January 01, 2010
Trade Creates Jobs for Texas
Related Studies & Resources
Creating and preserving quality U.S. jobs is a goal shared by all Americans. With 95 percent of the world’s consumers living outside of the United States, it makes sense for small and large businesses to partner to build stronger trade ties with countries seeking U.S. goods and services.
Trade creates jobs for Texans. Export growth increases jobs by generating new business for Texas’s manufacturers, services providers and farmers. Imports support jobs and keep costs low, helping Texas businesses compete and saving Texas families real dollars at the cash register. Foreign investment in Texas creates good jobs across a range of sectors.
MORE THAN 1 IN 5 TEXAS JOBS DEPENDS ON TRADE
Texas workers need trade to maintain and create jobs.
- Today, 3.0 million jobs in Texas depend on trade.
- In 2008, 20.5 percent of jobs in Texas depended on trade, up from 10.9 percent in 1992.
- Texas’ trade-related employment grew more than twice as fast as total employment from 2004 to 2008.
Trade through Texas ports support hundreds of thousands of jobs. The Port of Houston, which ranks first in the United States in foreign tonnage, alone provides more than 785,000 jobs, and generates $117.6 billion in economic activity and $3.7 billion in state and local taxes in the State of Texas.
Jobs in exporting plants pay on average up to 18 percent more than similar jobs in non- exporting plants.
Newly exporting firms increase employment almost four times faster than non-exporting firms.
TEXAS’S INDUSTRIES, SMALL BUSINESSES AND FARMERS GROW WITH EXPORTS
According to the U.S. Department of Commerce, Texas ranked first in the United States with total exports valued at $192.2 billion in 2008.
- Chemicals was Texas’ leading export category in 2008 accounting for 20.0 percent of total exports.
- One of the fastest growing export categories for Texas is petroleum & coal products, increasing at an average annual rate of 39.7 percent since 2002.
- In 2008, Texas companies sold their products in over 220 foreign markets.
- Texas’ leading export market is Mexico ($62.1 billion). Other leading markets include Canada ($19.4 billion) and China ($8.4 billion).
- The Netherlands is one of Texas’ fastest growing trading partners. In 2008, Texas companies exported $7.1 billion worth of goods to the Netherlands, an increase of 314 percent since 2002.
- In 2008, exports accounted for approximately 15.7 percent of Texas’ state gross domestic product (state GDP).
- Since 2002, exports have increased nearly twice as fast as state GDP.
Services exports are also important to Texas, including port services, education of foreign students at Texas colleges and universities, and spending by foreign visitors to tourist destinations in Texas, including the Alamo, Austin, and Big Bend National Park. Services companies employ 9.8 million workers in Texas. In 2008, 2.2 million Texas services jobs depended on trade.
Texas is a major exporter of agricultural products, ranking fourth in the U.S. for total agricultural exports in 2008. Leading markets are Mexico, Canada, the European Union, and Iraq. The State dominates U.S. exports of cotton and cottonseed, and cotton and linters, accounting for 36.0 and 34.3 percent, respectively, of U.S. exports in those categories. Texas is a leading exporter of virtually every other crop category, including feed grains, feeds and fodders, peanuts and products, live animals and meat, and wheat and products. These exports directly benefit Texas’ farmers in r the Panhandle, the Gulf Coast, and eastern Texas.
TEXAS’S SMALL AND MEDIUM BUSINESSES PARTNER WITH LARGE BUSINESSES TO EXPORT
Exports particularly benefit workers at Texas’ small- and mid-size companies. In 2007, 21,797 – 91.6 percent – of Texas’ exporting companies were small- or mid-sized companies.
Larger Texas companies are also important exporters. For the United States generally, half of U.S. exports are generated by U.S. multinationals.
Small and medium-sized Texas companies also indirectly export when they supply goods and services to larger Texas exporters. Every job at a Texas worldwide company supports nearly two others at companies that are part of its supply chain.
MORE OF A GOOD THING FOR TEXAS – TRADE AGREEMENTS LEVEL THE PLAYING FIELD
The United States has some of the lowest trade barriers in the world. Trade agreements level the playing field by lowering other nations’ trade barriers and opening up foreign markets to U.S. exports.
- Texas has increased its exports to partner countries following the implementation of each of the U.S. bilateral and regional free trade agreements (FTAs), with exports to Morocco experiencing the strongest growth.
FOREIGN INVESTMENT IN TEXAS CREATES JOBS
Foreign-owned companies invest significant amounts of capital to open or expand facilities in Texas every year.
These companies employ 368,200 workers, about 4 percent of all Texas employees in the private sector.
- Texas ranks third in the United States in the number of workers employed by foreign- owned companies.
- Foreign-owned manufacturing accounts for 92,500 jobs, representing nearly 10 percent of all manufacturing jobs in Texas.
- U.S. subsidiaries of foreign companies pay an average compensation of $68,317 per year, 32 percent higher than U.S. companies.
TEXAS COMPANIES AND WORKERS USE IMPORTS TO STAY COMPETITVE
- In 2008, 58.5 percent of the products we imported were used by U.S. workers to manufacture goods in the United States. Lower cost inputs keep U.S. manufacturing competitive in international markets.
- Imports frequently contain components (like cotton or semiconductors) and services (like design) sourced from U.S. companies and farmers, including companies and farmers in Texas.
- Services, especially transportation from Texas’s ports, finance and insurance, marketing and legal services, are needed to bring imported goods to American manufacturers and households. These importing-related services industries are vital to Texas’s growth, and account for 38.3 percent of state GDP, nearly three times as much as manufacturing.
EXPORTS AND IMPORTS HELP TEXAS FAMILIES ENJOY A HIGHER STANDARD OF LIVING
Exports and imports support family incomes.
- Jobs in exporting plants pay on average up to 18 percent more than similar jobs in non- exporting plants.
- Imports help keep prices for Texas families down while increasing their choices for goods and services. Prices for imported consumer goods tend to drop year after year.
- Trade and investment liberalization policies are worth over $10,000 per year to an average Texas family of four.
Laura Baughman and Joseph Francois, Trade Partnership Worldwide, LLC (http://www.businessroundtable.org)
The Port of Houston Authority (http://www.portofhouston.com/busdev/tradedevelopment/economicimpact.html)
U.S. Department of Labor (http://www.bls.gov/lau/home.htm)
U.S. Department of Commerce (http://ita.doc.gov/td/industry/otea/jobs/index.html), (http://ita.doc.gov/td/industry/otea/edb/index.html), (http://www.bea.gov/regional/index.htm)
U.S. Department of Agriculture (http://www.ers.usda.gov/StateFacts/)
U.S. Department of Commerce (http://tse.export.gov), (http://www.usatradeonline.gov), (http://ita.doc.gov/td/industry/otea/edb/index.html), (http://www.bea.gov/bea/regional/gsp/)
Andrew B. Bernard, J. Bradford Jensen, and Peter K. Schott (http://www.iie.com/publications/wp/wp05-10.pdf)
PIERS TradeIntelligence database
Organization for International Investment (http://www.ofii.org)
STANDARD OF LIVING
U.S. Department of Commerce (http://tse.export.gov)
Brigitte Schmidt Gwyn
Senior Director, Congressional Relations