We are finishing a decade of extraordinary growth in productivity and wealth around the world. The benefits have not been equally shared, and this causes anxiety and contention in some constituencies. I believe we need to address the issues of inequality and of providing opportunities to all to participate in the benefits, while at the same time resoundingly endorsing the beliefs and practices that have given rise to these extraordinary gains in well being.
The fact is that productivity has been expanding in the best companies internationally at rates higher than governments recognize generally. In the case of United Technologies Corporation, the rate has been five percent annually or more for a decade. I know why, which is that we and countless companies like us paid more attention to products and innovation than we did to process and production costs and quality, for decades prior to around 1990. Then we went at productivity and quality with a vengeance in the 1990's and with great success, fundamentally incorporating Japanese methodologies. The result in UTC's case alone is a company 20% or more larger in physical volume but with a workforce 25% smaller.
At the same time, the movements of goods and investments around the world have been accelerating at startling rates. Foreign direct investment may have declined in 2001 (when the statistic is available) but it's a fact that FDI grew at 17% annually in the dozen years before 2001, increasing seven fold over this period. Foreign trade grew 7% annually over the same period, more than doubling.
The result has been a challenging environment for workers everywhere and especially in the United States. Economists measure labor mobility in part through a statistic called displacement rate. The Bureau of Labor Statistics reports this for the United States and at about a 4% rate annually. The definition is separations initiated by employers but only of persons employed for three years or more. The U.S. workforce today is about 140 million people, about half of the total population, so these displacements total a little over five million jobs annually. One reason why globalization is such a contentious topic in the U.S. is that our displacement rate is in the range of ten times what it is in Europe, Japan and a good many other countries.
Yet at the same time that our displacement rate is higher our unemployment rate is lower and our rate of job creation much higher. The fact is that we have had a huge productivity engine for a decade, and labor mobility has been perhaps the greatest force in this. We like the benefits of tens of millions of new jobs and the incomes and wealth that come from productivity. What we don't like is the uncertainty that comes with potential displacement.
The assertion which is often made that jobs are lost to imports reflects this displacement anxiety. It is also flatly misplaced. The fact is that most jobs are lost to competition and productivity internal to any economy. On the numbers in the United States, these internal losses are about 90% of all jobs displaced, with losses to trade the other 10%.
We also focus on only half of the equation when we target jobs lost to imports. The remainder of the equation is the much more important part. May I recite UTC's experience which is really persuasive. First we're in our nation's top twenty exporters with about $4 billion in exports. We're also a big net exporter, with exports five times or more higher than imports. Most important to this discussion is that our exports are our economy's highest technology products and are essentially all aerospace equipment. Economists tell us that the wages in U.S. exports average 15% or more above the U.S. manufacturing wage, and in the case of UTC the difference is more pronounced still. Specifically, Pratt & Whitney's average manufacturing wages in the United States is $24.12 per hour and is 65% higher than the average for all U.S. manufacturing.
Take our nation's trade in manufactured goods with emerging markets. This is the target of the anti-globalists. It's about a third of all U.S. imports. But what's lost in the rhetoric is that we send an essentially like amount of exports to these same emerging markets. These exports are invariably high wage and high value added work, where the embedded wages in the imports are often as low as the $2-3 per hour range. In fact, think about the specific rhetoric of the anti-globalists: the concern for the alleged race to the bottom and jobs lost to low wage imports. I represent that instead this is exactly what we want. The fact is that foreign trade over the long term has to be essentially in balance, in other words we will export in like amounts to what we import. What we want is more of the high wage work in the exports and less of the low wage work in the imports. How better to drive up the well being of the nation?
There are obligations on employers that go with these free trade and labor mobility arguments. The essential one to me is always to prepare the workforce for higher value added and therefore higher wage work. It's the only credible counter to the charge of migration of work to low wage countries. I like our record here, it's revealing and persuasive. Six years ago United Technologies started what we call our Employee Scholar Program. It is the best set of benefits in the world to encourage employees to go back to school for college and advanced degrees. We pay all tuition and related costs. We provide paid time off from work, up to three hours weekly, which is more than three weeks annually. We don't limit coursework, you can be an engineer and study law or an hourly paid employee and study English literature or a foreign language. We recognize degree attainment in the United States with $10,000 worth of common stock of United Technologies Corporation, and scaled to prevailing wage rates elsewhere.
Most persuasive are the results. Since 1996, employees have earned more than 9000 degrees. We have invested $275 million in their futures. Fifteen percent of the U.S. workforce is presently enrolled in coursework, almost 12,000 employees. More than a quarter of the participants are hourly paid employees. Almost half of the degrees are advanced level. The program extends internationally, with 2000 participants outside the United States. Degree attainment is far flung, for example, 45 in China, 18 in Colombia, 3 in the Czech Republic, 61 in Korea, 19 in South Africa, 4 in Indonesia, and one each in Zimbabwe, Brunei, and (yes) Afghanistan.
UTC steps up to global standards. Critics say multinationals export unsafe or polluting work. Emphatically not so. We were early among American corporations to adopt globally uniform environment, health & and safety standards, in 1994. Many have followed since. The fact is that you won't find a different work practice or standard anywhere in our company, and this is the only way any one of us can come to work and hold up his head each day.
The Clinton Administration in 1995 called for Model Business Principles as a potential code of conduct for American multinationals. The elements were the right ones: (1) safe and healthy workplaces, (2) rights to organize and bargain collectively, (3) responsible environmental practices, (4) compliance with law, and (5) good citizenship broadly defined. Although not adopted, UTC at the time supported these principles and still does.
Productivity and globalization are the engines for better lives. But they must be tempered with responsible practices that reinforce opportunities for all and guarantee basic and essential rights. Free trade, free investment flows, and labor mobility are essential to generating productivity and incomes for all. Guaranteeing opportunities and providing basic protections are the offsets and should be readily and freely offered. This equation works. The only requirement on employees is their willingness to rise to the challenges of making themselves better every day.
Our world is not about a race to the bottom, it's in fact directly the opposite, a race to the top.
