NAFTA: Estimates of Job Effects and Industry Trade Trends After 5½ Years

Congressional research reportDec 14, 1999

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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.

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, 1994Sept. 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 10-15year 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

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 onehalf 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)

MEXICO

U.S. Exports

U.S. Imports

Trade

Balance

CANADA

U.S. Exports

U.S. Imports

Trade

Balance

1993

1994

1995

1996

1997

1998

$41,635

40,745

$50,840

50,356

$46,311

62,756

$56,761

74,111

$71,378

87,167

79,010

96,078

891

484

(16,445)

(17,350)

(15,789)

(17,068)

$100,190

113,617

$114,255

131,956

$126,024

148,304

$132,584

159,746

$150,124

171,440

154,152

178,048

(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.

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

(1)

Year

(2)

Total

Exports

(3)

New

Exports

(4)

Number of

Jobs

Supporting

a Billion

Dollars

Worth of

Exports to

NAFTA

Partners

1993

1994

1995

1996

1997

1998

1999

142

165

172

189

221

233

245

—

15,123

14,361

13,774

13,258

12,755

12,245

11,755

Value of Merchandise

Exports to NAFTA

partners (Can. + Mex.)

(in $billions)

(5)

Total Jobs

Supported by

Merchandise

Exports to

NAFTA

Partners

2,144,834

2,370,929

2,373,750

2,510,332

2,825,258

2,855,072

2,877060

TOTAL

Total Number of Jobs

Supporting New

Exports to NAFTA

Partners

(6)

“Gross”

Jobs

(7)

“Net”

Jobs

—

330,303

96,418

225,386

410,175

142,771

136,240

—

226,109

2,821

136,582

314,934

29,805

21,992

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

Export Value 1993-98

% of Total

NAFTA

Commodity

Export Gain

in $billions

% change

*Transportation Equip

*Electronics

*Nonelectric machinery

Chemicals

Primary metals

Rubber

*Scientific instruments

*Paper products

*Apparel

Food

132

1819

1818

SUBTOTAL

Other Manufacturing

100

SIC

Industry

TOTAL MANUFACTURING

Nonmanufacturing

TOTAL

Source: DOC Office of Trade and Economic Analysis.

* indicates industries that are also prominent in Table 4, which lists major industries of NAFTATAA 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.

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.

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.

“Case” refers to a group of workers applying for NAFTA certification. It may represent a

plant or a production operation.

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.

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. 96336E.

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

Trade Trendsd

Domestic Trends

Projected

1994-2005b

Cases

Certified

(2)

1/1/949/28/99

Workers

Certifieda

(3)

Output

Change

(4)

MANUFACTURING 1,698

*Apparel (SIC 23)

645

*Electronics (36)

280

*Trans. equip.(37)

Fab. metals (34)

114

Textiles (22)

105

*Nonelec. mach. (35)

Lumber (24)

146

*Scientif. inst. (38)

*Paper products (26)

Rubber/Plastics (30)

Leather (31)

Misc. (39)

Primary metals (33)

Food (20)

Stone/clay/glass (32)

Furniture (25)

Chemicals (28)

Prnt./publishing (27)

Petroleum prods. (29)

Tobacco (21)

244,266

73,568

33,684

17,092

15,372

14,150

11,747

9,826

9,433

8,982

7,722

7,521

6,909

6,321

6,043

5,995

4,130

3,493

1,995

285

R/E

100

142

7,549

6,234

1,569

1,989

259,618

Industry

(SIC)

(1)

TOTAL

Certified

workers

as a %

% Employ- of total

Employment

ment job loss

Change

in (6)

(5)

(6)c

(7)

—

R/D

—

NON-MANUFACTURING

Commodities

Services

Unallocated

Actual

1993-6/1999

-23

-11

-3

-2

-29

-3

-7

—

Trade with Mexico

and Canada

combined: 1998 level

in $billions; and (%)

change 1993-98

Exports

(8)

Imports

(9)

220 (66%)

4 (132)%

37 (81%)

46 (56%)

11 (56%)

