Archive for the 'Economics and Politics' Category


State of the U.S. Textile and Apparel Industry: Output, Employment and Trade (Updated March 2017) – FASH455 Global Apparel & Textile Trade and Sourcing

Source: State of the U.S. Textile and Apparel Industry: Output, Employment and Trade (Updated March 2017) – FASH455 Global Apparel & Textile Trade and Sourcing

State of the U.S. Textile and Apparel Industry: Output, Employment and Trade
Instructor: Dr. Sheng Lu, Department of Fashion & Apparel Studies, University of Delaware | Copyright© 2012-2018 Sheng Lu

us textile industry 1

The size of the U.S. textile and apparel industry has significantly shrunk over the past decades. However, U.S. textile manufacturing is gradually coming back. Value added of U.S. textile manufacturing reached $17.98 billion in 2015, which was the highest level since 2009.

us T&A industry 2

Nevertheless, the share of U.S. textile and apparel manufacturing in the U.S. Gross Domestic Product (GDP) dropped to only 0.16% in 2015 from 0.57% in 1998.

us T&A industry 4

us T&A industry 3

The U.S. textile and apparel manufacturing is also changing in nature. For example, textiles had accounted for nearly 70% of the total output of the U.S. textile and apparel industry as of 2015, up from 58% in 1998. Meanwhile, clothing had only accounted for 12% of the total U.S. fiber production by 2012, suggesting non-apparel textile products, such as industrial textiles and home textiles have become more important part of the industry.

us textile industry 5

us textile industry 6

us textile industry 7

Manufacturing jobs are NOT coming back to the U.S. textile and apparel industry. From January 2015 to December 2016, U.S. textile manufacturing (NAICS 313 and 314) and apparel manufacturing (NAICS 315) lost 8,300 and 9,200 jobs respectively. However, improved productivity is one important factor behind the job losses.

us textile industry 8

us textile industry 9

U.S. remains a net textile exporter and a net apparel importer. However, the U.S. trade surplus in textiles significantly dropped to only $68 million in 2016 from $347 million a year earlier. More U.S.-made textiles are now exported than a decade ago. Meanwhile, the U.S. trade deficit in apparel reached $81,754 million in 2016, which was slightly smaller than $86,311 million a year earlier.

Sheng Lu

Additional readings:  The Pattern of U.S. Textile and Apparel Imports

Discussion questions:

#1 Is the state of the U.S. textile and apparel industry consistent with the stage of development theory? Please specify your answer.

#2 Based on the statistics, do you think textile and apparel “Made in the USA” have a future? Please explain.

#3 Based on the statistics, what is the impact of trade on the development of the U.S. textile and apparel industry: positive, negative, mixed or you need more information (please specify) to evaluate?

#4 Overall, do you think the U.S. textile and apparel industry is in good shape? Why or why not?

Editor’s Note: This is actually a class one can take at the University of Delaware


Sexual Harassment Flourishes in Slave Labor Factories

Sexual Harassment Flourishes in Slave Labor Factories

Global Garment Industry Supply Chains Remain Rife with Gender-Based Violence and Harassment

New studies from international advocacy groups find that female workers face daily abuse.

Leading retailers H&M, Gap and Walmart continue to depend on overseas factories where harassment and abuse toward female workers runs rampant, according to new reports from leading union, workers rights and human rights organizations.

In three individual reports, a global coalition of organizations including Global Labor Justice and the Asia Floor Wage Alliance explain how much of the fast fashion produced for the retailers in overseas factories depends on conditions that breed violence and sexual harassment toward women.

“These are not isolated incidents,” Global Labor Justice reports on its website. “Rather, they reflect a convergence of risk factors for gender violence… that leave women garment workers systematically exposed to violence.”

The studies show that while major retailers have said they are committed to improving working conditions in the overseas factories that supply many of their products, much work remains to be done.

The findings also come at a time when discussion about the future of trade is taking place — and a reminder that while much attention has been paid to how shifts in trade relationships might impact companies’ bottom lines, free trade has meant real people around the world have suffered serious abuse.

In each report, researchers examine the ways in which female garment workers are routinely, and often violently, abused in their workplaces. Many also face unwanted sexual advances from their supervisors.

That abuse isn’t just limited to the factory floor, either — these workers also deal with violence and harassment during their commutes and in employer-provided housing, the reports find.

To conduct the studies, researchers held focus group discussions with female workers in garment supply chains and trade union leaders aiming to organize workers. They met with these workers in several countries, including Bangladesh, Cambodia, India, Indonesia and Sri Lanka.

Researchers then put together case and context studies to document the incidents described by the workers, “including case studies of sexual harassment, retaliation for reporting sexual violence, and barriers to seeking relief.”

