Thank You NAFTA for Higher Wages and More Jobs

September 14th, 2017

Critics and skeptics continue to decry free trade agreements (FTAs), claiming that they disadvantage American workers, despite the fact that history has shown to be false. For example, a 2010 study by the U.S. Chamber of Commerce found that FTAs have increased U.S. economic output by $300 billion and, thus, have supported 5.4 million U.S. jobs. With the exception of the multilateral trade liberalization in 1947, this is unprecedented for a budget neutral U.S. government initiative.

The North American Free Trade Agreement (NAFTA) provides an excellent example of how free trade benefits the United States, and specifically American workers. Since NAFTA was enacted almost 24 years ago, employment and wages are both up.

According to the U.S. Bureau of Labor Statistics, between January 1994 – when NAFTA was enacted – and March 2014, the U.S. added almost 25 million net new jobs. Data from the Bureau of Labor Statistics unemployment calculator shows that in the period directly after NAFTA was enacted until 2007, the U.S. unemployment rate averaged 5.1 percent. Conversely, in the same period of time prior to NAFTA being enacted (1982-1993), the unemployment rate averaged 7.1 percent. Additionally, in 2014 U.S. real wages were 12.6 percent higher than pre-NAFTA levels.

The Mexican and Canadian markets are crucial to America’s export industries. In 2015, the International Trade Administration estimated that 11.5 million jobs were sustained by exports (goods and services); 6.7 million of those jobs were specifically supported by the export of U.S. goods. The leading supporters of these U.S. jobs were our NAFTA trade partners with Canada supporting 1.2 million jobs and Mexico supporting 968,000 jobs in 2015 alone. In other words, Canada and Mexico supported 32 percent of all goods export-supported jobs in the United States.

American workers have reaped massive benefits from FTAs, specifically NAFTA. Freedom of trade with Mexico and Canada directly supports millions of U.S. jobs and has been instrumental in reducing America’s unemployment rate while increasing wages for U.S. workers. Rather than talking about repealing NAFTA, politicians in Washington, DC should be considering ways to expand trade with our North American neighbors.