First, the US embraced NAFTA, with the Clinton Administration falsely claiming it would create jobs when the Samuelson-Stolper theorem made clear it wouldn’t. And by the time China WTO entry would be under consideration, the impact on manufacturing employment would be incontrovertible.
How China gained so much so quickly
As a part of its increased openness to the world, China joined the World Trade Organization – the international body that sets global trade rules – in 2001. Believing that increasing economic liberalization would lead to political liberalization in China, the U.S. began to engage in robust trade with the country.
International trade theory teaches that free trade between nations makes them better off than not trading at all. And recent research underscores that the economic gains to the U.S. from trade in general have been positive but small, adding about 2% to 8% of gross domestic product.
Yet trade with China has given rise to a significant economic shock involving job losses and declines in human welfare in several U.S. regions, especially in the Deep South and in some Midwestern states.
The U.S. economy lost 1.5 million manufacturing jobs between 1980 and 2000, and 5 million more between 2000 and 2017.
This fall in manufacturing employment was not accompanied with the same number of job gains in other sectors of the U.S. economy.
A decade after the conclusion of the China trade shock in 2010, the U.S. still has a large number of local economies in which studies show social structures, including the institution of marriage, are fraying because workers have lost their jobs and don’t have stable salaries they can live on.
This lack of wages has subsequently resulted in declines in the demand for local goods and services and in housing values and property tax revenues. There has also been an increase in the number of people on government assistance such as Medicaid.
left-behind places never completely die. Instead, in such places fewer people marry and have children. More children live in poverty, alcohol and drug abuse go up and young men are less likely to graduate from college.
Therefore, a rethinking of economic policy is likely now needed in the U.S. to focus on two key points: the need to provide adequate assistance to workers in mass layoff events and to recognize that this assistance, quite frequently, will need to be place-based.
“Job Corps doesn’t work,” said Teresa Sanders, a former teacher at the North Texas center who quit in frustration in 2015 after a rash of violent episodes inside the center, but who keeps in touch with dozens of former students through a Facebook page. “The adults are making money, the politicians are getting photo ops. But we are all failing the students.”
WHY IS THE U.S. SO BAD AT WORKER RETRAINING?
One, those who need the training typically don’t know about—or are excluded from—them. Two, course material tends to be disjointed from the needs of employers. Three, and perhaps most importantly, job-training programs don’t force employers to pay skilled people decent wages. It’s worth taking a closer look at why programs like this go awry.
So far, federal job-training programs have been outright failures
Last Nov. 8, while millions of Americans flocked to the polls, the U.S. Labor Department slyly released an embarrassing report. The “Workforce Investment Act (WIA) Gold Standard Evaluation,” completed six months earlier, concluded that all of the federal government’s primary job-training programs don’t really work.
Specifically, the study found that the programs are largely ineffective at raising participant’s earnings and are offering services that don’t meet the needs of job seekers or employers.
Simply put, the Department of Labor’s job-training services are largely a waste of time for the majority of job seekers and an enormous squandering of taxpayer dollars.
The US working class has been sold down the river with no aid from government entities while corporations profits surged as does the stock market which is largely owned by the top 10%. Anyone think there could be political consequences to government failed long term thinking. Remember 2016 presidential election? A return to business as usual in 2020 isn’t likely to address working class dismal economic situation. The working class is outside the building looking through the windows viewing how their betters exist & live. Being told from one side to go to high priced university & from the other side to pull themselves up by their bootstraps. Meanwhile our nation’s government is bipartisan ally worried about the Russia & China “existential threat” while continuing to ignore the working class. Perhaps the “goobers” will take a lesson from Kazakhstan and begin violent protests as the ballot box solution has not worked for them?
Interesting times we live in. Well time to make some popcorn & watch the farce continue.