The Link Between Exports and Employment

In 1997 the Indiana University School of Business published a study of export-related employment trends for a dozen manufacturing industries in eight states, including New York, Illinois, Michigan, Ohio, Indiana, Tennessee, Wisconsin and Kentucky. The study, which interpreted and expanded upon federal trade data for the years 1992 to 1996, found that manufacturing exports have had major impacts on state employment and that export activity tends to lead to higher wages.

During the years covered by the study, total manufacturing employment in New York State declined from 1,014,400 jobs to 921,800 jobs. All 12 industries experienced job losses with the exception of lumber, which remained essentially unchanged.

Trade is important to New York-but we're trailing behind

The findings of the Indiana study, which are illustrated in Table 5, opposite, included the following:

• While total manufacturing employment in New York decreased between 1992 and 1996, manufacturing export employment (including both "direct" and export-supporting jobs) increased from 171,000 to 185,500 jobs. As a result, the proportion of all manufacturing employment attributable to exports in New York rose during the period from 16.9 percent to 20.1 percent.
  Including service sector jobs, total employment related to manufacturing export activity in New York State rose by 30,000 jobs, from 352,700 in 1992 to 382,700 in 1996. Almost 27 percent of export-related manufacturing jobs in 1996 were related to the Canadian market; another 16 percent were attributable to exports to Japan and the United Kingdom.

• New York State's export-related job growth trailed the other seven states studied.

Table 5: Total New York Manufacturing Export Employment (Thousands of Jobs)   1992 - 1996 1992 1996 $ Diff. % Diff. Food 1.7 1.6 -0.1 -6% Lumber and Wood 2 2.8 0.8 40% Furniture 0.8 0.5 -0.3 -38% Printing and publishing 15.1 10.6 -4.5 -30% Chemicals and allied products 10.2 13 2.8 27% Rubber and misc. plastics 6.7 7.5 0.8 12% Primary metals 5.1 7.3 2.2 43% Fabricated metals 11.5 10.3 -1.2 -10% Industrial machinery and computer equip. 36.7 44.4 7.7 21% Electric and electronic equip. 31.3 31.5 0.2 1% Transportation equipment 6.8 3 -3.8 -56% Sophisticated instruments and related products 21.1 20.7 -0.4 -2% TOTALS 171 185.5 14.5 8% Source: "Export-Related Employment and Wages Estimates for Eight States, 1992 to 1996," Indiana University School of Business, Oct. 1997

The Indiana study also found that export-related jobs paid higher wages than other manufacturing—except in New York State, where the export-related jobs actually paid slightly less.

If New York's export-intensive manufacturers have a wage advantage over competitors, why isn't the state adding more jobs and exporting at a faster pace? The answers to that question highlight some of the policy priorities still waiting to be addressed by state officials.