4 (100%)

37 (74%)

(21%)

9 (48%)

6 (69%)

(91%)

(62%)

(55%)

10 (76%)

(45%)

(43%)

(41%)

19 (72%)

(25%)

(65%)

(21%)

274 (78%)

9 (206%)

35 (117%)

74 (70%)

7 (126%)

2 (217%)

21 (132%)

11 (55%)

6 (106%)

12 (37%)

5 (103%)

1 (65%)

2 (114%)

15 (59%)

8 (84%)

3 (91%)

6 (149%)

10 (67%)

1 (108%)

(0%)

* (-92%)

13 (44%)

—

43 (48%)

—

220 (66%)

274 (78%)

SIC: Office of Management and Budget Standard Industrial Classification codes. Manufacturing industries are represented by

SIC Codes 20-39.

”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.

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).

Source: U.S. Department of Labor, Employment and Earnings, all workers

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

Jan. 1994-Sept. 28,

1999 NAFTA-TAA

Certified

STATE

North Carolina

Texas

Pennsylvania

New York

California

Georgia

Tennessee

Indiana

Arkansas

Michigan

Wisconsin

Washington

New Jersey

Alabama

South Carolina

Virginia

Ohio

Missouri

Florida

Illinois

Oregon

Louisiana

Idaho

Kentucky

Massachusetts

Colorado

Cases

Workers

171

252

193

126

124

110

109

27,725

23,386

18,663

17,487

14,825

12,457

12,191

9,406

8,993

8,334

7,776

7,351

7,064

6,627

6,551

6,513

6,074

5,984

5,756

5,718

4,907

4,688

3,073

2,904

2,562

2,359

Total

Jan. 1994-Sept. 28,

1999 NAFTA-TAA

Certified

STATE

Arizona

Minnesota

New Mexico

Maine

Kansas

West Virginia

Connecticut

Mississippi

Puerto Rico

Utah

Montana

Alaska

Wyoming

South Dakota

Iowa

Vermont

North Dakota

Maryland

Oklahoma

Nebraska

Nevada

New Hampshire

Delaware

Rhode Island

Hawaii

Dist. of Col.

TOTAL

Cases

Workers

1,354

1,343

1,260

1,234

1,184

842

780

753

631

483

399

390

371

319

300

280

220

211

157

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

from wage and salary jobs, after

one to three years, 29% were

confirmed to have found new

full-time wage and salary jobs

earning the same or higher

salary. Another 37% were reemployed at lower earnings,

part-time, or were selfemployed. Another 24% were

unemployed or dropped out of

the labor force. The remaining

10% were re-employed fulltime but no wage data were

available for their previous

employment, so it can not be

determined whether they gained

or lost wage ground.

Figure 1. Re-employment Experience of

Displaced Workers 1 to 3 Years Later

37%

Re-employed:

full-time at

lower

earnings;

part-time; or

self-employed

24%

Unemployed or

dropped out of labor force:

29%

Re-employed

full-time at

same or

higher

earnings:

10%

Re-employed

full-time; no

wage data:

Data source: see foonote at bottom of page.

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 (inflationadjusted) 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 nonmanufacturing sectors.

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

WITH

MEXICO

EXPORTS to MEXICO (f.a.s. value)

1993

1996

1997

1998

ALL COMMODITIES

41,635

56,761

71,378

79,010

MANUFACTURING

39,096

52,312

67,306

74,524

20—Food products

TRADE BALANCE with MEXICO

(exports minus imports)

IMPORTS from MEXICO (c.i.f. value)

chng

93-98

chng

93-98

1996

1997

1998

% chng

93-98

891

(17,350)

(15,789)

(17,068)

(2,018)

160

7,247

(8,723)

(4,267)

(8,230)

(214)

1993

1996

1997

1998

40,745

74,111

87,167

96,078

136

31,848

61,035

71,573

82,754

1993

1,996

2,000

2,385

2,830

941

1,499

1,733

2,016

114

1,055

500

652

814

(23)

21—Tobacco

(50)

175

(3)

