By Will Wiltschko
Approximately 4.8 million Californians have filed first-time unemployment claims since mid-March in the midst of a pandemic that the U.S. Census Bureau says has reduced income for more than half of the state’s households.
The economic downturn that the world is facing today as a result of Covid-19 may have been unavoidable. But the level to which so many of our neighbors are struggling today has been compounded greatly by the recent economic history of the United States, in which the economic security of working families has been sacrificed on the altar of corporate profits.
Nowhere has this trend been more pernicious than in international trade policy.
After being left scrounging the globe for life-saving products that not long ago had been “Made in the U.S.A.,” public officials are finally beginning to second-guess trade deals with China and other nations that have offshored the production of critical medical equipment like protective masks, ventilators and prescription drugs.
The disruption of supply chains in the time of Covid certainly needs to be addressed—but so, too, do trade agreements that have promoted a global race-to-the-bottom in wages.
Even before the global economy was paralyzed by the pandemic, the U.S. carried a significant trade deficit totaling $616.8 billion last year, according to the Census Bureau. The U.S.’s trade deficit with its biggest trading partner, China, is more than half of the total.
The growth of the U.S. trade deficit with China since 2001, when U.S. policymakers first approved China’s entry into the World Trade Organization (WTO), is responsible for the loss of 3.7 million U.S. jobs, according to a January study by the Economic Policy Institute (EPI). An estimated 654,100 of those displaced jobs were from California.
Nationwide, decades of this type of outsourcing have cost the families directly impacted billions in lost income. But, in one year alone, EPI estimates that trade deals with China and other low-wage nations reduced the wages of all U.S. workers without college degrees by a total of $180 billion.
In other words, the downward pressure on wages and benefits caused by outsourcing is hurting most Americans, even if their own jobs have not been outsourced.
The EPI study, which is considerably more conservative than others, found that outsourcing costs the majority of American workers 5.5 percent of their income. That’s even after the benefits of lower-cost television sets, tube socks and other imported sweatshop goods was factored in.
For the average Californian household today, that’s almost $3,700 out of your pockets each and every year.
An extra $3,700 in the family bank account sounds rich to many right about now, as workers are facing unprecedented furloughs and layoffs, as well as the threat of an even worse fall season of Covid-19 contamination.
Extend that $3,700 over ten years, and you can understand just how badly California’s working families have been robbed by bankrupt trade policies.
The Covid crisis has already drawn some attention to the need to rebuild domestic medical manufacturing capacity. If we want Californian families and communities to be more economically resilient, too, we’ll need trade policies that prioritize worker rights, higher wages and job creation moving forward.
Will Wiltschko is Director of the California Trade Justice Coalition.