Trade Discrimination: The Disproportionate, Underreported Damage to U.S. Black and Latino Workers From U.S. Trade Policies

Executive Summary

The damage caused by the corporate-led hyperglobalization that has been implemented over the past decades by “trade” agreements such as the North American Free Trade Agreement (NAFTA), the World Trade Organization (WTO) and NAFTA-style free trade agreements (FTAs) has been well documented — from mass job offshoring to unreliable supply chains to downward pressure on wages to weakened consumer and environmental protections.

In his 2016 presidential campaign, Donald Trump hijacked progressives’ critique of corporate globalization and job offshoring, but reframed it into a narrative of resentment with racialized appeals to target white working-class voters.

This followed on the “China Shock” research conducted by Massachusetts Institute of Technology Professor David Autor and others that showed the lasting impact on specific regions of the country from the loss of millions of U.S. jobs related to trade with China. Prominent press coverage of Autor’s work and Trump’s 2016 election focused on white non- college educated workers as the main victims of corporate-led hyperglobalization.

That conventional wisdom is challenged by the data presented in this report. The trade-related decline of U.S. manufacturing had a dire impact on racial minorities, particularly African Americans. In many ways, the damage has fallen disproportionately on people of color in the United States.

As Donald Trump failed to deliver on his promises to stop job offshoring or to create a “manufacturing boom” by “bringing back” or creating millions of new manufacturing jobs, in 2020 a surge in union voters and voters who earn $50,000 or less in key swing states ousted Trump, initial exit poll analyzes show. Whether these working-class voters of diverse races and ethnicities will stick with the Democratic Party depends on whether their lives and livelihoods measurably improve over the next four years. And that relies on the Biden administration enacting economic policies designed to do just that, which means breaking from the trade policy supported by Republican and Democratic presidents alike over the past few decades.

While decades of such corporate-rigged trade policies have harmed many American workers of all races and ethnicities, Black and Latino workers who lost jobs and experienced wage stagnation from NAFTA, the agreements enforced by the WTO, and the “China Shock” following China’s entry into the WTO — all policies enacted during the Clinton administration — have assumed a disproportionately large share of the harm inflicted by these deals. U.S. government data — despite shortcomings as to the recognition of the complexities of race and ethnicity — show that these two groups were overrepresented in the industries and concentrated in the regions that were hit hardest.

The findings in this report on relative wage levels and wealth also show that U.S. structural, race-based social and economic inequities that undermine the economic and social welfare of people of color have been further exacerbated by dislocations caused by U.S. trade policies. This report expands on the U.S. aspect of the research we published in late 2018 about NAFTA’s negative impact on working people in Mexico and on U.S. Latinos and the grim scenario facing the many Mexicans who migrated to the United States for work after NAFTA destroyed their livelihoods to now face increasingly precarious work conditions and racist, hateful attacks from Donald Trump.1 This report shows that among U.S. workers hurt by decades of corporate-designed trade policies, Black and Latino workers have suffered disproportionate injury:

• Black and Latino workers were disproportionately represented in nine out of the 10 manufacturing industries that have been hit hardest by import competition. While Latinos comprised 8.9% of the labor force, they represented 12.3% of workers in the manufacturing of fabricated metals, 11.4% of furniture and 10.5% of plastics and rubber. While Black workers comprised 10.6% of the overall labor force in 1995, they represented 13.5% of the workforce in paper manufacturing, 11.4% in chemicals, 11.3% in transportation equipment and 11.1% in primary metals. African Americans and Latinos represented 13% and 15.4%, respectively, of the workforce in the beverages industry.

  • According to the U.S. Bureau of Labor Statistics, Black workers have lost nearly half a million manufacturing jobs (494,000) during the NAFTA-WTO era. Black workers’ manufacturing losses were evenly spread across many subsectors that suffered significant trade-related job loss. For instance, in the automotive sector, by 2010, in just the first 15 years of NAFTA, Black workers had lost 56,524 jobs. Black workers were disproportionately represented in the primary metals manufacturing sector hit by the NAFTA-WTO era with a loss of 53,800 jobs. Black workers have also lost 22,100 jobs in the paper manufacturing industry and 18,600 jobs in the beverages and tobacco industry during the NAFTA-WTO era, two more sectors where Black workers were overrepresented relative to their general share of the workforce.

  • Latino workers also experienced job losses in sectors where they were overrepresented when the NAFTA and WTO went into effect. Latinos lost 123,000 jobs in the decline in the U.S. electrical equipment and appliances industry, and during the last 25 years, 182,700 Latino jobs in the United States have been lost in textiles, apparel and leather manufacturing.

• The explosion of deficits in highly trade-impacted manufacturing industries — along with the offshoring threat — also contributed to the stagnation of wages in sectors employing significant numbers of Black and Latino workers. Whereas earnings in highly trade-impacted industries have remained virtually flat (0.02% average growth rate on real terms), workers’ earnings in all manufacturing and hospitality and leisure had less than impressive but at least some degree of average yearly real earnings growth, with rates of 0.54% and 0.92% respectively.

• Black and Latino workers are also disproportionately represented in call center and customer service jobs that have been subject to mass offshoring. People of color (Black, Asian and Latino Americans) account for 43% of U.S. workers engaged as customer service representatives but are 36.4% of the U.S. workforce. Over the past 25 years, 71,788 U.S. jobs are TAA-certified as lost to trade with the Philippines, which has been the country of choice for call center offshoring. Some 58,220 of the U.S. jobs certified as lost to the Philippines are designated as explicitly lost to offshoring.

• The 20 U.S. states that are least racially diverse had only 20% of all government- certified trade job losses during the NAFTA-WTO era. Those states also represent less than 10% of total of U.S. manufacturing job losses during the NAFTA-WTO era (only 300,000 of the total 4 million) according to the U.S. Bureau of Labor Statistics.

