Free Trade and Employment :: Essays Papers

Free Trade and Employment There is an ongoing argument about whether or not free trade has an affect on employment. For hundreds of years there have been people who stand on both sides of the fence of this issue. As with most debates, each side presents facts that are presented in a certain light that may cause them to tell a story that may be different than what the actual numbers mean. Those who oppose free trade will say that competition with imports will destroy jobs for people working in those particular industries. While those who support free trade will defend their position by arguing that the increase in exports will instead create jobs, and that competition will help to drive prices down. While both positions tell stories that are true, they fail to accept that for the most part, any effects tend to cancel each other out and employment levels remain stable and level (Irwin Chapter 3). The issue of free trade is both complex and important enough that each side deserves a closer look, so we can see both sides together and get a feeling for what is really happening. After all, just because free trade may not have a substantial effect on employment alone, that is not necessarily true for the economy as a whole. Any industry that competes with a foreign good or service will inevitably have to drop the price of its product in order to stay competitive in an international market. Trade opponents admit that while this price drop will lead to more efficient production, it may also lead to lower real wages, and less employment in that particular industry or company. This is the primary argument for those who suggest that imports will destroy jobs, and it is not always false, but it is not always true either. Foreign competition can destroy jobs, because the people that get displaced cannot simply just go work for the competitor. In addition, it takes both time and money to retrain for another field of work; and most people, especially those who are closer to the retirement age, would rather spend that time looking for another job in the same or similar industry instead of educating themselves for a new line of work. Those who are fortunate enough to keep their jobs must settle for lower wag es; or at least the same wages that are now comparatively lower related to production than they were before production efficiency increased.