Report: NAFTA Has Cost 683,000 Jobs—and Counting

by James Parks, May 3, 2011

To date, 682,900 U.S. jobs have been lost or displaced since the North American Free Trade Agreement (NAFTA) took effect in 1994, a new Economic Policy Institute (EPI) study finds. The main reason for the job loss is a $97.2 billion trade deficit with Mexico. In 1993, one year before NAFTA was implemented, the United States had a $1.6 billion trade surplus with Mexico that supported nearly 30,000 U.S.  jobs.   

All 50 states, the District of Columbia and Puerto Rico have seen jobs lost or displaced to Mexico in the past 17 years, says Robert Scott, EPI’s senior international economist and author of  “Heading South: U.S.-Mexico trade and job displacement after NAFTA.”

During a phone conference today, Scott said NAFTA supporters argued the pact would create jobs in the United States. Backers of proposed trade deals with South Korea and Colombia are making similar claims, he said. But his research has shown that each trade agreement would cost thousands of U.S. jobs. In the first eight years, the current deal with Korea could cost 159,000 jobs, he said, and Colombia could swallow up 60,000 U.S. jobs.

Scott found the five states that experienced the largest percentage of local jobs displaced by trade with Mexico since NAFTA began are Michigan, Indiana, Kentucky, Ohio and Tennessee. The five that have the largest actual number of jobs displaced due to Mexico trade deficits are California, Texas, Michigan, Ohio and Illinois. (Check out the map above.)  

NAFTA made outsourcing to Mexico much more attractive for U.S. companies, Scott said. Mexico eliminated a wide range of longstanding that companies claimed were expensive, he added.   

Most of the jobs displaced by trade with Mexico—415,000 jobs, or 60.8 percent of the total—have been in manufacturing. The hardest hit manufacturers have been in computer and electronic parts (150,300 jobs lost or displaced, or 22 percent of the total number of jobs) and motor vehicles and parts (108,000 jobs, 15.8 percent). There has been a huge surge in motor vehicles and auto parts in the last three years that cost 30,000 U.S. jobs, Scott said.