Media Release

Growing Trade Deficits Cost North Carolina More Than 220,000 Jobs in 2007A new study shows unbalanced trade is hitting the state hard, even in industries once thought to be resistant to trade's effects

Contact: John Quinterno, Research Associate, NC Budget & Tax Center, (919) 856-3185; mobile (919) 632-2292

(RALEIGH, Oct. 2, 2008) --
America's growing trade deficit is costing the country millions of jobs - and North Carolina, which posted a net loss of more than 220,000 jobs last year, is among the hardest hit states.

The trade deficit led to the net loss or displacement of 5.6 million jobs in 2007, according to a new report by the Economic Policy Institute (EPI). The study estimated the employment impacts of the non-oil trade deficit in some 200 industries in all 50 states. North Carolina ranks in the top ten nationwide for net job losses both when measured in absolute numbers and when measured as a share of total state employment.

"North Carolina has been hard hit by unbalanced trade," said John Quinterno, research associate with the NC Budget & Tax Center. "The growing trade deficit is undercutting key state industries like manufacturing and destroying jobs. The result: diminished opportunities for industries, workers and communities."

According to the study, international trade in non-oil products destroyed 220,100 more jobs in North Carolina than it created in 2007. This is equal to 5.4 percent of total state employment. In terms of total net job losses, North Carolina was the ninth most affected state; when ranked by net job loss as a share of total employment, North Carolina was the eighth most-impacted state.
Perhaps most disturbing, the job-loss trend is occurring in industries once thought to be resistant to trade-related displacement.

"The conventional wisdom has been that trade only impacts traditional North Carolina industries, such as textiles, apparel, and furniture," said Quinterno. "But what we're now seeing is that trade-based job losses are actually occurring in a broad swath of industries, including higher-tech, higher value-added ones, like the production of computer equipment and automotive parts."

The consequences of unbalanced trade include lost employment opportunities and an overall decrease in job quality for working people in North Carolina.

"Workers lose when competition destroys jobs in import-competing industries, and forces people out of the labor force or into lower-paying industries. Even workers whose industries aren't affected lose out, since low-wage foreign competition serves to hold down American wages generally."

Responding to the impact of unbalanced trade requires action from both North Carolina's federal and state leaders. On the federal level, officials need to work against barriers that prevent truly fair trade, such as a lack of labor standards and foreign currency manipulation. Congress should also strengthen the social insurance systems designed to help displaced workers by, for instance, reauthorizing and modernizing the Trade Adjustment Assistance program. Finally, Congress must stop under-investing in vital workforce programs that help American workers hone the skills needed to compete.

The role of the state is to help mitigate some of the consequences faced by displaced Tar Heels. State leaders are well-positioned to help the workers, families and communities upended by unbalanced, unfair trade.

To help individuals forced into lower-paying jobs, the state should expand access to vital work support programs such as child-care subsidies and children's health insurance. Similarly, state policies could improve the quality of existing jobs by strengthening employment standards. Finally, the state could enrich the skills of current and future workers by better investing in North Carolina's model system of community colleges.