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New Manufacturing Job Losses Reveal Folly of Obama's Feel-Good China Summit
Alan Tonelson
Friday, June 07, 2013
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Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).
The new U.S. manufacturing job losses revealed in this morning’s Labor Department data once again make painfully clear that President Obama’s China policies are failing domestic industry and the broader American economy.  This new data also show that the President’s upcoming summit with Chinese leader Xi Jinping is completely misconceived.

Indeed, despite President Obama’s claims of a domestic manufacturing renaissance, U.S.-based industry’s share of total nonfarm employment has now sunk to 8.82 percent – below even its level in February, 2010, when manufacturing employment reached its absolute low point during the recession.  The reason:  Since that time, manufacturing has re-added jobs less than one-third as fast as the total nonfarm economy.

Given the continually rising, manufacturing-dominated, job-killing U.S. merchandise trade deficit with China, and Beijing’s ongoing trade and broader economic transgressions, the U.S. economy doesn’t need a feel-good, getting-to-know-you meeting with China’s leader.  A regime that has long pursued a mercantile, beggar-thy-neighbor growth strategy won’t change course because of Mr. Obama’s personal charm.  

In fact, the time for talk in U.S.-China economic relations has long since passed.  China’s bilateral trade surplus is rebounding from its recessionary lows and as a share of its economy. China’s promises to forsake export-led growth are still coming up empty.  And China’s predatory policies of currency manipulation, intellectual property theft, and illegal industry subsidization are either continuing apace of worsening.  As a result, Washington must begin rebalancing the dangerously lopsided bilateral economic relationship with tough and smart unilateral actions.

First and foremost, Congress should immediately pass and the President should promptly sign new legislation that would expand federal authority to offset the effects of ongoing currency manipulation by China and many other competitors with trade sanctions.  Similar action is needed on a border adjustment tax to eliminate the massive, trade deficit-fueling effects of value-added taxes implemented by China and most other members of the World Trade Organization.  

In addition, the United States urgently needs a “Team B”-type exercise to map out a national China strategy to replace today’s failed economic and security approaches.  This effort should include knowledgeable critics of the China policy status quo who would be tasked with identifying the major weaknesses of current U.S. policies and their costs, and recommending specific, concrete replacements.

The May jobs data not only reported an 8,000 month-to-month loss of manufacturing jobs.  They also revealed that rather than flat-lining in April, manufacturing employment actually fell by 9,000, and that rather than gaining 2,000 jobs in March, the sector lost 4,000 jobs.

According to the new figures, the manufacturing sector has now gained 507,000 jobs since its recessionary bottom in January and February of 2010.  But industry has lost 21,000 jobs since its last peak this February.  From the year-end 2007 onset of the recession through the employment trough, U.S. manufacturing employment nosedived by 2.29 million.

By contrast, since the recessionary bottom, overall U.S. nonfarm employment is up by 6.32 million.  This means that manufacturing employment has rebounded much more slowly than overall employment, recovering 22.14 percent of its lost recession jobs.  The total nonfarm sector has recovered 72.48 percent of the 8.72 million jobs it shed from the start of the recession through its February, 2010 employment bottom.

Manufacturing jobs are now down to 8.82 percent of total nonfarm employment – lower than their 8.86 percent share at the February, 2010 absolute employment low point, and far below the 9.96 percent share they enjoyed when the recession began



Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).