Women serve as the vast majority of the garment industry workforce across the global supply chain, although they rarely hold management positions. Instead, they typically work long hours in unsafe working conditions for low wages (almost always without overtime pay).

They’re also forced to work very fast under extreme pressure to meet the production targets of the fast-fashion industry.

“Use of production targets and piece rate wages create sustained pressure among workers to meet targets at the expense of taking breaks to rest, using restrooms and even drinking water,” the H&M report states. It later continues: “Low wages bind women to grinding production targets and excessive overtime hours — and even, then, they may not earn enough to meet basic nutritional requirements for themselves and their families.”

When factory supervisors don’t think that workers are moving fast enough, violence is often the result.

Radhika, a female worker employed in a Bangalore factory that supplies Gap and H&M, described how she was assaulted after failing to meet production targets:

“[M]y batch supervisor came up behind me as I was working on the sewing machine, yelling, ‘you are not meeting your target production.’ He pulled me out of the chair and I fell on the floor. He hit me, including on my breasts. He pulled me up and then pushed me to the floor again. He kicked me.’”

Radhika filed a written compliant, and was called into a meeting with the supervisor and a human resources staffer. The supervisor apologized, and Radhika was warned not to mention the incident again.

The harassment from the manager didn’t stop. Radhika still works at the factory because she is a single mother working to support her physically challenged daughter, she said.

Meanwhile, verbal abuse is commonplace. In a Gap supplier factory in Indonesia, one woman described the typical treatment from her supervisor:

“If you miss the target, all the workers in the production room can hear the yelling: ‘You stupid! Cannot work? If you are not willing to work, just go home! Watch out you! I will not extend your contract if you cannot work… They also throw materials. They kick our chairs.”

The situation is similar in Walmart supplier factories.

“Women workers in Walmart suppliers in Bangladesh described constant and relentless verbal abuse that continues from the beginning to the end of their shift,” according to the Walmart report. “Similarly, Indonesian workers at Walmart supplier factories reported that verbal abuse was daily and ongoing.”

Even in the rare instances when women workers are hired into management positions, they still face harassment.

Sulatana, a skilled garment worker with 10 years of experience, was hired in January 2018 as a production-line manager by a Walmart supplier in Bangladesh. But Sulatana still found herself facing unwanted advances from the factory’s general manager, including flirting and touching.

The general manager eventually asked Sulatana to go out with him; the production manager even offered her a salary increase and promotion if she agreed. Sultana declined, and the production manager threatened to fire her. When she went to the police to file a complaint, they refused to help.

“Sulatana had no avenue for relief for ongoing sexual harassment at work. When Sulatana refused to spend time with the General Manager outside working hours, she was fired in retaliation,” the Walmart report states. “Neither factory human resources nor the police provided viable pathways to accountability.”

So what are the solutions to this unchecked crisis? The researchers laid out a series of recommendations, and the International Labour Organization is currently convening to set the first international labor stands on violence and harassment in the workplace.

But the reports also serve as a reminder that when textile production moved overseas, it might have led to lower prices  and fast fashion — but it came at a big cost.

American communities were hallowed out, and the workers who took their jobs throughout Asia are now forced to work unreasonably long hours for terrible pay and in terrible conditions. As these reports find, many of these workers face regular physical abuse and sexual harassment as well.

H&M, Gap and Walmart might be singled out in these reports, but they are hardly the only retailers who profit upon the cheap goods provided by the fast fashion global supply chain — and which depends upon the terrible mistreatment of its workers to survive. Retailers repeatedly have made promises to improve labor conditions, but it looks like they continue to break those promises.

So as big discussions about the future of trade continue, it’s important to remember that trade hasn’t just led to lower consumer prices and increased company profit margins  — it also led to the rise of sweatshop labor, workplace violence and even sexual abuse in countries around the world.

Editor’s Note

Violence, intimidation and sexual harassment are some of the drawbacks to globalization. In exchange for getting cheaper products, the United States has given up all standards on how things are produced: whether it is working conditions, wages, pollution, child labor, over-production and extreme waste, toxic products and, in this case, sexual harassment.


How Good Is The US Economy anyways?

How Good Is the US Economy Anyways?

The United States has grown an unprecedented 88 straight months since 2010 under President Obama’s 2 terms and the 14 months under Donald Trump. The growth has been slow and stable (as the economists say: unspectacular) for the entire way. And there has been no acceleration of the economy with the change of Presidents. The only thing that has changed are (Republicans) attitudes towards the economy even though the economy has not changed one bit: Not Gross Domestic Product (first graph), Not jobs created (second graph), not unemployment or wage growth (third graph). The only thing that has changed is the attitude from Republicans (fourth graph).

