Wages and Foreign Trade

Abstract

THIS paper summarizes the results of an exploratory study of wage levels in relation to the foreign trade of the United States.' Attention is concentrated on manufacturing industries, although mining and agriculture are also included. The broad conclusion is that export industries tend to pay higher wages than importcompeting industries (i.e., the industrial classifications within which the largest volume of competitive imports fall). Within the manufacturing sector, the difference is associated with the higher wages paid by durable goods industries as compared with nondurable goods industries; that is, a large part of the difference is connected with the fact that the proportion of durable goods industries is higher among the leading export industries than among the leading import-competing industries. Even greater wage differences are found when the leading export industries are compared with industries producing commodities most vulnerable to further import competition or with industries producing goods that are competitive with highly protected imports. Relatively higher wages have characterized exported manufactures for over half a century. The same tendency for average wages in the export group to exceed those of the import-competing group is found in the mining and agricultural sectors, but for agriculture the analysis of wages in relation to foreign trade is much more tentative. The reconciliation of foreign trade statistics with data on wages, employment, and production for the years I947 and I952 had been accomplished by the Bureau of Labor Statistics in connection with its input-output studies.2 Average hourly earnings, which are used as the measure of wages,3 are either calculated from Census data or taken from B.L.S. estimates. For agriculture, however, there was no source of hourly earnings data, and, as is explained in the section on agriculture, the author has employed a makeshift method based on data of the Bureau of Agricultural Economics.