New Free Trade Agreement to Depress US Wages

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  • Using research widely accepted by economists who favor the TPP and similar agreements, the Center for Economic and Policy Research has calculated that the very small potential economic gains from the TPP projected by these economists would be outweighed, for the vast majority of U.S. wage and salary earners, by losses due to increasing inequality caused by increased trade.  Therefore, the vast majority of employees in the U.S. would suffer a net loss from the agreement.

  • The potential economic gains from TPP amount to a rounding error, according to research from the Peterson Institute of International Economics, which is cited by proponents of the TPP. This research projects that the TPP would generate only a 0.13 percent increase in GDP by 2025, about one hundredth of a percent of increased national income per year.

  • Taking into account the downward pressure on wages caused by so-called “free trade” agreements, the Center for Economic and Policy Research has calculated that the median U.S. worker’s wages could drop by 0.14 to 0.72 percent by 2025 if the TPP is implemented.

  • According to the non-partisan Congressional Budget Office, the long-term loss of GDP, in 2020,  from the ongoing failure to restore full employment in the U.S., is 25 times the size of the potential gains from the trade agreement.  The potential gains to GDP from the TPP are therefore very small as compared with other policy alternatives.

  • For the last twenty-five years income inequality has grown enormously while the wages of the typical (median) worker have stagnated, in part as a result of the free trade agreements that the U.S. has signed.  Today the U.S. has a higher rate of income inequality than other high-income countries.  The U.S. inequality gap is set to increase even more if the TPP is passed.

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