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volume 17, number 5, december 2006 nbr analysis Informing and Strengthening Policy in the Asia-Pacific Foreword. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 Richard J. Ellings U.S. Services Trade, Employment, and Competitiveness . . . . . . . . . . 135 Robert Bednarzik and Brett Theodos [This page intentionally left blank.] 133 Foreword U.S. trade in services is a critical element in U.S. export growth, the trade balance, and U.S. global competitiveness. This reflects the importance of services in the US economy, now accounting for more than 80% of the U.S. workforce and GDP. The United States is the largest exporter of services in the world, accounting for close to 15% of global service exports, and in 2005 had a services trade surplus of $66 billion. It would appear, therefore, that services trade probably accounts for a significant number of new U.S. jobs. But we really don’t know from the data. In contrast to the manufacturing sector, which is tracked in detail, the United States Government fails to collect meaningful trade data, and we have too few decent studies on this subject. We simply know very little about the impact of services trade on U.S. employment. Consequently, the debate over services employment in the United States has been dominated by those with compelling anecdotes, who tend to see apparent losses of services (and manufacturing) jobs to India and other countries, never mind full employment in the United States. Clearly, the United States economy is doing well somehow, but it would be nice to know how, and it would also be preferable for U.S. policymakers to understand the balance of employment impacts of our growing services trade if they are to justify and formulate effective trade policies. This NBR Analysis examines the magnitude and changing nature of U.S. crossborder services trade to better understand the implications on U.S. employment and competitiveness. While the findings point to the conclusion that, on balance, trade is good for employment, the key finding is that the lack of adequate U.S. government data on services, including our growing trade in services, makes it impossible to accurately assess these issues. Hence, the study is a clarion call for a major new U.S. government initiative, which must be supported by the private sector, to revolutionize the way data on U.S. services trade is collected and analyzed. Armed with better data and analysis, policymakers would have a firmer foundation on which to support America’s economic openness and global leadership, not to mention boost our economic prospects. Richard J. Ellings President The National Bureau of Asian Research [This page intentionally left blank.] 135 U.S. Services Trade, Employment, and Competitiveness Robert Bednarzik and Brett Theodos Robert Bednarzik is Visiting Professor at Georgetown Public Policy Institute (GPPI). He recently retired from the U.S. Department of Labor after 30 years of public service as a Senior Economist in the Bureau of International Labor Affairs studying the impact of international phenomenon on U.S. workers’ employment and wages. His current research is on geographic labor mobility in the United States and employing inner-city youth. He can be reached at . Brett Theodos is Research Associate at the Urban Institute. His research focuses on lowincome residents and workers as well as government spending priorities and efficiency. His recent research includes examining earnings mobility for low-wage workers and geographic labor mobility in the United States as well as assessing government allocations to minority districts as they are affected by electoral concerns. Mr. Theodos has researched employment, community, and housing outcomes in evaluations for the Small Business Administration and the Community Development Financial Institution Fund. He can be reached at . 136 Executive Summary This study examines the changing nature of U.S. trade, focusing on cross-border services trade and corresponding job trends and implications for U.S. global competitiveness. Main Findings: U.S. government trade-gathering systems and criteria were established at a time when manufacturing dominated U.S. trade. Thus the amount and availability of data on services and services trade is extremely limited and rudimentary, particularly in comparison to data available for manufacturing trade. Given these limitations, this study makes maximum use of existing services trade data by connecting service type to service industry in order to identify trade-sensitive industries. Although the creation of these data have wide application, they are used here to track overall job trends in trade-sensitive industries. The main findings are as follows: • Trade in services, though significantly smaller than trade in manufactures...


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