The ITC Releases Findings of its Examination of the Effects of Trade and Trade Policy on U.S. Workers

Many affected workers see trade competition as a way to eat away at bargaining power.

Good news for people who like extensive book reports: The U.S. International Trade Commission (ITC), which advises Congress and the executive branch of the federal government on all things trade-related, has released the findings from a study it conducted this year to determine the “distributional effects of trade and trade policy on U.S. workers.”

The document produced – available here – is its answer to a request from the United States Trade Representative (USTR) to study what trade exposure really means for “underserved and underrepresented” American workers affected by it. And to produce it the ITC convened three panels and seven roundtables, conducted a literature review, and held a public hearing and an academic symposium, all to catalog perspectives from representatives of these marginalized communities. Representatives from the Alliance for American Manufacturing (AAM) participated in a handful of them. But the ITC would have got an earful whether AAM showed up or not; this report is over 250 pages long, and its full of notable examples of what trade exposure actually means for the worker whose job is buffeted by trade competition.   

In its roundtable focused on race and ethnicity, participants described how the threat of trade competition undermines the bargaining strength of domestic workers:

One participant noted that jobs requiring different skills are often combined into a single position in order to stay competitive globally. He also indicated that increased competition resulting from trade agreements made employees less willing to push for better benefits (such as pensions) for fear it would hurt their company’s survival. The same participant also mentioned that his union agreed to an hourly pay cut in order to increase the competitiveness of a steel plant, and that wages remained at the same level through the next decade.

Here’s a little bit more on that last part, about how a steel plant’s union agreed to a pay cut for its members to help keep their company competitive. In another roundtable – this one focused on disability, age, and education – participants described how even the unstated threat of offshoring is used as a negotiating tool during contract bargaining:

Roundtable participants reported that the threat of moving production or an entire manufacturing plant to another country is used in contract negotiations to push workers to accept lower wages and/or benefits. A union representative indicated that at one factory in Chicago, the company decided during its negotiation with the union that it would rather produce in Mexico than meet the union’s demands. An NGO representative stated that—whether the threat is explicitly stated or not—workers are aware of the possibility that a company might close a plant and move it to a lower-cost location.

Emphasis added.

Once the trade-affected jobs are gone, the new jobs that become available often aren’t exactly welcoming, and the programs that are supposed to be available to displaced workers leave a lot to be desired. Here’s some of what was said in the roundtable focused on underserved, trade-affected communities in the Detroit area:

Moreover, a union representative and an NGO representative noted that new jobs often pay less, necessitate relocation or separation from families (which may not be an option for some), may be unwilling to hire older workers, or may require skills that are difficult for older workers to acquire or perform. The NGO representative reported that the Trade Adjustment Assistance (TAA) program can help displaced workers move into new jobs and professions, but noted that not everyone is able to get into the TAA program and the program’s training can sometimes be limited.

This whole document is a useful examination of what trade means for the average American worker. And, as part of its original request of the ITC to conduct this investigation, USTR also “requested that the Commission expand its research and analysis capabilities so that future probable economic effects advice might include estimates of the potential distributional effects of trade and trade policy.”

This would indeed be useful. You can download the ITC’s investigation here.