A new study (Pierce and Schott, 2012) has found normalization of trade relations with China has lowered manufacturing employment in the U.S. by 29.6% compared to what it would have been without the change in free trade policy. Instead of growing manufacturing employment by approximately 10% this sector’s employment fell by nearly 30%.
Are lower consumer prices worth this outcome? Is the hourglass economy, one characterized by high paying jobs at the top, few good paying jobs in the middle and lots of low paying jobs at the bottom, a result of changes in free trade? Is growing economic inequality exacerbated by free trade policies?
Pierce, Justin R. and Schott, Peter K. (2012). The Surprisingly Swift Decline in U.S. Manufacturing Employment. National Bureau of Economic Research. Working Paper 18655.