WASHINGTON — The United States could create up to 5.8 million new jobs if it acted to end global currency manipulation, according to a report released today by the Economic Policy Institute (EPI). The study found that every state would see significant job gains within three years, with a major impact on manufacturing job growth.
Currency manipulation is the primary cause of the nation’s $703 billion annual goods trade deficit, a massive imbalance that has harmed American manufacturers. The EPI report finds that eliminating currency manipulation over the next three years would significantly rebalance trade flows, creating jobs in every state and almost every congressional district.
“Congress and the Administration have a new focus on manufacturing because they understand its value to the American economy,” said Scott Paul, president of the Alliance for American Manufacturing (AAM). “But they are ignoring the most important job-creating opportunity for manufacturing; stopping currency manipulation. The key to an economic recovery is restoring manufacturing job growth. And to shore up those jobs, Washington should launch a national manufacturing strategy that starts with passing bipartisan legislation to end currency manipulation.”
Widespread Economic Benefits
The EPI report suggests that by realigning exchange rates, U.S. trade deficits would be reduced by up to $500 billion per year by 2015 and could:
- Increase U.S. GDP by up to $720 billion per year (4.9 percent);
- Support creation of up to 5.8 million jobs;
- Increase manufacturing jobs by up to 2,337,300 jobs; and
- Increased tax revenues and reduced safety net expenditures would reduce federal budget deficits by up to $266 billion in 2015.
The industrial states where the most jobs would be created include: Wisconsin (up to 156,600 jobs), Indiana (up to 152,600 jobs), Iowa (up to 79,600 jobs), Minnesota (up to 135,300 jobs), Michigan (up to 207,200 jobs), and Ohio (up to 254,600 jobs).
Rounding out the top 10 are South Dakota (up to 21,100 jobs), Kansas (up to 67,000 jobs), Idaho (up to 32,700 jobs), and Nebraska (up to 44,200 jobs).
Currency manipulation has exacerbated manufacturing job loss
Growing U.S. trade deficits have contributed to the elimination of 5.7 million U.S. manufacturing jobs over the past 15 years. Between 2001 and 2011, the rise in the nation’s trade deficit with China alone eliminated 2.7 million U.S. jobs, with over 2.1 million of them in the manufacturing sector.
The EPI report highlights the significance of manufacturing to the vitality of the U.S. economy. Manufacturing job growth played a leading role in the nation’s recent economic recovery, adding 613,000 jobs between February 2010 (when manufacturing employment fell to its lowest point), and January 2014. That represents more than 9 percent of the 6.77 million jobs created nationally during that time.
“President Obama often cites restoring America’s manufacturing prowess as a key to restoring the nation’s prosperity,” Paul said. “But his efforts to stop currency manipulation have been completely inadequate to get the job done. This report shows why stopping currency manipulation is so important.”
Paul added, “No other policy change could have such a profoundly positive impact for American manufacturing jobs.”