Tag Archives: jobs

US Exports and Jobs

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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

CFR blog post on it

International Trade and Jobs – A Good Partnership

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Economists generally agree that free trade is a good thing for the economy. It provides producers with access to global markets (and therefore potential to become more efficient by specialising and seeking economies of scale in their operations). It provide consumers with greater choice, including access to new types of products and new varieties of existing product types. It increases competition, which spurs innovation and productivity increases and limits growth in prices. In addition, market openness can provide access to world-class imported inputs, which in turn can improve the economic performance — including export performance — of domestic industries.

But, trade has taken a few hits in recent years, as it is sometimes viewed mainly as a source of economic disruption. Spurred by trade, economies adjust and that may mean that some folks in import-competing sectors may face economic hardship as a result. At the same time, such adjustment can be a good thing, promoting a better deployment and use of resources (hence rising productivity, which helps enable wages to rise). Here, there is a role for government to ensure the right conditions exist for business and workers to capitalise on the new economic opportunities arising from trade. In other words, for market openness to deliver the expected benefits, complementary policies are required.

For workers, this means government has a role in providing a social safety net to ensure that those facing adjustment can get the assistance they may require to find a new job, get training they may need to adapt, and get income during the adjustment period. For business, this means government policies to promote infrastructure development, keep the overall economic framework sound (e.g., avoiding undue inflation), limit red tape, and maintain sensible regulation, as well as provide a supply of labour with appropriate skills. And, to tie it all together, there is a need for clear rules of the game and standards for business and labour, as well as channels for frank and open discussion and social dialogue.

This is not just abstract theory. A new and substantial round of work by the OECD and other international organisations has looked at how some of these processes operate in the real world. The findings document the benefits of market openness and the importance of the complementary policies. Above all, experience demonstrates that protectionism is not the answer to the challenges of free trade. The economy as a whole is made much better off through a strategy to promote free trade while addressing the challenges that such a policy will entail.

You can find out more via the OECD website:

1) Trade, Growth and Jobs (in a nutshell, 4 pages)

2) Policy Priorities for International Trade and Jobs (the full story, 450 pages)