Have Rising Imports Cost 1.3 Million Jobs Since 2007?

If you go by the official data, U.S. workers have benefited from international trade in the past few years. The reported deficit in the trade of goods fell 25 percent from 2007 to 2011, adjusted for price changes. A shrinking trade gap is good for workers because it means more Americans are being kept busy producing things for domestic and foreign consumption.

But what if those trade numbers are wrong? After all, the U.S. lost 2 million manufacturing jobs from 2007 to 2011. A new research report from the Democratic-leaning Progressive Policy Institute says the trade deficit is worse than officially stated. It says the government is understating how much of what Americans consume is actually produced abroad, particularly in such low-cost nations as China. Report authors Michael Mandel and Diana Carew calculate that rising imports account for the loss of about 1.3 million American jobs from 2007 to 2011, or about one-third of all the job losses in the private sector outside construction over that period.

Mandel and Carew say the Department of Commerce’s Bureau of Economic Analysis underestimates the value of imports from low-wage nations because of an “import price bias.” They say when a U.S. company switches to a cheaper supplier—such as a Chinese company—and its import bill falls, the government mistakenly assumes the American company is buying fewer items, rather than getting a lower price per item. So it understates imports.

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