19 May 2008

One Million Jobs Lost to NAFTA

From my forthcoming policy brief for the Institute for Social Policy and Understanding.

Barack Obama recently claimed that NAFTA has cost America 1 million jobs[i]. Although the accuracy of this claim has been disputed,[ii] let’s take it at face value, and consider what it means. With more than 146 million jobs in the U.S. economy, 1 million jobs would be approximately 2/3 of 1 percent of all jobs. In April 2008 the unemployment rate was 5%, with roughly 7 million people unemployed out. Another 1 million unemployed would increase the unemployment rate to around 5.7%—still below the last 30 years’ average unemployment rate of 6.1%. But even that is an exaggeration, because that assumes all 1 million jobs were lost in one year. Instead, the 1 million jobs would be spread across the past 14 years, which works out to an average of less than 72,000 jobs per year, or less than 5/100ths of 1% of the U.S. job market. And those 72,000 jobs per year that are alleged to have been destroyed by NAFTA must be set against the net increase of 1.75 million jobs per year since 1994, when NAFTA went into effect. If 1,000,000 jobs have indeed been lost to NAFTA—and again it’s worth pointing out that the claim has been disputed and is, frankly, quite dubious—the negative impact on the U.S. is at best, very small.

The conclusion is, even as the supply of labor has increased by nearly half (since 1980), the percentage of unemployed workers has declined.

[i] Tapper, Jake. 2008. http“Obama Knocks Clinton, But Wouldn’t Ax NAFTA.” ABC News. Feb. 24.
[ii] Robertson, Lori. 2008. “More NAFTA Nonsense.” Annenberg Political Fact Check. March 3.

1 comment:

James K said...

That's pretty much all that needs to be said. 1 million looks like a big number, but against a country the size of yours it's quite trivial.