Real U.S. GDP

Good growth is considered 4% or higher. The U.S. has never hit 3% since the Great Recession. In Comparison the GDP Annual Growth Rate in China averaged 9.63 percent from 1989 until 2018. This year’s GDP for China is 6.75%.

It is apparent that when it comes to telling people how they should feel based on political views that Fox News with its propaganda strategy is second to none (in America). Russia TV (RT) does an equally good job on the Russian people. And it is no coincidence that RT and Fox News share many of the same stories and sources. What is frightening is that Fox News can continue to lie while calling themselves “News.”

The Future

The U.S. Economy is expected to continue to slightly improve, but inflation has already started upwards but will continue to more rapidly increase and, by 2019 – it could be a real problem, despite the miraculous “GOP Tax Plan”. Also, here is a little known fact that impacts inflation, Trump has some allegiances with Big Oil, consider his decision of making CEO of Chevron, Rex Tillerson, his Secretary of State. That is why Trump, without any rational explanation, hit both large oil producing countries: Iran and Venezuela with big economic sanctions. With these two sanctions, it is expected that a barrel of oil, which should only go for $43 per barrel at fair market price, could jump to $140 per barrel by next year. (See the following article). Get ready to pay more at the pump.

Inflation rate 2017-2018

Crude Oil prices

The price of bent crude on 6/9/2018 is $76.46 per barrel. It had gotten down to under $28 per barrel in January, 2016.

Iran: Oil Prices Could Jump to $140 on U.S. Sanctions

oil rig

Oil prices could jump to $140 a barrel due to the U.S. sanctions against Iran and Venezuela, Iran’s OPEC governor Hossein Kazempour Ardebili told Reuters on Friday.

The Iranian official also criticized a reported request that the United States made of Saudi Arabia to help stabilize oil prices in case the sanctions against Iran drives oil prices up.

A day before U.S. President Donald Trump pulled the United States out of the Iran nuclear deal, a senior official of the Trump Administration phoned Saudi Arabia to ask it to help keep oil prices stable should the U.S. decision on Iran disrupt oil supply, Reuters reported yesterday.

Earlier this week, Bloomberg reported that the United States had quietly asked Saudi Arabia and several other OPEC nations to raise oil production by some 1 million bpd.

Commenting on the U.S. request to Saudi Arabia, Iran’s Kazempour told Reuters:

“It’s crazy and astonishing to see instruction coming from Washington to Saudi to act and replace a shortfall of Iran’s export due to their Illegal sanction on Iran and Venezuela

“No one in OPEC will act against two of its founder members,” he said. “The U.S. tried it last time against Iran, but oil prices got to $140 a barrel.”

According to the Iranian official, OPEC will not accept the U.S. request because “OPEC will not accept such a humiliation. How arrogant and ignorant one could be (to) underestimate the history of 60 years’ cooperation among competitors.”

Iran and Venezuela have separately pleaded over the past week to their fellow OPEC members for support and solidarity against the U.S. sanctions.

Iran and Venezuela are currently the two key oil supply concerns globally that supported the oil price rally in recent weeks, before Saudi Arabia and Russia hinted at discussions that they were considering reversing some of the cuts to offset production losses and “ease market and consumer anxiety.”

If the partners in the production cut deal decide to raise production and if this move depresses oil prices, Iran and Venezuela will be two of the biggest losers from lower oil revenues, because they can’t raise their respective production levels, also because of the U.S. sanctions.

By Tsvetana Paraskova for




U.S. – China Trade Talk Ends With No Results

U.S.-China Trade Deal With China Ends With No Results

U.S.-China Trade Talks End With Strong Demands, but Few Signs of a Deal

The United States delegation in Beijing for trade talks on Friday included Treasury Secretary Steven Mnuchin, center left, and Commerce Secretary Wilbur Ross, center right. Credit Nicolas Asfouri/Agence France-Presse — Getty Images

BEIJING — Senior Chinese and American officials concluded two days of negotiations on Friday with no deal and no date set for further talks, as the United States stepped up its demands for Chinese concessions to avert a potential trade war.

The American negotiating team, which included Treasury Secretary Steven Mnuchin and the United States trade representative, Robert E. Lighthizer, headed for the airport after the talks and did not release a statement. But a list of demands that the group took into the meeting called for reducing the United States’ trade gap with China by $200 billion over the next two years and a halt on Chinese subsidies for advanced manufacturing sectors.

The demands, which spread on Chinese social media and were confirmed by a person close to the negotiations, suggested that both sides hardened their positions this week despite the two days of talks. Senior Chinese officials and their advisers were also sending a deliberate message to the West that the days of Beijing being conciliatory were over, and that China was staking out its own position in the negotiations.

The person close to the negotiations insisted on anonymity because of diplomatic sensitivities.

