Jobs, Wages and Economic Outcomes Under the NAFTA-WTO Model

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In the United States, the era of Fast Track, the North American Free Trade Agreement (NAFTA), the World Trade Organization (WTO), and NAFTA-style expansion agreements has seen economic stagnation, a net loss of quality jobs, and wages barely keeping pace with inflation. For example:

  • U.S. wages have barely increased in real terms since 1973, the year Fast Track was first passed, even as worker productivity doubled. In 1973, the median hourly wage for American workers in today’s dollars was $17.26, while in 2007 it was up less than 1 percent to $17.42. Over the same period, U.S. workers’ productivity nearly doubled. Increasingly, even economists who defend status-quo trade policies are attributing a significant share of this unprecedented disconnect between American workers’ productivity and their real wages to a form of "labor arbitrage."
  • Trade policy holds back wages even of jobs that can’t be offshored. Economists have known for over 60 years that all workers with similar skill levels — not just manufacturing workers — will face downward wage pressure when U.S. trade policy creates a selective form of "free trade" in goods that non-professional workers produce. When workers in manufacturing are displaced and seek new jobs, they add to the supply of U.S. workers available for non-offshorable, non-professional jobs in hospitality, retail, health care and more. Thus, proposals to retool U.S. trade adjustment assistance programs, while welcome, do not address the most serious impact of America’s trade policies, which is not just on those workers who actually lose jobs, but on the majority of American workers who see their wages stagnate.

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