(100)

22—Textiles

643

1,035

1,293

1,697

164

123

495

710

735

498

520

540

583

962

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

158

(155)

(157)

(46)

(129)

25—Furniture

696

527

650

789

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

112

247

283

323

188

1,264

1,574

1,780

1,975

27—Printing

263

341

329

380

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

2,225

3,120

4,003

4,471

101

29—Petroleum

813

1,162

1,624

1,504

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

351

529

617

596

(153)

(286)

(298)

236

32—Stone, clay,glass

364

478

561

635

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

306

(49)

34—Fabricatd metls

1,977

2,874

2,879

3,166

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

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

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

1,507

2,584

2,926

3,694

145

434

(787)

(464)

(1,015)

(334)

547

577

854

833

663

1,167

1,295

1,431

116

(117)

(589)

(441)

(598)

416

1,716

3,457

2,857

3,412

2,376

3,134

3,304

3,611

(660)

322

(447)

(199)

(70)

MINING

290

458

475

424

4,635

6,862

8,705

5,496

(4,345)

(6,404)

(8,231)

(5,072)

OTHER

534

741

650

1,886

3,080

3,585

4,217

124

(1,351)

(2,545)

(2,844)

(3,567)

164

39—Misc.

AGRICULTURE

CRS-14

TRADE

WITH

CANADA

EXPORTS TO MEXICO (f.a.s. value)

1993

1996

1997

1998

TRADE BALANCE WITH CANADA

(exports minus imports)

IMPORTS FROM CANADA (c.i.f. value)

chng

93-98

1993

1996

1997

1998

chmg

93-98

1993

1996

1997

1998

% chng

93-98

ALL COMMODITIES

100,190

132,584

150,124

154,152

113,617

159,746

171,440

178,048

(13,427)

(27,162)

(21,315)

(23,896)

78)

MANUFACTURING

93,460

124,110

140,672

145,271

93,437

131,266

141,030

148,079

(7,156)

(358)

(2,808)

(12,309)

20—Food products

3,462

4,298

4,819

5,058

3,295

4,767

5,293

5,770

167

(469)

(475)

(712)

(526)

21—Tobacco

164

518

(94)

(507)

(6)

(4)

(99)

22—Textiles

1,254

1,725

1,999

2,089

497

931

1,105

1,229

147

757

794

893

860

23—Apparel

676

1,027

1,221

1,304

622

1,199

1,448

1,719

176

(172)

(227)

(415)

(869)

24—Lumber

1,165

1,330

1,653

1,619

6,638

9,204

10,118

10,369

(5,473)

(7,874)

(8,465)

(8,750)

(60)

25—Furniture

1,266

1,519

1,794

1,980

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

8,307

11,165

10,957

11,243

(6,371)

(8,270)

(7,817)

(7,942)

27—Printing

1,789

2,048

2,207

2,186

530

774

881

998

1,259

1,273

1,326

1,188

(6)

28—Chemicals

7,977

11,052

12,397

12,847

5,443

8,239

9,080

8,825

2,534

2,813

3,317

4,022

29—Petroleum

734

995

1,111

1,052

1,905

2,940

2,916

2,216

(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

2,325

3,490

3,968

4,408

548

314

376

354

(35)

217

270

311

309

101

155

169

149

115

141

160

32—Stone, clay,glass

1,426

1,702

1,837

1,928

949

1,482

1,603

1,662

477

219

235

266

(44)

33—Primary metals

3,833

5,132

6,471

6,294

8,053

11,057

11,675

11,394

(4,220)

(5,925)

(5,204)

(5,100)

34—Fabricatd metls

4,911

4,965

5,538

7,585

2,044

3,443

3,731

4,216

106

2,867

1,522

1,807

3,369

35—Nonelec. mach.

16,038

22,360

26,263

26,619

6,881

10,357

11,085

12,041

9,157

12,003

15,178

14,578

36—Elec. machinery

12,369

17,446

18,993

19,738

4,988

8,167

8,872

9,729

7,381

9,279

10,121

10,009

37—Transprt. equip.

