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During election season in the United States, the adverse effects of trade on jobs are often talked about extensively. In the 2008 Michigan presidential primary election, for example, candidates offered different ways in which they claimed they would help the automobile industry and bring more jobs to the Michigan economy. In the South Carolina primary in the same year, job losses in the textile industry received lots of attention. One large textile manufacturer in the region, Swift, had been cutting jobs steadily and was closing up, apparently planning to move production to South America. Individuals who lost their jobs due to this closing reported that they experienced a period of unemployment as they searched for a new job. Some found new jobs, either in an automobile assembly plant or working on optic fibers. Others moved from working in manufacturing to services. This is job creation and destruction in action. It happens all the time, all across the world.
Viewed abstractly, job creation and destruction are healthy processes for an economy. Through the process of job creation and destruction, workers are induced to move from less productive to more productive jobs. Such movement enhances the overall productivity of an economy. From the perspective of individual workers, however, the process looks very different. Job destruction means that people lose their jobs, which are a source of income and perhaps also of pride and dignity. They may have to spend some period of time unemployed, and they may lose important benefits, such as health insurance. They may have to relocate in search of jobs that are being created elsewhere; such relocation can be difficult and costly.
In sum, although the productivity of an economy as a whole may increase, this need not translate into improvements for workers who lose their jobs. Some find higher-paying jobs, but others, particularly those with few skills, see their wages decrease. One of the big challenges faced by governments and policymakers is to encourage the efficient reallocations of workers while minimizing the individual hardships that workers confront.