The Walmart Effect

Its Chinese imports have displaced nearly 200,000 U.S. jobs
June 26, 2007 | EPI Issue Brief #235
by Robert E. Scott

China?s entry into the World Trade Organization (WTO) was supposed to improve the U.S. trade deficit with China and create good jobs in the United States. But those promises have gone unfulfilled: the total U.S. trade deficit with China reached $235 billion in 2006. Between 2001 and 2006, this growing deficit eliminated 1.8 million U.S. jobs (Scott 2007). The world?s biggest retailer, U.S.-based Wal-Mart was responsible for $27 billion in U.S. imports from China in 2006 and 11% of the growth of the total U.S. trade deficit with China between 2001 and 2006. Wal-Mart?s trade deficit with China alone eliminated nearly 200,000 U.S. jobs in this period.

The manufacturing sector and its workers were hardest hit by the growth of Wal-Mart?s imports. Wal-Mart?s increased trade deficit with China eliminated 133,000 manufacturing jobs, 68% of those jobs lost from Wal-Mart?s imports. Jobs in the manufacturing sector pay higher wages and provide better benefits than most other industries, especially for workers with less than a college education.

China has achieved its rapidly growing trade surpluses by purchasing more than $1 trillion in U.S. Treasury bills and other government securities over the past few years in order to artificially and illegally reduce the value of its currency and thereby lower the cost of its exports to the United States and other countries. It has also repressed the labor rights of its workers and suppressed their wages, making its products artificially cheap and further subsidizing its exports. Wal-Mart has aided China?s abuse of labor rights and its violations of internally recognized norms of fair trade behavior by providing a vast and growing conduit for the distribution of artificially cheap and subsidized Chinese exports to the United States.

China trade and U.S. job loss

Exports support jobs in the United States, and imports displace them. However, an increase in exports will not support the creation of new jobs if, for example, a domestic firm exports parts that used to be shipped to a domestic auto assembly plant, and those products are used to build cars that are then sent back to the United States.1 Thus, the net effect of trade flows on employment must be based on an analysis of the trade balance. This Issue Brief calculates the employment impacts of growing trade deficits by using an input-output model that estimates the direct and indirect labor requirements of producing output in a given domestic industry. The model includes 200 U.S. industries, 86 of which are in the manufacturing sector.2

The model estimates the labor that would be required to produce a given volume of exports, and the labor that is displaced when a given volume of imports is substituted for domestic output.3 The job losses presented here represent an estimate of what total employment levels would have been in the absence of growing trade deficits.4

U.S. exports to China in 2001 supported 189,000 jobs, but U.S. imports displaced production that would have supported 1,190,000 jobs, as shown in the bottom half of Table 1. Therefore, the $84.1 billion trade deficit in 2001 displaced 1 million jobs in that year. Job displacement rose to 2,763,000 in 2006. Growth in trade deficits with China has reduced demand for goods produced in every region of the United States and has led to job displacement in all 50 states and the District of Columbia.

Source: Economic Policy Institute

The ABC's of Offshoring

Offshoring is in a sense an extreme form of outsourcing, applied in the context of globalization. Outsourcing refers to a decision by a company to have some activities conducted outside the company – activities that are necessary to its operations, but not considered strategic or related to its distinctive strengths.

The concept of offshoring can be understood more or less narrowly. In the narrow sense, offshoring refers to the transfer of production capacity from a site within a country to a site in another country, and then importing for national consumption the goods and services that had previously been produced locally. Offshoring must not be confused with the relocation of companies and the location of production and investments abroad. Companies are relocated when the production site is moved to another country in order to be closer to that market and sell the product there. As for the location of production abroad, this is a form of foreign investment. The present paper interprets offshoring in the narrow sense of the word only.

Offshoring is actually a very old practice, which economists refer to as the specialization of labour. However, improvements in the transport of merchandise, the development of free trade, access to qualified and cheap labour, and above all the huge growth in telecommunications have accelerated offshoring so much that it now includes trade in services and has become one of the cornerstones of the global economy. Some observers have even gone so far as to say that offshoring is simply a new form of international trade.

The specialization of labour is now increasingly becoming a kind of “vertical” specialization by country for each stage of production, and this trend will increase in the future. This specialization has already seen the emergence of companies devoted to a specific stage of production, and the existence of international companies that locate different stages of production in different countries.

Frédérique Sachwald(5) has noted that the fragmentation of production processes is characteristic of modern economies. Instead of specialization in a product within a given country, we now have specialization at each stage of production within a given industry. This fragmentation has grown since the 1980s, and emerging countries are now gradually increasing their ability to perform increasingly complex tasks, including design and some development work. In short, offshoring increasingly goes hand in hand with globalization.

source: http://www.parl.gc.ca/information/library/PRBpubs/prb0459-e.htm

Help For The Holiday

Unfortunately, this is a reality faced by many people in this turbulent time of lay-offs and shut-downs of major manufacturing plants as well as the smaller "feeder" plants. Please help by donating goods to Coats for Kids, Salvation Army, St. Vincent De Paul, or other charitable organization in your area.

The Salvation Army
The Unemployed Help Centre
Goodfellows
Goodwill Industries
Royal Canadian Legion
United Way
Drouillard Place

VQA: is 100% Ontario

That's right! You don't need to step outside the province for a great bottle of wine. Look for the VQA Medallion and you'll be sure to taste the essence of Ontario wines. The VQA, which stand for Vintners Quality Alliance, is a set of standards for winemaking excellence.

The VQA Ontario site explains, "VQA is your assurance that the wine you choose is made from 100% grapes grown in Ontario and its unique viticultural areas. All VQA wines are verified to confirm their origin and tested to ensure they meet a rigorous set of quality standards." ... read more

Here are the basic VQA regulations as listed on the WinesofOntario.org website:

"To claim Ontario as its origin, a wine must:

Be made from 100% Ontario grown grapes of approved varieties.
Wines bearing more specific origin (sub-appellations) must be 100% from the stated area
Meet minimum sugar levels (ripeness) at harvest as set for each grape variety.
Be made from a minimum of 85% of grapes grown in a single vintage (year) and indicate the vintage on the label."
... read more from the Wines Of Ontario website

Healthy Skin, Local Products

Today I started a new skin care regime using local products from Jamieson Laboratories which I purchased at the local Sears store. Rosie was fabulous and helped me select just the right products for my skin type and took the time to explain to me the correct way to use them. I spent a great deal of time at the cosmetics counter with Rosie and another lady (sorry I didn't catch her name), and really enjoyed the excellent customer service from such friendly people.

I purchased the Jamieson Unique Foaming System Facial Cleanser, Jamieson Purifying Elixir Facial Toner, Jamieson Vitamin A Retinol Vital Day Moisturizer, Jamieson ProVitamina A Retinol Renewal Night Cream and the Jamieson Vitamin E Eye Cream with APKCo10 & Vitamin K.

So far I'm loving how quick and easy the products are to use and the way my skin feels....
Price-wise, it was easy on the pocketbook as well ;)

Green Tip of The Day