Wednesday, April 13, 2016

Let's Talk NAFTA

I'm always fascinated by all the comments with lots of strong opinions but no data to back any of it up and the subject of NAFTA is no exception.

Here's some data to chew on.

NAFTA was ratified in 1993 and went into effect in 1994. It was negotiated under the George H.W. Bush administration so don't just blame Clinton if you don't like it.

NAFTA has been a mixed bag. Its been credited for increasing US exports to Mexico and Canada from $340 billion in 1993 to $1.2 trillion by 2011 but in the meantime the AFL-CIO blames it for some 700,000 manufacturing jobs going over the border to Mexico as well.

However to put that in perspective, the US labor force is around 150 million so that represents less than 0.5% of all US jobs.

The US Real GDP (adjusted for inflation) in 1993 was $9.65 trillion or $36,473 per capita. In 2015 the US Real GDP was $16.46 trillion or $51,171 per capita. So SOMEBODY is making lots of money regardless of the drop in manufacturing jobs.

I say SOMEBODY because US Real Median income per household was $50,421 in 1993 and is now, 23 years later, only $53,657. So an increase of $15,000 per capita in GDP has only moved the household Median Income by $3.200. That implies that income in lower paying jobs has been almost stagnant while income in higher paying jobs has increased significantly.

To put it another way we've traded jobs with solid middle class salaries for jobs with lower salaries and jobs with much higher salaries in almost equal measure. So depending upon which bucket you're in, you're either unhappy, happy or, if you're at the top of the income ladder, very, very happy.

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