How many workers does it take to produce each USD 1 billion of exports?
Here is a positive story concerning US exports and jobs: a new report from the US Dept of Commerce shows exports expanding while also having a positive relationship to certain labour market indicators. (The assessment uses an employment requirements analysis to document the labor intensity of US exports.)
According to the report, US manufacturing has steadily become more productive with respect to exports. Producing US 1 billion in merchandise exports now requires far fewer workers than in 1993:
1993: 14050 workers per USD 1 billion exports
2010: 6115 workers per USD 1 billion exports
This rising productivity contributes toward making US manufacturing more competitive internationally. Thus, it is perhaps not surprising that US exports of goods are rising. And, they are doing so at such a pace that they are supporting an expanding number of jobs. Export-supported employment has varied quite a bit from year to year, but from endpoint to endpoint of the Department of Commerce study some 500,000 jobs were added:
1993: 6.1 million export supported jobs
2010: 6.6 million export supported jobs
Agricultural employment is also benefitting from exports. More and more jobs in the sector are supported by exports. In 2010, some 23.3% of jobs in agriculture were linked to exports. In 1993 it was just 15.3%. The service sector is also showing increased reliance on exports.
While export-supported employment levels have fluctuated, the indicators for export growth and labor productivity improvement are exhibiting clear, positive long-term trends. This is good news for the US economy.
All-in-all, the Commerce report provides a useful contribution to shedding some light on these US export and labour market developments. For an encore, it would be great to have a corresponding report on imports. (It is interesting to note that rising US imports of key inputs are contributing to part of the manufacturing productivity gains discussed above.)
What are the implications?
The US economy is demonstrating a growing integration with the rest of the world. More of our output is going to foreign markets. The country continues to make products sought by customers around the world. We still have our trade mojo.
But, this does not mean we can take it for granted. More investment is needed in education and skills, infrastructure, better regulation, and other factors to promote a dynamic, innovative and competitive economy. The global economy is more open and competitive than ever and presents challenges as well as opportunities. Past success is no guarantee of future performance.
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Rasmussen, Chris, and Martin Johnson (2012), Jobs Supported by Exports, 1993-2011, Office of Competition and Economic Analysis, US Department of Commerce, October
Link to the paper
Encouraging figures. It makes sense that investment in infrastructure is absolutely necessary for “trade mojo” to continue to be maintained let alone grow. If only policy makers had the foresight and/or the will to make this a priority. It’s amazing how a discussion of these public goods is absent in the current debate about the “fiscal cliff” (gag).