The extensive list of United States trade demands was unexpectedly sweeping, and showed that the Trump administration has no intention of backing down despite Beijing’s assertive stance in the last few days. “The list reads like the terms for a surrender rather than a basis for negotiation,” said Eswar Prasad, an economics professor at Cornell University.

Here are the highlights of the demands:

China must …

■ Cut its trade surplus by $100 billion in the 12 months starting in June, and by another $100 billion in the following 12 months.

■ Halt all subsidies to advanced manufacturing industries in its so-called Made In China 2025 program. The program covers 10 sectors, including aircraft manufacturing, electric cars, robotics, computer microchips and artificial intelligence.

■ Accept that the United States may restrict imports from the industries under Made in China 2025.

■ Take “immediate, verifiable steps” to halt cyberespionage into commercial networks in the United States.

■ Strengthen intellectual property protections.

■ Accept United States restrictions on Chinese investments in sensitive technologies without retaliating.

■ Cut its tariffs, which currently average 10 percent, to the same level as in the United States, where they average 3.5 percent for all “noncritical sectors.”

■ Open up its services and agricultural sectors to full American competition.

The United States also stipulated that the two sides should meet every quarter to review progress.

Chinese officials put the talks in a positive light. “The two sides agreed that a sound and stable China-U.S. trade relationship is crucial for both, and they are committed to resolving relevant economic and trade issues through dialogue and consultation,” Xinhua, the official news agency, said soon after the talks ended.

But the negotiations also highlighted key differences — and the American delegation’s tight-lipped departure from Diaoyutai, the parklike enclosure of guesthouses where the talks were held, suggested that the two sides had made little headway in solving them.

Before the trade talks began, people involved in China’s policymaking said, Beijing was willing to act on some concessions previously laid out by President Xi Jinping. Among the most notable was a willingness to make it slightly easier for foreign automakers and financial services companies to compete in China.

But China has its own demands. Beijing wants the United States to relax restrictions on exports of high-tech commercial products that may have military applications. During the trade talks here this week, Chinese officials also took issue with the penalties that American officials imposed last month on ZTE, a Chinese telecommunications company, for repeatedly violating United States sanctions on Iran.

The Commerce Department banned all shipments of American wares to ZTE, including chips and other equipment that are essential to many of the company’s products. The move appears to have strengthened China’s resolve to continue its drive for self-sufficiency and to curb imports in various high-tech fields.

China’s push to upgrade its technology accounts for many of its disagreements with the United States. The American document reiterated Trump administration calls for a broad halt of Chinese subsidies to manufacturers in advanced technology industries. And Chinese officials have defended the Made in 2025 program as essential to upgrading the economy and have said they would not agree to any limits on the Made in China program.

Beijing has said it would be willing to reduce some trade barriers, but only if the United States also lowered trade barriers. Chinese officials particularly object to American limits on the export of high-tech goods that have both civilian and military applications, contending that these restrictions prevent sizable potential exports.

They also objected to United States demands for a specific cut in the bilateral surplus. Li Gang, the vice president of the Commerce Ministry’s research and training institute, said in a separate interview last month that a $100 billion cut in the surplus was “impossible.” China’s surplus has been widening lately as the United States economy grows fairly strongly and takes in more imports.

The Commerce Department announced on Thursday in Washington that the trade imbalance with China had widened slightly in March compared with the same month a year ago, although it narrowed slightly compared with February, possibly for seasonal reasons.

The lack of a deal this week, as well as the failure to schedule further talks right away, does not rule out the possibility that Chinese negotiators will visit the United States next month for further talks. One possibility that American officials have considered is whether China might send Vice President Wang Qishan, who is close to Mr. Xi, on a follow-up trip.

So far, the Chinese side has been led by Liu He, a Politburo member who is also the vice premier for finance, trade and technology.

Trade experts have been saying for weeks that Chinese officials would like to resolve the dispute with the United States so that they can go back to focusing on issues closer to home.

“That’s the immediate problem, because it’s a headache for them that’s distracting from a very pressing domestic agenda,” said Christopher K. Johnson, a former C.I.A. officer who analyzed China and now holds the Freeman Chair in China Studies at the Center for Strategic and International Studies.

The Beijing talks were unlikely to result in a comprehensive deal, but experts said they could still be a first step toward reaching some sort of accord.

“There’s no way our team is going to risk signing up to something without getting back here and making sure that Trump is happy with it first,” Mr. Johnson said. “Maybe there’s also some optics where Trump wants to be seen standing with Wang Qishan and striking the deal.”

“I think we’re still several jumps down the track from that.”

Editor’s Note

The United States in Trade talks has made a lot of demands on China, many of these are so out of line that many will never be agreed to. This is especially true for the following: having the Chinese government stay out of supplementing certain businesses. The American contingent has to know that the Chinese government, like the Russian government, is very much involved with many businesses and their banking establishments. They are nothing like the USA which has prohibited government in getting involved with businesses/banks, so there is no chance that this particular demand will be agreed to.

