Implications for U.S. employment of the recent growth in mexican maquiladoras

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Gregory K. Schoepfle


La estructura industrial y tendencias en el patrón de empleo en Estados Unidos se examinan en las industrias más afectadas por el crecimiento reciente en el procesamiento y ensamblaje fuera de ese país, especialmente en maquiladoras mexicanas por parte de corporaciones estadounidenses. Estimaciones que se han hecho recientemente sobre los efectos de la exportación de trabajos para algunas operaciones intensivas en mano de obra indican que el efecto sobre el empleo total estadounidense probablemente es un porcentaje muy bajo del empleo total en tales industrias. El impacto se notará probablemente no en el nivel de empleo estadunidense, sino en su composición y distribución por sector industrial. Se consideran cuáles serán los efectos sobre el tipo y el carácter de empleos estadounidenses, incluyendo la distribución de de habilidades ocupacionales. También se estudia el total de requisitos estadounidenses de trabajo relacionados con la manufactura de componentes y con su ensamblaje. Al final del artículo el autor nos ofrece sus observaciones acerca de los efectos que tienen la maquila sobre el empleo en Estados Unidos. ABSTRACTThe industrial structure and trends of U.S. employment are examined in industries that are primarily affected by the recent growth in offshore processing and assembly, particularly by U.S.-based multinational corporations in Mexican maquiladoras. Recent estimates of the effects of this movement offshore of some labor-intensive U.S. operations indicate that the effect on total U.S. employment in the directly affected U.S. industries may be fairly small as a percentage of total employment in those industries. The impact will most likely be felt in the composition and industrial distribution of total U.S. employment rather than its level. The effects on the type and character of U.S. jobs, including the occupational skill mix, are explored. Total U.S. labor requirements related to production of components, and to assembly of those components, are also examined. Some closing observations are offered about the effects of outsourcing on U.S. employment.

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Schoepfle, G. K. (2017). Implications for U.S. employment of the recent growth in mexican maquiladoras. Frontera Norte, 3(5).


See Susan Walsh Sanderson, "American Industry Can Go Home Again," Across the Board, 23: 2 (February 1986), pp. 38-43.

See. F. Frobel, J. Heinrichs, and O. Kreye, The New International Division of Labour, Cambridge, Cambridge University, 1980.

For further details, see Joseph Grunwald and Kenneth Flamm, The Global Factory. Washington, The Brookings Institution, 1985.

For a more formal definition of export-processing zones, see United Nations Conference on Trade and Development (UNCTAD), Export Processing Free Zones in Developing Countries: Implications for Trade and Industrialization Policies. Geneva, UNCTAD, 1985; for a description of export-processing zones located in Mexico and the Caribbean, see Gregory K. Schoepfle and Jorge F. Pérez-López, "Export Assembly Operations in Mexico and the Caribbean" Journal of Interamerican Studies and World Affairs, 32: 4 (Winter 1989), pp. 131-161.

For further discussion about the employment implications for Mexico, see Gregory K. Schoepfle and Jorge F. Pérez-López, Employment Implications of Export Assembly Operations in Mexico and the Caribbean Basin, Working Paper 16, Commission for the Study of International Migration and Cooperative Economic Development, Washington, D. C. (January 1990)

Another related program (directed toward Mexico and certain Caribbean Basin countries) permits increased quotas to be negotiated for imported apparel items that are assembled from fabrics made and cut in the United States.

While U.S. imports under items 806.30 and 807.00 do provide a rough measure of offshore processing and assembly for the US. market, they fail to capture all export processing or assembly operations (e.g., items not exported to the United States but entered under other tariff schedule provisions). However, the establishment of a customs user fee on imported merchandise in December 1986 motivated many importers of goods normally covered by duty-free tariff provisions (e.g., most- favored- nation (MFN) duty free, the Generalized System of Preferences (GSP), and the Civil Aircraft Agreement) to claim eligibility under items 806.30 and 807.00 to avoid the fee; items entered under the 806.30 and 807.00 tariff provisions are exempt from the user fee (until September 30, 1991), the duty-free portion of U.S. imports under items 806.30 and 807.00 will more closely represent the U.S. -origin components and metal in foreign manufacturing operations that export their finished products to the U.S. market.

The top-40 categories were determined according to the following rule: 4.5 percent or more of all imports but more than $100 million in U.S.- content value. Together, these top-40 commodity groups accounted for about half of all U.S. imports, 98 percent of all imports under item 807.00, and 96 percent of the total U.S.- content value of item 807.00 imports in 1987. In 1987, there were 50 three-digit SIC-based import 807.00 products were primarily crude oil and refined petroleum products, meat products, silk fabrics, pulp and paper mill products, and industrial organic chemicals.

