According to a new study by Economic Policy Institute in Washington DC, the financial woes of the US auto industry are not just a Detroit problem but could impact the economies of states across the nation.
The study estimated that Pennsylvania ranked 9th among the 50 states in potential job loss as a result of one or all of the Big Three automakers shutting down. It added that up to 120,100 jobs would disappear in Pennsylvania within a year, if General Motors, Ford and Chrysler were allowed to fall into bankruptcy. The loss of General Motors would jeopardize up to 33,200 jobs in Pennsylvania.
It said that even if only motor vehicles and parts jobs are counted, Pennsylvania would lose up to 8,400 jobs from a total industry shutdown and up to 2,300 from the shutdown of General Motors alone.
Dr Mark Price PhD labor economist for the Keystone Research Center in Harrisburg said that the EPI study should concern manufacturers and other industries in Pennsylvania. He added that "Anyone who thinks an auto industry collapse has little impact on Pennsylvania should think again. As the EPI study shows, the 120,000 Pennsylvania jobs threatened by an auto industry failure account for 2.1% of total state employment."
The EPI paper, titled When Giants Fall, estimates that a total collapse of all 3 US auto makers would result in the loss of up to 2.1 million American jobs within 2009. Tax revenue losses and additional governmental costs would top USD 150 billion within 3 years if the 3 companies enter bankruptcy. It added that without cars to export, the US trade deficit would rise by USD 109.3 billion.
The study's author, EPI economist Mr Robert E Scott, said that Congress should act quickly to provide a bridge loan to the auto industry, noting that it is an investment that the US government will likely recover with interest. He added that "It is in the national interest to invest in a bridge loan now, rather than pay the consequences of bankruptcy for one or more domestic auto makers."
The study estimates the loss of jobs by industry, with manufacturing leading the pack. Motor vehicles and parts and transportation equipment also stand to lose tens of thousands of jobs.