The other reason why almost-no demands will be agreed to is that the United States is too dependent on Chinese imports. China has the upper hand. It is so easy for the Chinese government to raise tariffs or boycott certain products, like steel or soybeans, that the American public and businesses will feel it. And when the American public feels an increase in prices, that starts plenty of complaining. Public complaining means trouble for politicians. Of course, the United States could do the same thing to the Chinese imports, but the difference is vast: the Chinese population will not publicly grumble. Furthermore, the Chinese citizens, also, believe in helping their country first, unlike Americans who believe in the individual first. These threatened tariffs and boycotts by the U.S. on Chinese imports would not have nearly the effect the Chinese slapping tariffs on American products would have. So, I don’t see much progress will come of these Trade talks, unless the American public has a change of heart – fat chance of that. I mean how many really try to buy Made in America or supporting local businesses?


Trump reconsiders joining the TPP

Trump considers rejoining the Trans-Pacific Partnership

Trump Proposes Rejoining Trans-Pacific Partnership

New York Times

President Trump made the comments during a meeting on Thursday with farm-state lawmakers and governors at the White House. Credit Doug Mills/The New York Times

WASHINGTON — President Trump, in a sharp reversal, told a gathering of farm-state lawmakers and governors on Thursday morning that the United States was looking into rejoining a multicountry trade agreement known as the Trans-Pacific Partnership, a deal he pulled out of days after assuming the presidency.

Mr. Trump’s reconsideration of an agreement he once denounced as a “rape of our country” caught even his closest advisers by surprise and came as his administration faces stiff pushback from Republican lawmakers, farmers and other businesses concerned that the president’s threat of tariffs and other trade barriers will hurt them economically.

Larry Kudlow, Mr. Trump’s top economic adviser, said in an interview on Thursday with The New York Times that the request to revisit the deal was somewhat spontaneous. “This whole trade thing has exploded,” Mr. Kudlow said. “There’s no deadline. We’ll pull a team together, but we haven’t even done — I mean, it just happened a couple hours ago.”

Mr. Trump’s decision to throw out the Trans-Pacific Partnership and his pledge to tear up the North American Free Trade Agreement were bedrock promises of his populist campaign, which centered heavily on unfair trade practices that he said had robbed American manufacturers and workers.

As he often does, the president started to change gears after hearing complaints from important constituents — in this case, Republican lawmakers who said farmers and other businesses in their states would suffer from his trade approach since they send many of their products abroad.

Then late Thursday, Mr. Trump appeared to shift gears again, saying in a Twitter post at 11:15 p.m. that he would consider re-entering the agreement only if it were “substantially better” than the deal offered to President Barack Obama. “We already have BILATERAL deals with six of the eleven nations in TPP,” he wrote, “and are working to make a deal with the biggest of those nations, Japan, who has hit us hard on trade for years!”

The discussion on the trade deal began at the White House meeting earlier on Thursday, when Senator John Thune, Republican of South Dakota, questioned Mr. Trump about returning to the pact, arguing that the Trans-Pacific Partnership was the best way to put pressure on China.

Mr. Trump, who has put China’s “unfair” trade practices in his cross hairs, turned to Mr. Kudlow and Robert Lighthizer, his trade negotiator, and asked them to look into re-entering the agreement.

Rejoining the pact could be a significant change in fortune for many American industries that stood to benefit from the trade accord and for Republican lawmakers who supported it. The deal, which was negotiated by the Obama administration, was largely intended as a tool to prod China into making the type of economic changes that the United States and others have long wanted. Many economists say the best way to combat a rising China and pressure it to open its market is through multilateral trade deals like the Trans-Pacific Partnership, which create favorable trading terms for participants.

“The idea was to set a framework that eventually China would have to accommodate,” said David Autor, an economist at M.I.T.

Farmers would stand to benefit from new access to markets, especially Japan, if Mr. Trump rejoins the pact. For instance, ranchers in Australia can currently send beef to Japan more cheaply than ranchers in the United States.

Michael Miller, the chairman of U.S. Wheat Associates and a farmer in Washington, said rejoining the deal would allow his industry to compete on a level playing field with competitors in Australia and Canada, which both remained in the accord.

But rejoining it could be a complex task. The remaining countries, like Japan, moved ahead without the United States, and spent months renegotiating a pact before finally agreeing to a sweeping multinational deal this year. Mr. Trump, who has demanded that any such deal benefit the United States, is unlikely to rejoin the Trans-Pacific Partnership without further concessions for what he has criticized as a terrible agreement. That could complicate talks, since Japan maintains that it has already given all the concessions it could, said William A. Reinsch, a trade expert at the Center for Strategic and International Studies.

