Middle Class Better off After Decade of Trade Expansion

by Daniel Griswold

Daniel Griswold is director of the Cato Institute's Center for Trade Policy Studies

October 3, 2007

Opponents of trade liberalization have sought to indict free trade and trade agreements by painting a grim picture of the economic state of American workers and households. They claim that real wages have been stagnant or declining as millions of higher-paying middle-class jobs are lost to imports. Contrary to public perceptions:

• Trade has had no discernible negative effect on the number of jobs in the U.S. economy. Our economy today is at full employment, with 16.5 million more people working than a decade ago.
• Trade accounts for only about 3 percent of dislocated workers. Technology and other domestic factors displace far more workers.
• Average real compensation per hour for American workers, which includes benefits as well as wages, has increased by 22 percent.
• Median household income in the United States is 6 percent higher in real dollars than it was a decade ago. Middle-class households have been moving up the income ladder, not down.
• The loss of 3.3 million net manufacturing jobs in the past decade has been overwhelmed by a net gain of 11.6 million jobs in sectors where the average wage is higher than in manufacturing.
• The median net worth of U.S. households jumped by almost one-third between 1995 and 2004, from $70,800 to $93,100. The large majority of Americans, including the typical middle-class family, is measurably better off today after a decade of healthy trade expansion.

This article appeared on Examiner.com on October 3, 2007.