CUED
Center
for Urban Economic Development
University of Illinois at Chicago
Monitoring
Manufacturing Employment Trends in Chicago and Illinois:
Implications for
NAFTA Impacts
Project Number: 382-A
Report Date: May 1994
Author(s): David Ranney
The following is a report on efforts to monitor possible NAFTA employment impacts in the Chicago area and the State of Illinois. Based on the fact that proponents of NAFTA and GATT have argued that increases in exports will lead to increased employment, we examined Illinois employment trends during the post recessionary period of 1991 to 1993 in those industries which had expanded exports to Mexico. We find that the largest exporting industries also experienced some of the largest job losses. A statistical analysis, controlling for industry employment size and the relative magnitude of change in employment and exports, concludes further that there is no statistical relationship between employment and exports.
A companion analysis was performed on plant closings and layoffs in the Chicago area during the period of September 1993 through March 1994. The results of this analysis are consistent with the findings on employment trends referenced above.
We conclude that export-led growth arguments cannot be used to support so called "free trade" agreements. Illinois and the Chicago area have experienced significant employment loss throughout the 1980s and early 1990s, while exports to Mexico increased by over 300%. Other studies further reveal that manufacturing job loss falls most heavily on women, African-Americans and Latinos. Changes in income distribution would suggest that if there were any benefits accrued from increased exports in recent years, they were enjoyed by the wealthiest individuals in the State of Illinois. The present study demonstrates that increased exports do not lead to employment growth in the exporting industries. Thus, NAFTA (and by implication, GATT) cannot be justified in terms of employment or income benefits to the average citizen. For this reason, their potential costs -- to the environment, working conditions, consumer product safety, and local economic autonomy -- must loom much larger in evaluating NAFTA, GATT and other future trade agreements.
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