Despite his attempts at appealing to white working class voters whom he thinks will come to him because of his verbiage against trade deals and his promises about bringing manufacturing jobs back, Donald Trump faces a number of problems, several of which are explored in this piece from The Upshot blog, written by Robert Irwin and appearing on the New York Times website.
Irwin notes of Trump’s speech that
He’s right that the number of steel industry jobs — more precisely “iron and steel mills and ferroalloy manufacturing,” in government data-speak — is down by 44 percent in the Pittsburgh area since 1990, a span in which the United States entered the North American Free Trade Agreement and engaged in much more extensive trade with China.
The problem is, of course, that correlation is not the same as causation, and looking only at events in time without examining other factors can be misleading if not flat out wrong. And in this case, a further examination makes several things clear.
Irwin notes that even before NAFTA Pittsburgh was losing its steel jobs to two factors, only one of which was international competition. The other was the introduction of mini-mills
which allowed the production of steel with far fewer man-hours. Because of that and other technological innovations that improved productivity, total American steel output is about the same now as it was in 1990, even with far fewer workers.
But there is more.
The 5,100 steel production jobs lost in Pittsburgh are dwarfed by the 66,000 health care jobs gained in the same time span. Pittsburgh has often been viewed as the very model of a city moving beyond its heavy industrial history to find new prosperity in areas like health care, banking, and professional services.
Those who attended Netroots Nation in Pittsburgh did not see a dying city, but rather a vibrant city whose vibrancy was fueled by things other than manufacturing.
I would note several other things, not mentioned in the article. While Pittsburgh was the headquarters of the steel industry, when I was growing up in the 50s and early 60s it was not the largest manufacturer of still — Gary Indiana was. And as to Trump’s promise to rebuild our infrastructure with American steel, a key part of his speech? Well, his signature Trump Tower in New York City was built without using steel girder trusswork as would be expected in most skyscrapers, but rather with concrete, something that David Cay Johnston has argued was in part fueled by Trump’s relationship with a mob-controlled concrete company. For some of his other construction, Trump used imported steel because it was cheaper, and as should be well known by now, Trump always seeks to maximize his profit by controlling his costs, something he did by illegally using and underpaying Polish workers in building Trump Tower NY and in using the legal system to try and screw some businesses providing services to his company.
Trump is clearly running against Republican orthodoxy on this topic, and perhaps even to Clinton’s left. After all, he wound up quoting the Economic Policy Institute in his speech, an organization whose work I admire, but one normally in opposition to the policies promoted by Republicans in Congress and seeking the presidency. Irwin notes of those words
Notably, these were not off-the-cuff comments, but rather an enumerated platform scripted and read from a teleprompter.
Trump is also arguing against history. Note these words:
But in making the utter rejection of Nafta and normalized trade relations with China central to his campaign, Mr. Trump is evoking a different United States. Since peaking in World War II at 38 percent of all jobs, manufacturing employment has been on a steady downward trajectory almost continuously ever since.
Currently 8.5 percent of American jobs are in manufacturing. Anyone younger than 35 has never lived in a world where more than one in five jobs were in factories.
In fact, as of about 2000, nationally there were more jobs in education and health care combined than in manufacturing.
Yes, I know that people try to play games with statistics. There was a Republican administration which tried to count jobs at McDonald’s and other burger chains as manufacturing because they were “building the burgers” out of “raw materials” of patties, buns, onions, ketchup, etc.
The biggest single reason for the decline of manufacturing jobs was largely a technological advance pioneered in the US, but first used by our overseas competitors: robots. While converting a manufacturing facility to robotics requires a heavy upfront investment, over time the savings are immense — no additional pay for an overtime shift, no payment for benefits (which can represent a significant portion of the labor costs). In one sense our victory in World War II is partially responsible for the overseas competitors moving more quickly. We were still using older steel mills and manufacturing plants, while in many cases they had to rebuild their manufacturing capacity from scratch, using the latest (and thus often far more efficient) technology than American companies who shortsightedly continued to use obsolete but paid for manufacturing capacity to maximize profit in the short run. I would argue that our problems were exacerbated by the financial sector which overly emphasized quarterly profitability over long-term success, thus further distorting our ability to upgrade manufacturing capacity.
Still, despite that, the manufacturing sector, including steel, has modernized, which means as more productive methods are put in place far fewer jobs are required even as production increases.
It is somewhat similar with coal mining. Even were our domestic demand for coal not falling significantly, jobs disappeared as seam mining was replaced by mountaintop removal.
As Irwin notes,
America’s economy has kept growing because factory output has risen even as manufacturing employment has fallen.
Our factories are far more productive, which means they require far fewer workers.
The final two paragraphs of Irwin’s piece are worth pondering separately.
The penultimate reads like this:
As Mr. Trump faces a general election, the question is how much his message of economic nostalgia will resonate, particularly beyond the older Americans who mourn a lost age.
It is clear that for some older workers this change in economics is conflated with changes in the social structure and the ethnic composition of the country. Thus we see the appeal of racism, mysogyny, and anti-immigration screeds. Some people see their economic condition as worse, with less hope for their children. They see the other changes. It is easy to blame the other changes. But that also is mistaking correlation for causation.
There is another set of factors which have occurred at the same time. The legitimizing of uncontrolled greed, the unleashing of the power of the super-wealthy to distort the political process. And, oh yes, the destruction of the labor union movement.
If in fact people want to look back at a period of economic nostalgia, perhaps they should remember that the middle class was built in large part at a time of the greatest participation in private sector unions and the highest incremental tax rates in our history — under a Republican President named Dwight Eisenhower who also did our largest infrastructure commitment in building the interstate highway system, and who was committed to labor unions and Social Security and who very much wanted to roll back our wasteful commitments to military spending.
And then there is Irwin’s final paragraph:
In other words, it’s easy to see why the people who used to work in those 5,100 no-longer-existent steel jobs in the Pittsburgh area might vote for Mr. Trump. But how will he fare with those additional 66,000 health care workers? The answer may well determine the election, and the course of the United States’s economic relationship with the rest of the world.
Here I am going to quibble. As some know, several times a year I travel to Southwest Virginia, to the Appalachian part of the state, to volunteer in free medical/dental clinics. I remember being in Grundy, in Buchanan County (the state’s poorest), in October of 2010. All over I saw black signs with white letters saying “Boucher Betrayed Virginia Coal” because the longtime Congressman Democrat Rick Boucher had been willing to consider environmental issues. And yet — there were very few coal jobs in Buchanan County, or in adjacent counties like Russell, Tazewell, and Wise. Wise had a billion dollar coal-fueled power plant built by Dominion. But the coal for that was the result of mountaintop removal, which required very few jobs in the coal industry. Still, it was an effective ad.
Irwin is correct that the rhetoric of Trump in his speech yesterday represents a threat to our economic future, just as much as the rhetoric fueling Brexit may well have seriously undermined the British economy.
One can only hope that the various pundits, those who interview Mr. Trump, and especially those who ask question during debates, will drill down on these issue.