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Moreover, the costs of saving jobs through protectionism can be very high. A number of different studies have attempted to estimate the cost to consumers in higher prices per job saved through protectionism. [link] shows a sample of results, compiled by economists at the Federal Reserve Bank of Dallas. Saving a job through protectionism typically costs much more than the actual worker’s salary. For example, a study published in 2002 compiled evidence that using protectionism to save an average job in the textile and apparel industry would cost $199,000 per job saved. In other words, those workers could have been paid $100,000 per year to be unemployed and the cost would only be half of what it is to keep them working in the textile and apparel industry. This result is not unique to textiles and apparel.

(Source: Federal Reserve Bank of Dallas)
Cost to u.s. consumers of saving a job through protectionism
Industry Protected with Import Tariffs or Quotas Annual Cost per Job Saved
Sugar $826,000
Polyethylene resins $812,000
Dairy products $685,000
Frozen concentrated orange juice $635,000
Ball bearings $603,000
Machine tools $479,000
Women’s handbags $263,000
Glassware $247,000
Apparel and textiles $199,000
Rubber footwear $168,000
Women’s nonathletic footwear $139,000

Why does it cost so much to save jobs through protectionism? The basic reason is that not all of the extra money paid by consumers because of tariffs or quotas goes to save jobs. For example, if tariffs are imposed on steel imports so that buyers of steel pay a higher price, U.S. steel companies earn greater profits, buy more equipment, pay bigger bonuses to managers, give pay raises to existing employees—and also avoid firing some additional workers. Only part of the higher price of protected steel goes toward saving jobs. Also, when an industry is protected, the economy as a whole loses the benefits of playing to its comparative advantage—in other words, producing what it is best at. So, part of the higher price that consumers pay for protected goods is lost economic efficiency, which can be measured as another deadweight loss, like that discussed in Labor and Financial Markets .

There’s a bumper sticker that speaks to the threat some U.S. workers feel from imported products: “Buy American—Save U.S. Jobs.” If the car were being driven by an economist, the sticker might declare: “Block Imports—Save Jobs for Some Americans, Lose Jobs for Other Americans, and Also Pay High Prices.”

Trade and wages

Even if trade does not reduce the number of jobs, it could affect wages. Here, it is important to separate issues about the average level of wages from issues about whether the wages of certain workers may be helped or hurt by trade.

Because trade raises the amount that an economy can produce by letting firms and workers play to their comparative advantage, trade will also cause the average level of wages in an economy to rise. Workers who can produce more will be more desirable to employers, which will shift the demand for their labor out to the right, and increase wages in the labor market. By contrast, barriers to trade will reduce the average level of wages in an economy.

Questions & Answers

Do we have calculation in macroeconomics
Wilberforce Reply
What will be the multiplier, when MPS is 0, 0.4, 0.6, and 1? What will it be when the MPC is 1, 0.90, 0.67, 0.50, and 0? How much of a change in GDP will result if firms increase their level of investment by $8 billion and the MPC is 0.80? And If the MPC is 0.67?
Ayesha Reply
what are the side effects of government policies
narayan Reply
Government policy can influence interest rates, a rise in which increases the cost of borrowing in the business community. Higher rates also lead to decreased consumer spending. Lower interest rates attract investment as businesses increase production.
REHMA
if there is a negative technology shock to the economy in short run the firms production cost will go up and labor goes down and thus consumption and production will be lower than before. the government can spend to create jobs and central Bank can lower the interest rates
Dine
what are marlet prices
Jaheim Reply
price which includes net indirect taxes
Anish
what is aggregate demand
Kalkidan Reply
what is micro economics
A-dip Reply
microscopic study...
REHMA
microeconomics is study of individual, household and firms of division making and allocation of resources.
himanshi
absolutely
Shahzaib
😄😂😅
Thi
Join me in Vietnam
Thi
cũygi👅
Thi
what a pure economics. must have downloaded by mistake.
Zaiveisho
microeconomics is the study of an individual unit in an economic system or an household
DAMIAN
what really cause inflation?
Urey Reply
what is trade deficit
vivek Reply
is ther forgon alternative. is the amount sacrifice of one thing to gain another thing
Alie
what is enflation rate?
Mohibullah Reply
Is it inflation rate sir
Bilal
yes
Mohibullah
This is the annual rate of increase of basic household goods and services and measures also the cost of living and doing business in a country. it's a important information when making for forecast or business plans.
this is continuous increase of overall price level
Bethwel
the betewen microeconomics and macroeconomics is microeconomics is concerned with individual scarcity like household,workers and so on while macroeconomics is focuced on the problème winth organisation the collaboration with others companies the profits and then the growth of the organisation
Amadou Reply
what is unemployment?
kwizera
what is tax base
ekwuye Reply
The tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority.
Mare
difference between voluntary and involuntary unemployment?
kwizera
what is economic system
Alinda Reply
Quantity of Gasoline in millions was?
Touseef Reply
1000cubic meter
Keyrene
definition of phillips curve
Alok Reply
what is closed economy
Nati Reply
an economy that is not open
Chris
meaning: The economy is a closed system, there is not trade between this economy and another one, so no shared market. just a system with no outside influences.
Chris
thanks
Nati
what are the decision-making unit of an economy..?
Nati
an economy which is not involved in exchange with foreign countries
Manjisha

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Source:  OpenStax, Macroeconomics. OpenStax CNX. Jun 16, 2014 Download for free at http://legacy.cnx.org/content/col11626/1.10
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