Foreign Trade Competition Has Hurt Black And Disadvantaged Workers Most Report Says

A government trade agency report suggested that the impact of trade policy differed for workers depending on their race and socioeconomic status.

WASHINGTON — People of color have been disproportionately hurt by the economic disruptions caused by global trade, as a trend toward offshoring and globalization in recent decades prompted U.S. factories to relocate abroad, according to a newly released report from a government trade agency.

The report, issued on Monday by the U.S. International Trade Commission gathers academic literature and worker testimonies to show that workers who are not white have fared worse than their counterparts in the face of so-called trade shocks, such as China’s integration with the global marketplace, which eliminated jobs and lowered wages for some American workers.

The report, which was compiled at the request of Katherine Tai, the U.S. trade representative, is the latest sign of shifting views in Washington toward the pursuit of what are commonly referred to as free-trade policies. Many politicians on the right and the left have backed away from policies that pushed aggressively toward more open global markets, viewing them as economically damaging to workers at home.

Trade officials in the Biden administration, like those in the Trump administration, have increasingly highlighted the downsides of trade deals that made it easier for offshore factories to compete with American producers and that flooded U.S. markets with inexpensive foreign goods.

The report documents some benefits of global trade, including the higher wages and jobs that have been created when U.S. companies have expanded domestically in order to sell their goods and services overseas. But much of the 253-page report is dedicated to discussing the negative effects that trade policy has had on already vulnerable workers.

Ms. Tai said she intended to use the report’s conclusions to craft trade policy that would provide benefits to communities that have been historically underserved.

“Through the development and publication of new research, data and analytical tools, we can ensure that U.S. trade policy can be equitable, inclusive, and help boost the competitiveness of our economy in the 21st century,” Ms. Tai said.

As ample research has documented, changes in trade policy create both winners and losers. Workers with more education have often stood to benefit as the U.S. economy has opened up to foreign markets. That transition has incentivized U.S.-based businesses to shift toward more productive and highly skilled industries, while transferring less skilled tasks — like sewing clothing or assembling auto parts — to foreign countries where wages are much lower.

Those with fewer skills and less education were often hurt, as they faced competition from overseas factories and struggled to move into new fields. When they did find new jobs, those without any college education often saw their incomes drop more than workers with some higher education, studies have shown.

That trend has disadvantaged people of color, who tend to receive less education on average, the report said. But, even when controlling for education level, white workers have fared better during trade-related disruptions than others, the report said.

That likely reflects the negative impacts of discrimination and disparate access to transportation, training and technology, as well as of other barriers, researchers have suggested.

“The limited literature shows that, in the face of trade shocks, Black and other nonwhite workers fare worse than their white counterparts,” the report concluded.

The report cautions that many implications of trade remain under-researched, especially when it comes to the potentially positive effect of increased exports on U.S. workers, and to trade in services, such as telecommunications, consulting, legal services, call centers and other fields.

The International Trade Commission based the report on discussions with workers and experts that it convened in March and April, as well as a review of pre-existing academic literature on the effects of trade policy. The report examines the impact of trade by race, ethnicity, gender, sexual orientation, disability and age, and it looks at the effect of trade on local communities, like the areas around Detroit and Fresno, Calif.

Workers and other experts who participated in the conversations discussed how the rise of foreign factories had reduced bargaining power for American workers, leading to lower wages and benefits, especially for Black workers, the report said. The workers said factory closures also had negative effects on local businesses, though some highlighted the positive impacts trade had made on their communities.

The participants argued that people of color and disadvantaged groups were less able to weather shocks like job losses because of factors like limited educational opportunities, low geographic mobility and discrimination, according to the report.

They advocated more training and community programs to help underserved communities grapple with these challenges. That included highlighting the benefits of the long-running Trade Adjustment Assistance program, which lapsed this year after Congress failed to appropriate funding for it.

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