Yoshihide Suga, Japan’s chief cabinet secretary, on Friday cautioned against any efforts to change the agreement to accommodate Mr. Trump, calling it a “well-balanced pact” that addressed the needs of the 11 nations that signed the deal.

It is also unclear how serious Mr. Trump is about rejoining. In the past, the president has floated policies that appeared to run counter to his earlier positions, like cooperating with Democrats on legislation governing immigration and gun rights, then quickly abandoned them.

“What he tells people in a room to make them happy does not always translate into administration policy,” said Phil Levy, a senior fellow at the Chicago Council on Global Affairs.

In a statement, a deputy White House press secretary, Lindsay Walters, pushed back on the notion that Mr. Trump was reversing his promises.

The president had “kept his promise to end the TPP deal negotiated by the Obama administration because it was unfair to American workers and farmers,” she said. “The president has consistently said he would be open to a substantially better deal.”

But the White House is in somewhat of a box when it comes to prodding China to fall in line with global trade rules. The administration is trying to use tariffs to force Beijing to open its markets, but many of his supporters, including business groups and farmers, fear the fallout from an escalating trade war will be even more damaging. China has responded to Mr. Trump’s threat of tariffs on as much as $150 billion worth of its goods by placing its own tariffs on American pork, and threatening taxes on soybeans, sorghum, corn and beef.

Some advisers, including Mr. Kudlow, have indicated that those tariffs may never go into effect, and that they are mainly a prelude to negotiations with the Chinese, statements that have helped calm volatile stock markets. In a recent note to clients, the ratings agency Fitch said that the most likely outcome to the conflict remained a “negotiated solution” and that it was therefore not changing its primary economic forecast.

Mr. Kudlow, in the interview, said that farmers had “a legitimate concern” but added that it would be “at least two months before final decisions will be made.”

“I’m not here to say we won’t use tariffs — everything’s on the table in these negotiations — but I am here to say we don’t know yet,” he said.

Still, White House officials suggest that little to no progress has yet been made in bridging contentious gaps with the Chinese. Administration officials say that back-channel talks have occurred, but they would not characterize them as official negotiations. The Chinese appear impassable on some of the issues that the White House is most concerned about, including their subsidies to cutting-edge industries like robotics, aerospace and artificial intelligence.

The Trump administration says it has ordered the Agriculture Department to create a program to help farmers should the two nations find themselves in a trade war. Trade advisers say the department could draw on the financial resources of a program known as the Commodity Credit Corporation, which provides up to $30 billion to help shore up American farmers by buying their crops.

“Stay with us while we go through this difficult process,” Mr. Kudlow told farm-state representatives during the meeting, according to a White House transcript. He added, “And at the end, if the worst case has come out as the president said, you will be helped. That’s a promise.”

But such a program would be time-consuming and costly and would come as the budget deficit continues to increase. Farmers say that Mr. Trump’s threats have already hurt them by causing the price of futures contracts to fall. They maintain that the easiest way to help them is to avoid a trade war with China in the first place.

Senator Joni Ernst, Republican of Iowa, described the meeting with the president as “productive” and said that she had urged him to re-engage in discussions with countries in the Trans-Pacific Partnership. “Iowa farmers aren’t looking for another subsidy program; rather they want new and improved market access,” she said.

“The best thing the United States can do to push back against Chinese cheating now is to lead the other 11 Pacific nations that believe in free trade and the rule of law,” Senator Ben Sasse, Republican of Nebraska, who attended the meeting, said in a statement. “It is good news that today the president directed Larry Kudlow and Ambassador Lighthizer to negotiate U.S. entry into TPP.”


Harley Davidson Closing Down Kansas City Plant

Harley Davidson Closing Down Kansas City Plant

President Trump, right, and Vice President Mike Pence check out Harley-Davidson motorcycles at the White House in February 2017. | Photo courtesy Wikimedia Commons

The company once promoted its American manufacturing footprint at the White House.

Oh, what a difference a year makes.

Almost exactly one year ago, executives from Harley-Davidson visited the White House as part of an effort by newly inaugurated President Donald Trump to promote American manufacturing. Trump thanked the Wisconsin-based company for building its iconic motorcycles in America and pledged to rebalance trade to drive more U.S. manufacturing.

On Tuesday, Trump gave his first State of the Union address to Congress, in which he continued to promise to act on trade to strengthen manufacturing (he hasn’t actually done much, but more on that over here).

Meanwhile, Trump’s big speech overshadowed an announcement by Harley-Davidson that also happened on Tuesday: The company said on a call to its investors that it will shut down its factory in Kansas City in 2019, leading to 800 layoffs:

“Tuesday’s announcement to investors was a complete surprise to employees, three fourths of whom are represented by one of two unions.

