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Authors Erica Groshen, Bart Hobijn and Margaret McConnell investigate the effects of recent trade patterns on the domestic labor market by measuring not only the jobs lost to imports but also the jobs created through the production of U.S. exports.
The authors begin their inquiry by noting the rising concern over the transfer of U.S. service sector jobs to overseas workers. Many observers have suggested that “offshoring” has caused a surge in the displacement of U.S. workers and was largely to blame for the sluggish recovery of the labor market in the years following the 2001 recession.
Groshen, Hobijn and McConnell assess the scale of job losses by considering how recent trade flows to and from the United States have affected employment. They first calculate how many U.S. workers, at current wages, prices and productivity levels, would be needed to produce the goods and services imported by the United States. They subtract from this figure the number of workers needed to produce the goods and services exported by the United States. This calculation yields an estimate of the number of jobs needed to produce U.S. net imports domestically—a measure that the authors term “U.S. jobs embodied in net imports.”
The authors determine that, in 2003, 2.6 million jobs were embodied in net imports for the entire private economy. Relative to overall U.S. payrolls, this number is small—2.4 percent of the total.
The authors find no evidence to support claims that a surge in offshoring played a large role in the so-called jobless recovery. Instead, their study reveals that the growth of jobs lost to net trade flows actually slowed during the post-recession period of weak job gains. More broadly, Groshen, Hobijn and McConnell show that a pickup in jobs lost to trade can coincide with a strong labor market.
Erica Groshen is an assistant vice president and Bart Hobijn a senior economist in the Microeconomic and Regional Studies Function of the Research and Statistics Group; Margaret McConnell is a senior economist in the Group’s Macroeconomic and Monetary Studies Function.