24,358

32,416

36,978

36,802

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

1,227

1,746

1,900

1,930

2,656

3,205

3,765

4,032

39—Misc.

1,321

1,653

1,844

2,070

491

884

949

1,038

111

830

769

895

1,032

AGRICULTURE

2,910

3,204

3,409

3,428

2,998

3,906

4,266

4,257

(87)

(701)

(857)

(829)

842

MINING

1,065

1,531

1,957

1,950

10,393

14,561

15,565

12,809

(9,328)

(13,029)

(13,608)

(10,859)

OTHER

2,755

3,738

4,087

3,503

6,790

10,014

10,579

12,903

(4,035)

(6,276)

(6,493)

(9,400)

133

31—Leather

CRS-15

TRADE

WITH

MEXICO &

CANADA

COMBINED

EXPORTS TO MEXICO & CANADA COMBINED

(f.a.s. value)

1993

1996

1997

1998

ALL COMMODITIES

141,826

189,345

221,503

233,162

MANUFACTURING

132,556

176,422

207,978

20—Food products

IMPORTS FROM MEXICO & CANADA COMBINED

(c.i.f. value)

chng

93-98

1993

1996

1997

1998

154,362

233,857

258,607

274,126

219,795

125,286

192,301

212,603

230,833

chng

93-98

TRADE BALANCE WITH MEXICO & CANADA

COMBINED

(exports minus imports)

% chng

93-98

1993

1996

1997

1998

(12,536)

(44,513)

(37,104)

(40,964)

(227)

7,270

(15,879)

(4,625)

(11,038)

(252)

5,458

6,298

7,203

7,888

4,236

6,266

7,026

7,786

1,222

177

102

(92)

21—Tobacco

522

(92)

(489)

(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

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

6,964

9,615

10,575

10,791

(5,315)

(8,029)

(8,622)

(8,796)

25—Furniture

1,962

2,046

2,444

2,769

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

8,419

11,411

11,240

11,566

(5,107)

(6,696)

(6,037)

(5,967)

27—Printing

2,052

2,389

2,536

2,566

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

6,254

9,692

10,708

10,423

4,759

5,933

7,320

8,493

29—Petroleum

1,547

2,156

2,735

2,556

2,531

3,371

3,262

2,543

(984)

(1,215)

(527)

(101)

3X—Exprts, unident.

3,500

4,612

4,737

4,977

—

3,500

4,612

4,737

4,977

30—Rubbr & plast.

4,505

6,430

7,658

8,627

2,692

4,201

4,867

5,475

103

1,813

2,228

2,790

3,152

31—Leather

414

512

630

669

452

684

787

745

(38)

(171)

(157)

(76)

100

32—Stone, clay,glass

1,790

2,180

2,398

2,563

1,567

2,498

2,743

2,991

223

(318)

(345)

(428)

(292)

33—Primary metals

5,724

7,928

9,709

10,103

9,342

13,846

14,815

14,897

(3,618)

(5,919)

(5,106)

(4,794)

34—Fabricatd metls

6,887

7,839

8,417

10,751

2,996

5,141

5,930

6,776

126

3,892

2,697

2,486

3,975

35—Nonelec. mach.

21,248

29,219

35,811

36,889

8,912

15,746

18,270

20,639

132

12,336

13,473

17,540

16,250

36—Elec. machinery

20,560

29,968

35,285

37,196

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

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

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

1,154

2,050

2,245

2,469

114

713

180

454

434

(39)

AGRICULTURE

4,626

6,661

6,266

6,840

5,374

7,040

7,569

7,868

(747)

(379)

(1,304)

(1,028)

MINING

1,354

1,989

2,432

2,374

15,028

21,423

24,270

18,305

(13,673)

(19,434)

(21,838)

(15,931)

OTHER

3,289

4,273

4,827

4,153

8,675

13,094

14,164

17,102

(5,386)

(8,821)

(9,337)

(12,967)

141

Source of data: U.S. International Trade Commission. Website: http://Dataweb.usitc.gov.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.