The exceptions are (each with less than 6 percent Mexican share of total item 807.00 entries): knit fabrics and hosiery (SIC 225), prefabricated building panels (SIC 245), fabricated structural metal products (SIC 344), farm and garden machinery (SIC 352), motor vehicles and parts (SIC 371), aircraft and parts (SIC 372), and railroad equipment (SIC 374).

The bulk of item 807.00 imports ($52.8 billion or 78 percent) in 1987 contained less than 20 percent U.S.-content value and came primarily from OECD and Eastern European nations. The majority of products with less than 20 percent U.S.- content value were transportation equipment products, mainly motor vehicles and equipment from Canada, Japan, West Germany, South Korea, United Kingdom, France and Sweden. In 1987, these seven countries accounted for 93 percent (or $46.5 billion) of all item 807.00 imports of transportation equipment. Together, they accounted for 88 percent of the value of item 807.00 imports that incorporate less than 20 percent U.S. -content value. U.S. imports of motor vehicles and parts from four of these countries (Canada, Japan, West Germany, and Sweden) accounted for over 30 percent of all U.S. imports from each of these four countries.

For a more detailed discussion of the maquiladora program, see Leslie Sklair, Assembling or Development: The Maquila Industry in Mexico and the United States, Boston: Unwin Hyman, 1989, and Ellwyn R. Stoddard, Maquila: Assembly Plants in Northern Mexico, El Paso, Texas, Western Press, 1987.

For a further discussion of the differences, see Grunwald and Flamm, op. cit., p. 144.

To qualify for entry under item 807.00, components must have been imported from the United States in a condition ready for assembly without further fabrication, must not have lost their physical identity in articles by change of form, shape, or otherwise, and must not be advanced in value or improved other than the assembly or operations incidental to assembly.

The studies summarized include: United States International Trade Commission (USITC), The Use and Economic Impact of TSUS Items 806.30 and 807.00, Publication 2053, Washington: USITC (January 1988); José A. Méndez, Tracy Murray, and Donald J. Rousslang (MMR), "U.S.- Mexico Employment Effects of Repealing the VS. Offshore Assembly Provision," mimeographed, 1988; and Gerald Godshaw, Corri Pinon-Farah, Marco Pinon-Farah, George Schink, and Virendra Shingh, The Implications for the U.S. Economy of Tariff Schedule Item 807 and Mexico's Maquila Program, Bala Cynwyd, PA: Wharton Econometric Forecasting Associates Group (WEFA Group) (May 1988).

See Gregory K. Schoepfle and Jorge F. Pérez- López, U.S. Employment Impact of TSUS 806.30 and 807.00 Provisions and Mexican Maquiladoras: A Survey of Issues and Estimates, Economic Discussion Paper 29, Bureau of International Labor Affairs, U.S. Department of Labor, Washington, D.C. (August 1988), and Gregory K. Schoepfle and Jorge Pérez-López, "The Impact of Maquiladoras on the U.S. National Employment and Employment in Selected Industrial Sectors," in Maquiladora Industry: Economic Solution or Problem?, Khosrow Fatemi, ed., New York: Praeger, 1990.

Recently, the USBLS issued a report in which it made projections of U.S. industry output and employment and occupational employment by industry to the year 2000. The study considered three growth scenarios (low, moderate, and high). The projections presented here are those under the moderate growth scenario. See United States Bureau of Labor Statistics (USBLS), "Outlook 2000: Five Articles on the Shape of the Economy and Occupations in the Year 2000," in Monthly Labor Review, 112: 11 (November 1989), entire issue.

USBLS collects information on employment and earnings using two surveys; one based on establishment and the other based on households. Differences between these surveys are described in Employment and Earnings. The Office of Economic Growth in the USBLS also conducts a survey of occupational employment for its employment projections program; their sample frame is somewhat larger than the one used in the household survey. Comparisons between the three data sources (all used here) should take these factors into account.

Most of these detailed occupational groups appear to be paid near the minimum wage level. During 1988, the U.S. minimum wage was $3.25 per hour; based on a workday of 8 hours, this translates to $26 a day, $130 for five days, and $156 for six days (including any overtime).

Detailed sectoral tabulations are available from the author upon request.

Detailed sectoral tabulations are available from the author upon request.

The USBLS has constructed indexes of hourly compensation costs (which include hourly earnings plus additional compensation and benefits) for production workers in manufacturing for 30 countries or areas. Selected data for developing countries included in the USBLS report are given in the following table: