Economists Say Trade Is Good, As Long Resources Are Refocused On Workers As opposed to renegotiating trade deals, some economists argue a better approach would be to support those who've lost jobs. The U.S. has underfunded employment programs, compared to other economies.
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Economists Say Trade Is Good, As Long Resources Are Refocused On Workers

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Economists Say Trade Is Good, As Long Resources Are Refocused On Workers

Economists Say Trade Is Good, As Long Resources Are Refocused On Workers

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STEVE INSKEEP, HOST:

One of Donald Trump's signature issues is his criticism of American trade agreements.

(SOUNDBITE OF ARCHIVED RECORDING)

DONALD TRUMP: And the government, our government, our poor government, we're being out-dealt by China. They're so smart. But I make a lot of money with China. We're being out-dealt by China and Mexico and Japan. Look at Japan. They sell cars. By the millions, they pour in. You know what we give them? Practically nothing, OK?

INSKEEP: Trump is playing on a very real resentment. Many American jobs have gone overseas. Occasionally, you hear a factory worker whose final task is dismantling the equipment to send it to its new location out of the country. Bernie Sanders critiques trade deals too, but some economists have been arguing that a better approach is more help for the workers who do lose their jobs. NPR's John Ydstie reports.

JOHN YDSTIE, BYLINE: Most economists, including Jacob Kirkegaard of the Peterson Institute for International Economics, believe that trade is good for the U.S. Economy despite negative effects for workers who lose their jobs.

JACOB KIRKEGAARD: I think there is a group here who could say that, yes, they have a grievance. But that doesn't change the fact that on a net effect for the U.S. Economy as a whole and for the average American, trade has been a huge benefit.

YDSTIE: But Kirkegaard says the U.S. Hasn't been very good at channeling some of those benefits to people who've lost the most to trade. John Folk knows all about that. He worked at a Huffy bicycle plant in Celina, Ohio that was shutdown nearly 18 years ago when the company moved its production to China. Huffy had given its union workers an ultimatum, work for $6 an hour with no benefits.

JOHN FOLK: We didn't even put it out to vote. No one could live on that. We had many people there that their whole income in the household was from Huffy's. Both the husband and wife worked there. So it was pretty devastating.

YDSTIE: A federal program called Trade Adjustment Assistance that paid for worker retraining was available. But Folk says only about a quarter of the Huffy workers signed up, partly because they needed health insurance and couldn't get by on unemployment benefits.

FOLK: If you didn't have the means to keep a roof over your head, keep food on the table for you and your children and clothes on their back, you had to go and find a job right away.

YDSTIE: The Trade Adjustment Assistance program is still around. John Folk knows it well. He used the program after he lost his job at Huffy to study financial management. And he is now an administrator for the program at Allen County Jobs and Family Services in Lima, Ohio. Folk says it and other U.S. Employment programs are sorely underfunded.

FOLK: In fact, in the 12, 13 years that I've been in this field, our funding has been almost cut in half from when I started in 2002.

YDSTIE: And Folk says he's come to believe that reemployment services should be expanded, and not just for those who can prove their jobs were lost to trade. Why should a worker whose job moves from Ohio to China be treated any differently, he asks, than someone whose plant moves from Ohio to South Carolina? Jacob Kirkegaard says in Europe, countries generally don't care whether you've lost your job to trade or to domestic competitors.

KIRKEGAARD: In some countries, they call it the right and duty principle, which means that if you become unemployed, you actually have a legal right to some kind of retraining.

YDSTIE: Kirkegaard acknowledges that European countries spend up to 10 times more, as a share of GDP, on these so-called activist labor policies than the U.S. Spends on its programs. And he admits there's no political appetite for spending that much in the U.S. One possible, less expensive option, is something President Obama mentioned in his State of the Union speech. It's called wage insurance. Colby College economist Lori Kletzer has pushed the idea. It's a way of subsidizing wages for workers who lose a job for any reason. But their lack of skills means they can only get a job that pays much less than their old job.

LORI KLETZER: But if there's a program of wage insurance that closes the gap between old and new job earnings, that can be an enticement back into the labor market, where a worker has access to training.

YDSTIE: On the job training, which is the most effective kind, training that lifts skills and productivity and ultimately wages. Kletzer calculates a program like this would cost the U.S. About $2 billion a year. John Ydstie, NPR News, Washington.

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