. We need to know which U. S. compamies were selling this clothing. Does anyone one remember the 1911 Triangle fire in NYC in 1911? Similar story to this recent fire. Doors locked, people jumping from windows, many dead. Prior to Unions. More than 100 years later, and we have outsourced not only our manufacturing jobs, but the careless way business treats workers.

Sep. 20 2012 09:51 AM
Robert from NYC

Well will be celebrating mom's 91 birthday today in Bronx so will miss this but you want to see oursourcing of American jobs to overseas? Check out Democracy Now at Democracynow.org today and see what's happening to a company owned by Bain Capital being sent to China. Excellent job Amy, as always.

Sep. 20 2012 08:58 AM
Are you ready for world median wages ?


There are smart, hard working, educated people
all over the world.

If ALL barriers to trade disappeared, if we
lived in a frictionless world - US wages would
equalize with that of the rest of the world.

Our leaders love to talk about the stars at the top,
but most people are average - or at least considered
average.

WHAT IS THE WORLD MEDIAN WAGE ?

Even if it were to double due to "efficiencies"
and "growth" how well would people in the US
feel being forced to live at the WORLD MEDIAN WAGE ?

Everybody thinks they're well above average STARS
and will capture the small premium high growth niche jobs.
Realism suggest most of us won't be able to do so.
So we better make the AVERAGE also be decent and liveable.

NOTE also : PROTECTED SECTORS - Like healthcare (and defense)
- will become increasingly unaffordable.

Sep. 19 2012 03:32 PM
NY FED : Trade adds >2% to unemployment rate. from Read this research article pls before show!

Read this interesting article :

As of 2003 - before the new depression and before
offshoring became the new normal, economists at
the NY FED estimated that our trade imbalance
adds more than 2 % to the unemployment rate.

(This is probably a very conservative estimate)

Here's the article :

http://www.ny.frb.org/research/current_issues/ci11-8.pdf

Sep. 19 2012 03:26 PM

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