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Trade Creates Jobs for Massachusetts

Creating and preserving quality U.S. jobs is a goal shared by all Americans. With 95 percent of the world’s consumers living outside of the United States, it makes sense for small and large businesses to partner to build stronger trade ties with countries seeking U.S. goods and services.

Trade creates jobs for Massachusetts. Export growth increases jobs by generating new business for Massachusetts’ manufacturers, services providers and farmers. Imports support jobs and keep costs low, helping Massachusetts businesses compete and saving Massachusetts families real dollars at the cash register. Foreign investment in Massachusetts creates good jobs across a range of sectors.

MORE THAN 1 IN 5 MASSACHUSETTS JOBS DEPENDS ON TRADE

Massachusetts workers need trade to maintain and create jobs.

  • Today, 921,900 jobs in Massachusetts depend on trade.
  • In 2008, 21.8 percent of jobs in Massachusetts depended on trade, up from 10.1 percent in 1992.
  • Massachusetts’ trade-related employment grew more than three times faster than total employment from 2004 to 2008.

Trade through the working Port of Boston alone has an annual economic impact of $2.4 billion and supports more than 34,000 jobs.

Jobs in exporting plants pay on average up to 18 percent more than similar jobs in non-exporting plants.

Newly exporting firms increase employment almost four times faster than non-exporting firms.

MASSACHUSETTS’ INDUSTRIES, SMALL BUSINESSES AND FARMERS GROW WITH EXPORTS

According to the U.S. Department of Commerce, Massachusetts ranked 12th in the United States with total exports valued at $28.4 billion in 2008.

  • Computers and electronics was Massachusetts’ leading export category in 2008 accounting for 27.6 percent of total exports.
  • One of the fastest growing export categories for Massachusetts is primary metal manufacturing, increasing at an average annual rate of 48.0 percent since 2002.
  • In 2008, Massachusetts companies sold their products in 210 foreign markets.
  • The top export market is Canada ($3.9 billion). Other leading markets include the United Kingdom ($3.5 billion) and Germany ($2.5 billion).
  • The Netherlands is one of Massachusetts’ fastest growing trading partners. In 2008, Massachusetts companies exported $2.7 billion worth of goods to the Netherlands, an increase of 154 percent since 2002.
  • In 2008, exports accounted for approximately 7.8 percent of Massachusetts’ state gross domestic product (state GDP).
  • Since 2002, exports have increased more than twice as faster as state GDP.

Services exports are also important to Massachusetts, including port services, education of foreign students at Massachusetts’ colleges and universities, like Harvard University and Massachusetts institute of Technology, and spending by foreign visitors to tourist destinations in Massachusetts, including Boston and Cape Cod. Services companies employ 3.2 million workers in Massachusetts. In 2008, 748,700 Massachusetts services jobs depended on trade.

MASSACHUSETTS’ SMALL AND MEDIUM BUSINESSES PARTNER WITH LARGE BUSINESSES TO EXPORT

Exports particularly benefit workers at Massachusetts’ small- and mid-size companies. In 2007, 7,933 – 89.4 percent – of Massachusetts’ exporting companies were small- or mid-sized companies.

Larger Massachusetts companies are also important exporters. For the United States generally, half of U.S. exports are generated by U.S. multinationals.

Small and medium-sized Massachusetts companies also indirectly export when they supply goods and services to larger Massachusetts exporters. Every job at a Massachusetts worldwide company supports nearly two others at companies that are part of its supply chain.

MORE OF A GOOD THING FOR MASSACHUSETTS – TRADE AGREEMENTS LEVEL THE PLAYING FIELD

The United States has some of the lowest trade barriers in the world. Trade agreements level the playing field by lowering other nations’ trade barriers and opening up foreign markets to U.S. exports. Massachusetts has increased its exports to partner countries following the implementation of the U.S. bilateral and regional free trade agreements (FTAs).

