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September 26, 2012

We Need Jobs; Imports Help

By

Feel guilty about buying that wide-screen TV assembled in Asia? Sure, it’s huge and clear and cheap. But didn’t that Asian TV plant take away American jobs?

No, it didn’t. In fact, imports help support American jobs, from port offloading to after-market service. Imports of clothes and toys — just from China alone — helped support more than half a million American jobs in 2010, according to a new study from the Heritage Foundation. Other imports no doubt help support far more work here. Protectionists who claim imports kill U.S. jobs are just plain wrong.

Conventional thinking views imports as being all about trade-offs. On the plus side are greater consumer choice and competition that drives costs down and the general economy forward. What would cars cost — and look like — if Detroit only had to compete against itself? How much money would be taken out of our pockets if all our clothes had to be made here?

The downside is that fewer Americans have jobs making cars and clothes. But that is only part of the jobs story.

Clothes and cars made overseas don’t magically appear in our closets and driveways. Longshoremen unload them from ships; truckers move them to wholesale warehouses and on to retail outlets, where salespeople sell them to us. There’s also financing and the necessary construction — shipping berths, railways, trucks and roads, malls. All of this helps create jobs.

Further, it supports many more jobs than would occur without imports. When Americans choose to buy toys made in China, say, they do so because those toys are cheaper or better or both. Cheaper or better toys means more toys being bought — and that means more jobs. It also means more money left in our pockets to buy other things. Those other products are cheaper and better due to competition from imports as well. This creates a virtuous cycle that helps create many, many jobs and leaves American workers and consumers better off.

It all becomes clear when looking at the big picture for imports and unemployment. Imports rose continuously for 25 years after 1982. During that period, unemployment ebbed and flowed, but over that period it fell by half — from a peak near 10 percent to less than 5 percent.

We all know what happened in 2008-2009: Unemployment soared. But did you know that imports also dropped like a stone? Imports don’t cause unemployment, they act like opposites. When unemployment falls, imports rise; and when unemployment rises, imports fall.

Rather than look at the “big picture,” the Heritage study mentioned earlier drilled down. The authors concentrated on just two major imports from China, because Chinese imports have been the most controversial since the Japanese economy sputtered and died.

Here’s how it works: When foreign clothes and toys enter the U.S., they have a value that is included in the tally of total American imports. But when they are sold, they have a higher value (If they didn’t, no money would be made, so no one would bother importing them.) Value is added along the way by activities such as transportation and retail stocking that get things to people who want them. With large-scale imports like clothing, the value-added in the U.S. is in the tens of billions of dollars, even when corporate profits are excluded.

Now for the jobs part. Importing requires many different kinds of jobs with a wide range of salaries. Keeping it simple, the Heritage study uses the national average salary of a bit more than $60,000. In 2010, the value added in the U.S. to imports of clothes from China helped support 355,000 American jobs paying an average of a bit over $60,000. That’s a lot of jobs at pretty good money. Imports of toys from China helped support another 221,000 jobs paying a bit more than $60,000.

Of course, we import much more from China than clothes and toys. Cellphone imports from China also help support American jobs, as do clothes from Bangladesh, auto parts from Mexico, and so on.

Next time you go shopping, pick the best product for you with a clear conscience. Regardless of where it was made, you’re helping create work for millions of Americans who enable us to choose what we want every day.

• Derek Scissors is senior research fellow in economics for the Heritage Foundation’s Asian Studies Center.

First appeared in The Washington Times.

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