‘They didn’t even give us a call ahead of time,’ said Joe Capra, directing business agent for Local 778 of the International Association of Machinists & Aerospace Workers. ‘It is real devastation for these people who work here and work hard in the Kansas City area.’”

Harley-Davidson cited sluggish motorcycle sales as the reason for the closure; its worldwide sales fell 6.7 percent in 2017 compared to 2016, and U.S. sales specifically were down 8.5 percent. The company will shift some of the production at the Kansas City plant to its facility in Erie, Pa., which will create about 450 jobs there.

Analysts say the company faces an uphill battle in terms of sales, as motorcycle-loving baby boomers are getting older and millennials aren’t as interested in motorcycles.

But it’s also worth noting that while Harley-Davidson is shuttering an American factory, it is expanding its manufacturing footprint overseas – the company is building a factory in Thailand that is expected to open this year.

United Steelworkers President Leo Gerard, whose union represents some Harley-Davidson workers, called that decision “a slap in the face to the American worker.” The USW ended its two-decade partnership agreement with Harley-Davidson in September.

“This decision puts in jeopardy one of the few remaining genuine U.S. brands,” Gerard said. “Our members have been true partners with this company, working in good times and bad to make great products that fostered its growth and success. We remember the U.S. government stepping up in the 1980s to save Harley-Davidson and contributing to its revival.

“Harley owners and prospective buyers across the globe want to continue to enjoy machines made in America that provide quality rides and unique experiences. Harley’s potential outsourcing of production puts all of this at risk.”

Emil Ramirez, who represents USW District 11 that includes Kansas City, referenced the new Thailand factory in a statement about the factory closure, according to the Star.

“We cannot speculate about how the company plans to replace this production or to what extent these good-paying, family-supporting, American jobs will be outsourced to facilities the company has opened in Asia and other parts of the world,” Ramirez said.

There’s no doubt that Harley-Davidson’s decision is disappointing, to put it mildly. Not only will 800 people lose their jobs, but the closure of that factory will be a major blow to many others in Kansas City who depend on it for their own business.

Harley-Davidson also announced Tuesday that it expects to launch its first electric motorcycle within 18 months, part of an effort to attract new consumers.

Here’s hoping the company makes those motorcycles in the United States.



Million of Jobs Lost Due to Free Trade with China

Millions of Jobs Are Still Missing. Don’t Blame Immigration or Food Stamps

by Andrew Van Dam in The Washington Post February 22,2018

Millions of Jobs Are Still Missing, Don’t Blame Immigration or Food Stamps

Prisoners wait for breakfast at California Men’s Colony prison in San Luis Obispo, Calif., in 2013. Rising incarceration rates are one of a handful of factors that help to account for the United States’ missing jobs. (Andrew Burton/Getty Images)

Where did all the jobs go? Well, we’re finally starting to find some satisfactory answers to the granddaddy of all economic questions.

The share of Americans with jobs dropped 4.5 percentage points from 1999 to 2016 — amounting to about 11.4 million fewer workers in 2016.

At least half of that decline probably was due to an aging population. Explaining the remainder has been the inspiration for much of the economic research published after the Great Recession.

Economists and politicians have pointed at immigration, China, video games, robots, opioids, universities, working spouses — everything up to and including the academic equivalent of shrugging their shoulders and muttering, “Kids these days.”

Until recently, there was no good system to untangle it all.

University of Maryland economists Katharine Abraham and Melissa Kearney built one. After reviewing the most robust research available and doing some rough-but-rigorous math to estimate how much job loss each phenomenon can explain, the duo discovered something surprising: pretty much all the missing jobs are accounted for.

Just as important, they pinpointed the culprits. In a draft paper released by the National Bureau for Economic Research this week, Abraham and Kearney find that trade with China and the rise of robots are to blame for millions of the missing jobs.

Other popular scapegoats, such as immigration, food stamps and Obamacare, did not even move the needle.

During this time, there were other changes in the labor force (particularly an increase in educated workers) that pushed the employment rate upward. As a result, their research needed to account for more than just the 4.5-percentage-point drop and offset those gains.

Factors that mattered

Competition from Chinese imports

The era of vanishing jobs happened alongside one of the most unusual, disruptive eras in modern economic history — China’s accession to the World Trade Organization in 2001 and its subsequent rise to the top of the global export market.

There’s a deep body of research into the manufacturing jobs that were lost to competition from cheap Chinese imports, as well as those that vanished from related industries. On the basis of that research, Abraham and Kearney estimate that this competition cost the economy about 2.65 million jobs over the period.


Automation also seems to have cost more jobs than it created. Guided by research showing that each robot takes the jobs of about 5.6 workers and that 250,475 robots had been added since 1999, the duo estimated that robots cost the economy another 1.4 million workers.

