Fair Trade Can Help Close America's Jobs Gap

At the height of the recession, the economy was shedding jobs at a terrifying rate. Millions of jobs simply disappeared in the last year of the Bush administration. Under the Obama administration the economy has been slowly and steadily coming back, month by month.

However, we are not out of the woods yet. The gap between the number of Americans at work and those who want a job but cannot find one is still massive.

The recently released employment numbers for June place the official U.S. jobless rate at 8.2 percent, which means that there was a gap of 12.7 million jobs last month.

The real story is more complex. The official jobless rate does not count discouraged workers or those marginally attached to the work force or those employed only part time for economic reasons. The just released Labor Department jobless data, termed, "Alternative measures of labor underutilization," reveals that as of June the total unemployment rate was still at 14.9 percent.

An even closer look at the numbers reveals that while the private market is continuing to add jobs, public sector jobs are actually disappearing. In June the federal government shed another 7,000 jobs. Across the entire public sector, employment is down by over 600,000 jobs since 2009.

If the U.S. is to cut unemployment to about 4.5 percent, which most economists consider to be full employment, the nation must ultimately create more than 16 million new jobs across the entire economy. That is in addition to finding jobs for the 12 million net new entrants into the work force, which the Labor Department estimates we will have by 2018.

The big policy and political question our country faces is how do we create that many jobs?

The missing element in all the existing plans is a robust trade policy that creates jobs here in the United States. For more than three decades, U.S. trade policy has tolerated closed foreign markets and encouraged the outsourcing of work. The consequences of this longstanding omission on U.S. job formation are enormous.

Let's begin with the arithmetic of jobs. The U.S. Department of Commerce estimates that every $1 billion of trade equates to 14,000 U.S. jobs. Thus, a net trade surplus of $1 billion means 14,000 more American jobs and a net trade deficit of $1 billion means 14,000 fewer jobs. The math is that direct and simple.

In 2011, the U.S. ran a trade deficit of $560 billion dollars, which translates into more than 7.8 million lost American jobs. In 2012, the deficit will rise to more than $600 billion -- that equates to more than 8.4 million lost jobs. The three major sources of deficit we see are imported oil with a $149 billion deficit, autos with a $117 billion deficit, and products from China that add a deficit of $295 billion.

This trade deficit, moreover, does more than harm U.S. employment; it also creates a drag on the overall economy. In 2011, the trade deficit reduced overall economic growth by almost 3 percent.

Put another way, if the U.S. had run a balanced trade account last year, the economy would have produced not only more than 7.8 million more jobs, it would have created an additional $500 billion of goods and services in the Gross Domestic Product, and almost $200 billion more revenue for the federal, state and local governments. Take note, deficit hawks.

How to create a balanced trade program is not rocket science. It begins by demanding reciprocity in trade with other nations, what we call fairness. It means confronting foreign government's currency manipulation to gain a price advantage in world markets. It means stopping foreign counterfeiting, product piracy and theft of U.S. intellectual property rights. And certainly it means ending U.S. tax and regulatory policies that encourage the offshoring of our domestic production and jobs.

The Obama Administration has taken some important steps in the right direction. Most recently, the U.S. Trade Representative announced that we will finally challenge China's unfair targeting of U.S.-made automobiles. It is unfair trade when the cost of a U.S. automobile can be tripled by a complex series of foreign government actions obviously meant to keep U.S. products out of the Chinese market place. Other major markets like Japan's remain largely closed to U.S. auto products.

Nevertheless, the big question is why is this issue not front-and-center in this year's political campaigns? The effects of unequal trade relations between the United States and other nations have far too little attention in this election cycle. Without a new trade policy that effectively opens closed foreign markets and brings the U.S. trade accounts in balance, the United States will be unable to create the millions of new jobs our economy so desperately needs.

Hopefully, the national media will soon give this trade and jobs issue the attention it merits and ask candidates for President, the Senate and the House to describe their solutions.

By Representative Marcy Kaptur (D-OH) and Dr. Pat Choate