The WSJ's Numbers Guy (Flawed math ...):
Millions of jobs are the cost of doing business with China, according to dozens of members of Congress seeking re-election.
Representatives from both major parties signed a letter last month asking the House leadership to pressure China to allow its currency to appreciate against the dollar. The letter cited a think tank study finding that trade with China reduces U.S. employment by 2.4 million jobs.
But several economists say the estimate of job losses congressional members relied on vastly overstated trade's impact on employment. A major flaw, they say, was that the study assumed every dollar spent on Chinese goods displaces a dollar that would be spent on U.S.-made products, when in fact products made in other low-cost manufacturing nations might fill the void. Also, cheap imports might even help fuel the U.S. economy and spur employment.
It sounds like the job loss estimates come from something like an economic impact study where reduced spending is translated into jobs. Grossly simplifying the model but not the logic, if our annual trade deficit with China is $200 billion and displaced jobs are earn $100,000 each year then we've lost 2 million jobs. The article goes on to explain why this simple logic likely overstates job losses (which can't accurately be measured).
The last sentence in the quote is the most important, however; China's currency policy and comparative advantage (i.e., lower cost production without a manipulated currency) is a subsidy for U.S. consumers. While there may be some job losses from a trade deficit, prices on goods in the U.S. are much lower as a result. Lower prices are good for consumers, especially those really struggling to make ends meet.
