Don’t Blame Mexico for Michigan’s Problems

In her State of the State address last week, Michigan Gov. Jennifer Granholm listed the reasons why she believes the state's economy has fallen. "We all know the reasons — trade policies that dismantled factories here and built them in Mexico, the auto industry in meltdown, the banking crisis, the mortgage crisis, and on top of all that, a severe national recession." While the latter reasons may have played their part, company and job relocation to Mexico has been the least of Michigan's problems. Furthermore, trade with Mexico has actually been a bright spot for the state.

Company relocations are a very rare occurrence. In 2004, the Bureau of Labor Statistics kept track of U.S. companies that moved their production. The survey includes responses on employer and work relocations, and the answers are fairly surprising. In the first three quarters of 2004, 685,929 employees were separated from their work, but only 40,727 were separated because their companies relocated, and only a quarter of these jobs — 10,722 — moved outside of the United States.  

While 10,722 jobs may sound like a lot, it was only a fraction of the overall job turnover in the economy. During the same period, Michigan alone lost 754,628 jobs and added 777,196. Even if we assumed that all of the nation's outsourced jobs left Michigan, which is very unlikely, relocations overseas would still account for just 1.4 percent of Michigan's job losses that year.

Considering that Michigan's exports to Mexico grew by 169 percent over the past 10 years, and that only Texas and California export more goods to Mexico than Michigan, it's very likely that the country's southern neighbor has actually been a source of state job growth.

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