  • Exports to Bahrain experienced the strongest growth, increasing by 246 percent since the FTA’s implementation.
  • Since the North American Free Trade Agreement went into effect in 1994, Massachusetts’ exports to Canada have increased $1.3 billion (52 percent), while exports to Mexico have increased $874.5 million (303 percent).
  • Exports of computers and electronics, Massachusetts’ largest export category, to Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) countries have increased more than five times faster than computers and electronics exports to the world since DR-CAFTA was passed.
  • Since the implementation of the U.S.-Chile Free Trade Agreement, Massachusetts’ exports of chemicals, the State’s second largest export category, to Chile have increased by 279 percent.

 

 

FOREIGN INVESTMENT IN MASSACHUSETTS CREATES JOBS

Foreign-owned companies invest significant amounts of capital to open or expand facilities in Massachusetts every year.

These companies employ 173,000 workers, nearly 6 percent of all Massachusetts employees in the private sector.

  • Foreign-owned manufacturing accounts for 33,000 jobs, representing nearly 11 percent of all manufacturing jobs in Massachusetts.
  • U.S. subsidiaries of foreign companies pay an average compensation of $68,317 per year, 32 percent higher than U.S. companies.

MASSACHUSETTS COMPANIES AND WORKERS USE IMPORTS TO STAY

  • In 2008, 58.5 percent of the products we imported were used by U.S. workers to manufacture goods in the United States. Lower cost inputs keep U.S. manufacturing competitive in international markets.
  • Imports frequently contain components (like cotton or semiconductors) and services (like design) sourced from U.S. companies and farmers, including companies and farmers in Massachusetts.
  • Services, especially transportation from Massachusetts’ ports, finance and insurance, marketing and legal services, are needed to bring imported goods to American manufacturers and households. These importing-related services industries are vital to Massachusetts’ growth, and account for 46.2 percent of state GDP, nearly five times as much as manufacturing.

EXPORTS AND IMPORTS HELP MASSACHUSETTS FAMILIES ENJOY A HIGHER STANDARD OF LIVING

Exports and imports support family incomes.

  • Jobs in exporting plants pay on average up to 18 percent more than similar jobs in non-exporting plants.
  • Imports help keep prices for Massachusetts families down while increasing their choices for goods and services. Prices for imported consumer goods tend to drop year after year.
  • Trade and investment liberalization policies are worth over $10,000 per year to an average Massachusetts family of four.

SOURCES

JOBS

Laura Baughman and Joseph Francois, Trade Partnership Worldwide, LLC (http://www.businessroundtable.org)
The Boston Harbor Association (http://www.tbha.org/programs_workingport.htm)
U.S. Department of Labor (http://www.bls.gov/lau/home.htm)
U.S. Department of Commerce (http://ita.doc.gov/td/industry/otea/jobs/index.html), (http://ita.doc.gov/td/industry/otea/edb/index.html),  (http://www.bea.gov/regional/index.htm)

EXPORTS

U.S. Department of Agriculture (http://www.ers.usda.gov/StateFacts/)
U.S. Department of Commerce (http://tse.export.gov), (http://www.usatradeonline.gov), (http://ita.doc.gov/td/industry/otea/edb/index.html),  (http://www.bea.gov/bea/regional/gsp/)
Andrew B. Bernard, J. Bradford Jensen, and Peter K. Schott (http://www.iie.com/publications/wp/wp05-10.pdf)
PIERS Trade Intelligence database (http://www.piers.com/)

FOREIGN INVESTMENT

Organization for International Investment (http://www.ofii.org)

IMPORTS

U.S. Department of Labor (http://www.bls.gov/mxp/home.htm)
U.S. Department of Commerce (http://www.bea.gov/bea/regional/gsp/)

STANDARD OF LIVING

Council of Economic Advisers (http://www.gpoaccess.gov/eop/index.html)
U.S. Department of Labor (http://www.bls.gov/cpi/home.htm)
U.S. Department of Commerce (http://www.bea.gov/)

TRADE LIBERALIZATION

U.S. Department of Commerce (http://tse.export.gov)

CONTACT:

Brigitte Schmidt Gwyn
Senior Director, Congressional Relations
Business Roundtable
202.496.3263
bgwyn@businessroundtable.org

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