Why Free Trade Helps Workers

Opponents of free trade often sound a lot like this, but in Cato’s Dan Griswold explains why opening up trade helps American workers:

 The middle class isn’t disappearing — it’s moving up. The Census reports that the share of U.S. households earning $35,000 to $75,000 a year (in ’06 dollars) — roughly, the middle class — has indeed shrunk slightly over the last decade, from 34 percent to 33 percent. But so, too, has the share earning less than $35,000 — from 40 percent to 37 percent. It’s the share of households earning more than $75,000 that’s jumped — from 26 percent to 30 percent.

Trade has helped America transform itself into a middle-class service economy. Yes, the country’s lost a net 3.3 million manufacturing jobs in the past decade — but it’s added a net 11.6 million jobs in service and other sectors where average wages are higher than in manufacturing. Most of these new jobs are in better-paying categories, like professional and business services, finance and education and health services. Trade accounts for only about 3 percent of annual job displacement in our dynamic economy.

Got that? The "disappearing middle class" that you hear about is becoming the increasing upper class.  And for every lost manufacturing job the country has seen in the last decade, it’s seen more than three new high-paying service sector jobs.

Opponents of free trade like to refer to it as "protection," but the reality is that it’s a penalty.  No one would stand for the government implementing the same policies on a smaller level by, say, slapping tariff-style fees on goods bought from the town down the highway.  It obviously doesn’t make any sense: Why artificially force up the price of those goods?  The same logic ought to apply for international trade.  Restrictions and fees only act as a lead weight on the economy, making everything more expensive for everybody and, in the end, stifling the creation of new jobs and keeping wages down.