• States and cities with the largest Black and Latino populations have been hardest hit by the economic and social fallout of failed U.S. trade policies.

  • Just 15 U.S. states that are home to 85% of the total Latino population account for half of TAA-certified trade-related job losses — 1.6 million of the more than 3.2 million U.S. jobs lost — from the start of the NAFTA-WTO era in 1994 to the latest TAA certifications covering most of 2019. Those 15 states also account for nearly half (47%) of all TAA-certified job losses caused by NAFTA – 480,000 out of 1.01 million. These 15 states also account for 2.4 million of the 4 million total manufacturing job losses documented by the U.S. Bureau of Labor Statistics during the NAFTA-WTO era.

  • The 15 states that are home to 58% of the Black population account for 2.9 million of the 4 million total manufacturing job losses documented by the U.S. Bureau of Labor Statistics during the NAFTA-WTO era. These states account for 57% of TAA-certified trade job losses — 1.8 million of the more than 3.2 million U.S. jobs. Those 15 states also account for 57% of TAA job losses caused by NAFTA, from NAFTA’s implementation up to April 2020.

  • Many cities such as Detroit, Chicago, Pittsburgh, New York and Cleveland that were hardest hit by U.S. trade policy failures were locations whose growing manufacturing employment opportunities had drawn six million Black workers fleeing from racial terror and poverty in the Jim Crow South for safety and better economic opportunities in the first half of the 1900s.

• U.S. Latino and Black workers who lose their jobs are even less likely than their white counterparts to find a replacement job, according to the Bureau of Labor Statistics. For every 100 white workers who lose their jobs, 14.3 remain unemployed. Meanwhile, for every 100 Black workers who lose their jobs, 21.2 remain unemployed. Similarly, for every 100 Latino workers who lose their jobs, 21.8 remain unemployed.

• Increased competition for a reduced number of well-paying jobs available for non- college-educated workers exacerbates underlying structural racial discrimination in hiring, promotions and wages that, even in the absence of trade impacts, have resulted in lower wages for Black and Latino workers relative to similarly educated non-Latino white workers. A study by the Economic Policy Institute estimated that, even in manufacturing and controlling for educational differences, actual wages for Latino and Black workers are, respectively, about 25% and 23% lower compared to wages paid to white workers.

• In no small part because of damaging disparities in educational opportunities, Black and Latino workers are overrepresented relative to their share of the overall workforce among the 58% of Americans without college degrees who were left to compete for an ever-diminishing number of quality jobs available for non-college educated workers. Sixty-eight percent of Black Americans and 77% of Latino Americans do not have college degrees as of 2019, compared to 54% of the white population.

• After 25 years of the NAFTA-WTO model, large racial wage gaps remain for men and are worsening for women. When NAFTA and the WTO began, Black men earned 75 cents, and Latino men earned 64 cents for every dollar earned by white men. Black women earned 88 cents, and Latinas earned 78 cents for every dollar earned by white women. Today, Black men earn 79 cents, and Latino men earn 71 cents for every dollar earned by white men. Black women earn 83 cents, and Latinas earn 73 cents for every dollar earned by white women.

• The wage premium offered by the manufacturing sector relative to other sectors is a particularly important factor, given the racial wage gap that exists across all sectors. Median weekly earnings in 2020 are $786 for Latino workers and $806 for Black workers –compared to $1,018 for white workers. These median wage gaps are further widened by gender. The median Black woman earns $779 per week, and the median Latina earns $717 per week, while the median U.S. woman worker overall earns $913 per week. Meanwhile, white women earn a median weekly income of $930 per week. 

• When Black and Latino workers lost manufacturing jobs and found new jobs, they faced disproportionate pay cuts. More than half of Black workers and about 60% of full- time Latino workers earn less than $15 an hour, compared with 42% of full-time U.S. workers overall. While the manufacturing sector lost about 4 million jobs between 1993 and 2019, other sectors with jobs available to those without college education – such as retail and leisure and hospitality – gained 6.8 million jobs. With average wages of $18.11 an hour, these sectors pay two-thirds that of manufacturing. Today, Latino workers make up 24% and Black workers 13.1% of these sectors, percentages greater than their representation in the overall workforce. As increasing numbers of trade-displaced workers have joined the glut of workers competing for these non-offshorable jobs, real wage growth has been extremely modest in these growing sectors.

• The states that have large Black and Latino populations also strikingly correlate with those with higher income inequality levels. Five out of the 10 most unequal states in the nation (New York, Florida, California, Illinois and New Jersey) are home to large Latino and Black populations. Additionally, Nevada, Massachusetts and Washington, which are states with large representations of Latino families, are also in the top 10 most unequal states in the country. These same eight states are among the 10 states with the biggest jumps in income share accumulated by the richest 1% from 1972 to 2015. In other words, in these eight states the top 1% increased their share of income by at least 10.7%, leaving less for the rest of their communities.

• Wealth inequality also has worsened over the NAFTA-WTO era with disproportionate damage to Black and Latino families. The median wealth for white families is 41 times that of Black families and 22 times that of Latino families. Median Black family wealth in the United States is $3,500, which represents only 2% of the median white family’s $147,000. Similarly, median Latino family wealth is $6,500, representing 4% of that of a median white family. And racial disparities in wealth have grown more severe over time. From 1995 (when the WTO went into effect and the first year of NAFTA) to 2016 (the latest data available), the median Black family wealth has increased only by $308. During that same period, the median Latino family’s wealth has slightly increased by $1,345. Meanwhile, the average white family has increased its wealth by more than $50,000.

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