South By North Strategies, Ltd.

A new brief from the NC Budget and Tax Center looks at the impact of offshoring on the North Carolina economy.

In North Carolina, offshoring has had a significant, direct, and negative impact on the state’s economy over the past decade, clearly contributing to stagnant wage growth and job creation during the 2000s, and especially to the state’s sluggish recovery from the Great Recession. First, job losses related to trade deficits with China and Mexico in particular have exacerbated the anemic pace of job creation and the inability of the state’s labor market to return to pre-recession employment levels. Defined as the difference between the value of US exports to a particular country and the value of the goods imported from that country, trade deficits represent an excellent measure of offshoring since every dollar imported from another country is a dollar that would otherwise be produced by an American worker, serving to displace American workers who would have otherwise produced the imported good. Although US exports created jobs in North Carolina, it is important to note that the job losses due to foreign imports more than offset these minimal gains, according to a recent study by the Economic Policy Institute. For example, offshoring related to US trade deficits with Mexico (the nation’s largest trading partner) created 26,600 jobs through exports in 2010, but resulted in the displacement of 44,900 jobs through imports, resulting in a net loss of 26,000 jobs related to offshoring in that year.