"The flood of Chinese imports that started hitting the U.S. a quarter-century ago radically altered the U.S. economy. It upended manufacturing communities, hurt workers and their families, and sowed a discontent with globalization that changed the nation's politics and helped usher President Trump into his first term.
New research offers an unprecedented look at exactly how the "China Shock" rippled through the U.S., hitting manufacturing communities in the Southeast and parts of the Midwest particularly hard.
It shows a remarkable change that occurred leading up to the pandemic: Many of the places that were hit came back. The people who got hit did not.
"We were very, very startled by what we found. It was so different from what we expected," said David Autor, a Massachusetts Institute of Technology economics professor. The research by Autor and four other economists posted Monday as a National Bureau of Economic Research working paper.
In 2001, China joined the World Trade Organization, dropping many barriers to its exports around the world.
Policymakers in the U.S. hoped China's accession to the WTO would benefit U.S. consumers by giving them access to inexpensive goods while opening China's markets to U.S. business and nudging Beijing toward democracy.
The idea was that, sure, some manufacturing workers might be hurt, but that the pain would be manageable and workers would adjust. That's what experience, such as with Japan's rise as a powerhouse in the 1970s and '80s, suggested.
It didn't work out that way. China was huge, its labor costs were extremely low, and its surge in exports took place over a matter of just years rather than decades. Many U.S. manufacturing towns couldn't compete.
Autor, along with the University of Zurich's David Dorn and Harvard University's Gordon Hanson, released their first paper on the topic in 2011.
They showed, there and in subsequent research, how hard these towns were hurt. Those communities experienced higher unemployment, lower wages, higher use of food stamps, higher disability payments, higher rates of single parenthood and child poverty, and elevated mortality.
The idea was controversial in economic circles. Globalization was thought of as a benefit with few downsides.
The previously available data lacked the granularity the economists needed to answer key questions, such as how workers had responded. Beyond that, with the passage of time, there arose questions about how the places had changed.
For the new paper, Autor, Dorn and Hanson joined with Maggie Jones, a Census Bureau economist, and Brad Setzler, a Penn State University professor. The working paper examined individual-level employment and earnings records for nearly all American workers from 2000 to 2019.
Among the findings was that manufacturing as a sector didn't really come back.
The economists found that, starting in the 2010s, most of the affected economies came roaring back, including the counties surrounding Hickory, N.C., and Dalton, Ga. But the recoveries were driven by expansions in industries such as healthcare, education, retail and restaurants.
What's more, the manufacturing workers who had been hit by the China shock -- largely U.S.-born white and Black men without any college education -- didn't participate in these recoveries.
The new data show that while some of these workers lost their jobs and struggled to ever find work again, the bulk of them remained employed until retirement. But as they aged out of the manufacturing workforce, they weren't replaced.
In addition, not many manufacturing workers moved into nonmanufacturing jobs. And manufacturing workers were even less likely to relocate following the China shock than they had been before.
The new research also raises policy questions about what could have been done to lessen the sting. The fact that workers didn't move supports directing aid toward distressed communities. But the fact that so many new people flowed into these places suggests that this type of support could have been poorly targeted.
Many of the people who were hurt are still living in those shock-hit places, Autor points out. "The world has changed very dramatically around them," Autor said." [1]
1. U.S. News: 'China Shock' Upended Factory Workers --- Towns recovered after import surge, but many lives were hurt, new paper says. Lahart, Justin. Wall Street Journal, Eastern edition; New York, N.Y.. 05 Feb 2025: A2.
