A new study by the Economic Policy Institute estimated that the growing trade deficit with China has cost America nearly 3.2 million jobs since 2001 — including 41,100 from Kentucky and 7,800 from the 3rd Congressional District encompassing most of Jefferson County.
The EPI analysis studied the relationships between changes in trade flows and employment for 195 industries using data obtained from the U.S. Census Bureau, U.S. International Trade Commission and the Bureau of Labor Statistics. They found that China was able to create a widening trace deficit by keeping its exports artificially cheap through currency manipulation, direct export subsidies, nontariff barriers to imports, dumping cheap goods in foreign markets and suppression of labor rights.
According to the study, Kentucky was the 17th hardest-hit state, estimating that 77 percent of the jobs lost to China (31,600) were in the manufacturing sector. Between 2001 and 2013, Kentucky lost a total of 53,000 manufacturing jobs, meaning the trade deficit with China was responsible for roughly 60 percent of the decline.
EPI concluded that not only were jobs lost to China, but competition has driven down the bargaining power of American workers, lowering the pay of low-wage workers. EPI also found that a full revaluation of the yuan and other undervalued Asian currencies would reduce the U.S. trade deficit by up to $500 billion within three years, increase U.S. GDP by $720 billion, create up to 5.8 million jobs, and reduce the federal budget deficit by $266 billion per year.
Legislation in both the U.S. House and Senate to combat currency manipulation by China has not gained much ground, despite having a bipartisan group of sponsors — five of the 23 sponsors of the Senate bill are Republicans, as are 43 of the 157 sponsors of the House bill. Among Kentucky’s delegation, the only sponsors are Rep. John Yarmuth, D-3, and Rep. Hal Rogers, R-5.