University of California, Santa Cruz 23-Oct-01
Trade Competition Hits some U.S. Workers Hard Library: BIZ Keywords: JOBS LABOR TRADE WORKERS DISPLACED COMPETITION ECONOMICS EMPLOYMENT Description: An economist has found that two-thirds of trade-displaced U.S. workers earn less when they find a new job than they did on their old job. A new book explores the consequences for American workers of an era of increasingly free trade.
October 22, 2001
Contact: Jennifer McNulty (831) 459-2495; jmcnulty at cats.ucsc.edu
SOME WORKERS HARD-HIT BY TRADE COMPETITION, ECONOMIST FINDS
FOR IMMEDIATE RELEASE
SANTA CRUZ, CA--Not content to calculate merely the number of American jobs that will be lost to competition from increased trade, economist Lori Kletzer has researched the fates of displaced workers.
Kletzer, an associate professor of economics at the University of California, Santa Cruz, has found that two-thirds of trade-displaced workers earn less when they find a new job than they did on their old job; in addition, one-quarter experience earnings losses in excess of 30 percent.
In her new book Job Loss from Imports: Measuring the Costs (Washington, D.C.: Institute for International Economics, 2001), Kletzer explores the consequences for American workers of changes in the American economy in an era of increasingly free trade.
"We know that in a dynamic economy, jobs are created and lost, and workers are displaced," said Kletzer. "I wanted to look more deeply at the types of work trade-displaced workers are moving into and how those jobs compare to what they used to do. We need that information to design effective policies."
Using data from the Displaced Worker Surveys, Kletzer answers a number of key questions about the cost of trade-related job loss:
-- How do these workers compare to those displaced from other manufacturing industries?
-- How sizable are the earnings losses?
-- What can we learn from the pattern of reemployment and earnings that will aid in the (re)design of adjustment services?
The costs of import-competing job loss are high for some workers, but not starkly higher than the costs of other types of manufacturing job loss, according to Kletzer.
Kletzer's analysis reveals a narrow, but significant, group of workers for whom import-competing job loss is very costly. For other workers, the costs are smaller.
Understanding this range of outcomes should assist policymakers in targeting assistance to address the real costs of import-competing job loss, said Kletzer.
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Lori Kletzer, an associate professor of economics at UCSC, was a visiting fellow at the Institute for International Economics for the 2000-01 academic year. She may be reached at (831) 459-3596 or via e-mail at lkletzer at cats.ucsc.edu. She is the coauthor of a wage-insurance proposal that has attracted support from a broad spectrum of government policymakers, free-trade proponents, and commentators. Designed to help all workers who lose their jobs through no fault of their own, the proposal would provide up to two years of financial assistance to workers who get a new job that pays less than their previous job. The policy brief, "A Prescription to Relieve Worker Anxiety," coauthored by Robert E. Litan, vice president and director of the Economic Studies Program at the Brookings Institution, is available on the web at http://www.iie.com/policybriefs/news01-2.htm.
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