Can President Trump rescue the Rust Belt?
He promised to reverse the decades-long decline of manufacturing jobs. Can it be done?
President Trump promised to reverse the decades-long decline of manufacturing jobs. Can it be done? Here's everything you need to know:
Why is the Rust Belt hurting?Once the booming heart of America's manufacturing industry, the Rust Belt is now dotted with derelict factory buildings, empty warehouses, and struggling downtowns filled with pawnshops and boarded-up stores. The region, which stretches from western New York to Pennsylvania, Ohio, Michigan, Indiana, Illinois, and Wisconsin, has been in serious decline since 1979 — the year that U.S. manufacturing employment peaked. Over the past four decades, manufacturing jobs have plunged by 7 million as factories have downsized, closed, and outsourced work to low-wage countries such as Mexico and China. Young people have fled these blighted communities, and amid poverty and hopelessness, a growing number of those left behind have turned to opioids and other drugs to cope. In 2016, much of this once heavily unionized region flipped for Trump, who promised to "remove the rust from the Rust Belt" by renegotiating trade deals and slapping tariffs on imports. "We will stop these countries from taking our jobs," Trump said while campaigning in Erie, Pennsylvania. "I promise we can fix it so fast."
What does Trump intend to do?Trump already claims credit for pressuring several companies, including Carrier, to keep or create jobs in the U.S. In November, the Indiana air-conditioning manufacturer announced it would choose not to move 800 jobs to Mexico, in exchange for various economic incentives. But even if Trump made similar deals every week for the next four years, he would bring back only 4 percent of the manufacturing jobs lost since 2000, according to a New York Times analysis. On a broader level, Trump has floated the possibility of tariffs and import taxes of 20 to 35 percent on products made in Mexico, China, and other countries. Calling trade deals "the greatest jobs theft in history," the president has also vowed to renegotiate NAFTA.
Will these policies work?Few economists think so: The reality is that trade deals have played only a small part in the Rust Belt's decline. The U.S. lost half its manufacturing jobs before 1994 — the year NAFTA took effect, and seven years before China joined the World Trade Organization. The much bigger culprit in job loss was the one that has taken the "man" out of manufacturing: automation. About 85 percent of the 5 million factory jobs lost between 2000 and 2010 can be blamed on technology and robots, according to a Ball State University study (see below). That's why virtually all economists agree that bringing back millions of lost jobs is unlikely. "Trump deserves credit for taking seriously the anxieties and anger and frustrations in these communities," said Mark Muro, a specialist in economic development at the Brookings Institution. But Trump's promise to bring back millions of jobs is a "pipe dream," he says — and could backfire.
Who could be hurt?If Trump adopts a protectionist trade policy, it would likely result in retaliatory tariffs on U.S. exports to Canada, China, Mexico, and other countries. A trade war would badly hurt American farmers, who get 30 percent of their revenue from exporting produce and meat abroad. Major U.S. corporations derive 40 percent of their profits from foreign sales and would have to lay off workers if there were a trade war.
So are Rust Belt workers doomed?Not necessarily. But economists agree they do need to be retrained for the new manufacturing age, which requires workers who can program and operate computers and robots. The U.S. will need to fill 3.5 million skilled jobs in specialized manufacturing over the next decade, according to a 2016 White House report. To help fill that demand, the Trump administration could create training programs that connected community colleges to local companies. Another job-growth area is health and educational services, with positions for nurses, health-care aides, and teachers; that sector grew 43 percent in several Rust Belt states between 1996 and 2016. But the potential for service jobs and manufacturing retraining is limited: Many blue-collar men in their 40s and 50s see service jobs as "women's work," and are intimidated by the idea of being retrained to operate computers. For that reason, some social scientists have offered a more drastic solution.
What's that?Relocation. Henry Olsen, a senior fellow at the Ethics and Public Policy Center, says lawmakers should pass a New Homestead Act that would subsidize people who want to leave the Rust Belt for booming urban areas like Houston and Los Angeles. In these areas, job growth is brisk. A Brookings study of a similar relocation experiment from the 1990s, known as "Moving to Opportunity," found that poor families who relocated with help from the Department of Housing and Urban Development often ended up happier and healthier than families who stayed behind. Many of the Rust Belt's historic steel towns and manufacturing hubs simply cannot be saved, says Galen Newman, assistant professor of urban planning at Texas A&M. "I think we're going to have to let some of them go," says Newman.
Why robots replaced peopleContrary to rumor, U.S. manufacturing is not in decline. The value of goods manufactured in this country hit at all-time high last year. But because of automation, it takes far fewer employees to make those goods today than during the Rust Belt's golden era. Today, for example, a spot-welding robot in the auto industry costs the employer $8 an hour, compared with $25 for a worker. And robots are getting more sophisticated every year. One such machine from Universal Robots can solder, paint, screw, glue, and grasp items — and even repair itself when damaged. "A steel mill like we have here, 20 years ago, it would have to be run by 5,000 or 6,000 people," says Ohio State Sen. Sean O'Brien. "Now it's 800 people, because of automation." As technology becomes ever more sophisticated, job losses will grow, not diminish. A 2013 study projected that as many as 47 percent of U.S. jobs could be lost to automation and robots over the next two decades.