Jobs Lost Due to Free Trade

Greg Mankiw points to this story about the decline of the U.S. sock industry due to increased globalization. Of particular note is the ending.

Jimmy Durham, the [Dekalb] county [Alabama] economic development officer, shows just how grim things have been for the sock business here.

On street after street, he points to buildings that used to house sock mills, most of which are now gone. With all these businesses shuttered, you might think Durham is in despair about the future of Fort Payne. He isn't.

Those closed sock factories are reopening as new businesses.

He points to Steadfast, which makes bridges; Ferguson, a major plumbing supply company; a distribution center for Children's Place; two new metal tube manufacturers; a high-tech label maker. For a town of only 13,000 people, this is a lot of new, good-paying employment. These jobs pay more than sock-making jobs.

In fact, most of 4,000 recently laid-off sock workers quickly found new jobs. It's an irony that reversing this tariff — fought for so hard by some in Fort Payne — will likely have its biggest impact thousands of miles away in Honduras.

It's difficult to convince trade skeptics of the transitioning of jobs when factories move offshore. And yet, despite a near doubling of imports into this country over the past ten years, employment has increased more than ten percent.

Of further note is this realization:

Wills never finished high school. Why bother? It was easier to just go get a job in a sock mill, just like his mom and dad and most of his uncles did. Wills is 60 now and had a good career.

Like many in Fort Payne, Ala., Wills was able to acquire more and more sock-making skills. Eventually, he opened his own business, as a sock machine specialist. He'd come into a mill and fix broken knitting machines. He specialized in K-Ends and Crawfords, an older kind of machine that didn't have computer-based controls. By 2003, most of the mills that used those old machines had closed or invested in newer models.

Wills suddenly found that there was no demand for his specialized services. He got a full-time job at Durham Hosiery, one of the last mills that still used K-Ends. But even Durham was investing more and more on newer equipment with computers. And Wills didn't know how to operate those.

"With computer machines," he says, "it's more important to have an education."

Again, to alleviate poverty you have to understand what causes it. It's not the schooling per se that improves one's productive output - there's probably more dumbing down going on in government schools than actual learning - but high school dropouts signal their inability/unwillingness to follow through and complete simple tasks.

Comments

[GIMPE CHIMPE]

SO YOU ARE SAYING WHAT?

THAT CORPORATE FREE TRADE IS GOOD OR BAD FOR THE COMMON MAN?

* I SAY YOU ARE A LIAR REGARDING THE 4000 LAID OFF WORKERS WHO QUICKLY FOUND JOBS.......THAT IS YOUR OPINION NOTHING MORE!

[GIMPE CHIMPE]

SO YOU ARE SAYING WHAT?

THAT CORPORATE FREE TRADE IS GOOD OR BAD FOR THE COMMON MAN?

* I SAY YOU ARE A LIAR REGARDING THE 4000 LAID OFF WORKERS WHO QUICKLY FOUND JOBS.......THAT IS YOUR OPINION NOTHING MORE!