Minimum wage increases

Abraham and Kearney used previous research into how teens and adults respond to rising wages to produce a high-end estimate of the impact of minimum wages over this period. Other recent research has found either a small effect or no effect. In the end, they combined those figures to find that about 0.49 million workers were lost.

That number does not account for the benefits that the broader labor force derived from higher wages, Kearney said.

Social Security Disability Insurance

The number of people receiving Social Security Disability Insurance nearly doubled from 1999 to 2016, from 4.9 million to 8.8 million. The population has aged, but that is still 1.64 million more people than there should have been, had rates remained steady for each age group, the researchers found.

Abraham and Kearney estimated that the labor force shrank by about 0.36 million as an increasing number of workers drew disability benefits.

Veterans benefits

The economists estimated that roughly 0.15 million people were not working because of the expansion of a disability insurance program run by the Department of Veterans Affairs. Between 2000 and 2013, the share of veterans receiving such benefits rose from 9 percent to 18 percent.

Mass incarceration

There were about 6.5 million former prisoners in the United States between the ages of 18 and 64 in 2014, according to the best available data. Assume that 60 percent of them served time as a result of policies implemented since the 1990s, account for their ages, time served, and pre-prison earnings, and you get a conservative estimate of 0.32 million lost jobs.

What did not reduce employment


Most research indicates that immigration does not reduce native employment rates. And even if it did, it is unlikely that it would reduce overall (native and foreign-born) employment. Immigrants’ employment rates are higher than those of native-born residents.

Food stamps (Supplemental Nutrition Assistance Program)

SNAP benefits average about $4.11 per person per day. Able-bodied adults are generally cut off from benefits unless they are working. Furthermore, the program itself did not change enough over the period in question to alter people’s behavior. It grew, but that was because of fallout from the Great Recession, not because of permanent policy changes that made nutrition assistance more accessible.

The Affordable Care Act

Obamacare went into effect in 2014 and has not had a noticeable impact on jobs to date. It is safe to assume it was not a decisive factor in the 1999-2016 period.

Working spouses who allow men to stay home

While this is a popular theory, the share of men who are not in the labor force but had a working spouse actually fell slightly between 1999 and 2015, according to a 2016 report by the White House Council of Economic Advisers.

The unknowns

Along with an aging population, the first six factors (competition from China and automation in particular) account for the majority of the jobs lost during the recession. But the U.S. labor market is colossal and complicated, and other explanations are out there, pushing and pulling the estimates in either direction.

It might be harder to change jobs now

Americans are not moving as often as they once did. It seems reasonable to assume, on the basis of recent research, that employment rates would be higher if people were more willing or able to relocate for work. But there is not yet enough evidence to state this conclusively.

Likewise, it is possible that the skills possessed by the available workers are becoming increasingly unrelated to the skills required by the available jobs. But this “skills mismatch” has not yet been proved over the long term.

Finally, there has been speculation that the rapid rise — from 5 percent in the late 1950s to about 30 percent today — in the share of workers in jobs that require a local or state government license has limited folks’ ability to switch careers and respond to labor-market requirements. We do not yet know enough to put a number on it.

Video games, opioids and changing youth culture

U.S. youth employment rates fell rapidly over the period. Economists have grabbed headlines recently by blaming the precipitous drop in young males in the workforce on a variety of factors including video game playing and prescription painkiller abuse.

But there is not yet enough evidence to prove that either phenomenon is a cause of low youth employment or a result of it. According to Kearney,  both issues could, at their root, be the result of shifting views of what is acceptable for a young man to be doing with his life.

“For whatever reason, these men seem more willing to stay home, live with their parents, live off their girlfriends,” Kearney said.

The paper’s most striking finding is not, however, speculation on idle American youths. It is that many of the topics that dominate political discourse about the labor market — such as immigration, food stamps and Obamacare — are unlikely to bring back lost jobs.

Instead, policymakers should be focusing on the forces that took those jobs in the first place: import competition, automation, incarceration and disability insurance.

“There’s not much we can do about the fact that our population is aging,” Kearney said. “But it’s pretty imperative that we figure out why younger individuals aren’t working at the rates they used to and do something to change that.”

The headline of this story has been updated.

Correction: A drop in the employment-to-population ratio of 4.5 percentage points would have been equivalent to about 11.4 million workers in 2016. An earlier version of this post put that number at 6.8 million.


Editorial Comments

It is good to get actual research numbers instead of just theories about the U.S. economy as seen in Abraham and Kearney’s article: Explaining the Decline in the U.S. Employment-to-Population Ratio: A Review of the Evidence.

This viewpoint is so much different than the Free Trade mania that is pushed by “Big Media”

July 2018
« Jun    



%d bloggers like this: