California Is Losing More Jobs To China Than Any Other State
When you think of manufacturing in the United States, you're most likely to think of states such as Ohio or Michigan. While California's output—as measured by GDP, is by far the largest in the U.S., most don't think of the state when discussing manufacturing job losses to China.
However, a recent report by the Economic Policy Institute shows that California is also by far the largest loser in terms of job losses to China. California lost 654,100 jobs to China from 2001, when China joined the World Trade Organization, to 2018. That number is almost twice as much as the 334,800 jobs Texas lost to China during the same period.
The think tank, which used U.S. Census Bureau and U.S. Labor Department data for the study, determined that four of the top ten congressional districts that lost the most jobs in the country are in the proximity of Silicon Valley. The report noted that more than 80% of the jobs lost to China in these districts were in the computer and electronics sector.
"California has been particularly hard hit because, surprisingly, the hardest hit industries have been in electronics," said Robert Scott, the coauthor of the report and director of trade and manufacturing research at the Economic Policy Institute. "You may think of China as being a low-tech, labor-intensive economy, but they moved very rapidly upscale from textiles and apparel into high-tech goods, computers, telephones, electronic products, video screens — and that’s the largest single industry in terms of job loss to China."
Across the entire U.S., more than 3.7 million jobs were lost to China from 2001 to 2018. Nearly 2.8 million, or just over 75%, of the jobs lost were in the manufacturing sector. More than 1.3 million of these job losses were in the computer and electronic parts industry. The remaining 900,000 jobs lost to China were in the non-manufacturing sector.
The report notes that China's trade deficit with the U.S. grew from $83.0 billion in 2001 to $419.5 billion in 2018, an average increase of 10% per year. Computer and electronic parts accounted for a whopping 44% of the growth in the trade deficit over this period.
Despite U.S. President Donald Trump's tough talk on China and the lingering trade war, the trade deficit with China rose from $347 billion in 2016 to $420 billion in 2018, a 21% increase. As a result, the report notes that 700,000 jobs were lost or displaced over this period.
The report notes that the growing trade deficit with China has cost Americans their jobs in all 50 states and in every congressional district across the U.S. Texas, New York, Illinois and Florida followed California in total jobs lost to China to round out the top five.
The report also details how the job losses to China are creating inequality on U.S. soil. The transfer of these jobs from Americans who did not graduate college to low-wage countries has seen the income redistributed to corporations and those with college degrees.
The effects of globalization are being felt by workers throughout the U.S. as China becomes increasingly important to the global economy. However, U.S. Secretary of Commerce Wilbur Ross believes a solution to these job losses may lay in the outbreak of coronavirus, saying yesterday "I think it will help to accelerate the return of jobs to North America."
And stocks soared on the news! On the same day the first person-to-person case of coronavirus was confirmed in the United States, the World Health Organization declared the outbreak of coronavirus a "public health emergency of international concern." During a bizarre press conference, WHO chief Tedros Adhanom Ghebreyesus had plenty of praise for China, saying "The main reason for this declaration is not what is happening in China but what is happening in other countries." Stocks soared after he said the WHO isn't recommending "measures that unnecessarily interfere with international trade or travel." Those who are sick and quarantined can now breathe easy knowing that the markets are not too worried about coronavirus. In what is somewhat concerning, Ghebreyesus was previously accused of covering up cholera epidemics in Ethiopia when he was health minister.
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