China trade gap seen costing 60,000 Mass. jobs

July 30, 2008

The growing trade deficit with China has cost Massachusetts nearly 60,000 jobs over the past several years, with about two-thirds of those losses in manufacturing, according to a study. The study, released today by the Economic Policy Institute, a Washington think tank, used an economic model to estimate national job losses resulting from the trade deficit, and then apportioned them according to each state's share of US employment. A trade deficit occurs when a nation imports more than it exports. The nation's trade deficit with China hit a record $256 billion in 2007. Between 2001 and 2007, the United States lost 2.3 million jobs, including 1.5 million manufacturing jobs, according to the study. The China trade deficit cost Massachusetts nearly 40,000 manufacturing jobs, accounting for about one-third of all manufacturing job losses in the state during that period. Massachusetts manufacturing employment has been on the decline for years. (Robert Gavin)

The House Financial Services Committee, chaired by Massachusetts Democrat Barney Frank, said it will hold hearings in September on the auction-rate securities crisis. According to a congressional staff member, the hearings are being held in hopes of finding a way for brokerages and investment firms to help investors who are stuck get out of the investments. The interest rates on auction-rate securities were reset at regular auctions, but the market fell apart in February when investment banks stopped buying because the paper was seen as too risky. The market's failure left many investors unable to access their cash. (Globe staff)

Whole Foods Market Inc.'s $565 million purchase of Wild Oats Markets Inc. should be re-examined by a federal judge to determine whether it violated antitrust rules, an appeals court said. In a 2-1 decision, the Appeals Court in Washington ruled that a district judge should have taken more time to consider Federal Trade Commission claims that the purchase violated antitrust law and would hurt consumers. The appeals panel sent the case back to the lower court to reconsider its decision. Whole Foods, the largest US natural-foods grocer, completed the purchase less than two weeks after US District Judge Paul Friedman's Aug. 16 ruling, which denied an FTC request for an injunction to block the merger. The company, which now has 270 stores, is too far along in its integration of Wild Oats to undo the deal, Whole Foods lawyer Paul Denis said April 23. (Bloomberg)

Delta Air Lines Inc., the nation's third-largest carrier, will double its charge for checking a second bag on a domestic flight as part of a set of fee increases to help offset the high cost of fuel. The Atlanta carrier said the changes will apply to customers who purchase a ticket beginning tomorrow for travel on or after Aug. 5. Fee changes include an increase to $50 from $25 to check a second bag for domestic travel. Fees for specialty items that require special handling, such as surfboards or ski equipment, will increase on domestic and international flights, Delta said. (AP)

AT&T Inc., the biggest US telephone company, agreed to pay $16 million to settle a class-action claim that it underpaid pension benefits to some retirees, lawyers for the plaintiffs said. The agreement, which must still be approved by a judge, covers about 3,800 managers who accepted early retirement in 2000 under the company's Enhanced Pension and Retirement Program, Eli Gottesdiener, an attorney for the plaintiffs, said. The US Supreme Court last month refused to consider an appeal of a $31 million award against an AT&T pension plan in a separate case for improperly reducing the benefits of thousands of workers. Company spokesman Fletcher Cook didn't immediately return a phone call for comment. (Bloomberg)

British Airways PLC, Europe's third-biggest carrier, said it plans to merge with Spain's Iberia Lineas Aereas de Espana SA as slower economies and higher fuel costs wipe out earnings. The airlines are in talks about an all-stock transaction that would create a new company with two fleets and a dual listing in London and Madrid, the companies said. Iberia shares rose 21 percent in Madrid, giving the carrier a market value of $2.94 billion. British Airways climbed 6 percent. A deal would be the largest in Europe since Air France acquired KLM for $826.9 million in 2003. At least 24 carriers have stopped flying or filed for bankruptcy protection this year. (Bloomberg)