The description of Who is Donald Trump
A cornerstone of the Donald Trump candidacy was the loss of jobs in Middle America to foreign competitors. There is no denying that, over the last 50 years, U.S. manufacturing jobs have been lost, factories have been shuttered, and jobs in major industries such as the coal industry have rapidly disappeared. Rust belt towns have been affected from job losses and underemployment, and incomes for many Americans with jobs have not kept pace with living costs.
But what was not understood in the clamor of the campaign was that many of these jobs would not come back because they were, in large part, never lost to foreign competitors. The emphasis by the Trump Administration on dismantling foreign trade agreements may not fully achieve the stated goal of creating millions of new jobs for Americans. The truth is, solving the foreign trade issue would likely only produce an insignificant increase in new jobs. Other initiatives need to be undertaken to create new jobs here at home.
Where Did the Jobs Go?
Workers today produce twice as much manufacturing output as their counterparts did in the early 1990s, and three times as much as in the early 1980s, thanks to innovation and advances in technology that have made today’s workers the most productive in history.
Since 1975, manufacturing output has more than doubled, while employment in the sector has decreased by 31%. While these American job losses are indeed sobering, they are not an indication of declining U.S. competitiveness. In fact, these statistics reveal that the average American manufacturer is over three times more productive today than they were in 1975. The auto industry produces as many cars as it did decades before but with nearly two-thirds fewer workers. Automation and production efficiencies are key reasons for the reduction in U.S. manufacturing jobs.
Our employed labor supply has increased—older Americans are holding on to jobs instead of letting younger workers take them, partially because Social Security is not providing an adequate retirement living standard. Another factor is concern about the solvency of Medicare and the high out-of-pocket cost of drugs for cancer and other illnesses. Americans’ average self-reported age of retirement has slowly trended upward. According to a Gallup poll, from 2002 through 2012 the average retirement age hovered around 60. Over the past two years, the average age at which Americans report retiring has increased to 62. With nearly 60 million Americans over age 60, a retirement age shift of a year or two prevents millions of jobs from becoming available to younger workers.
There is no doubt that global trade agreements such as North American Free Trade Agreement (NAFTA) and the Korean Free Trade Agreement (KORUS FTA) have cost jobs. As to the net effect of NAFTA, the net loss of jobs is actually lower than most people believe. In total, 116,400 U.S. jobs were displaced between 2007 and 2010. Thus in a world without NAFTA there would have been 116,400 more available positions in 2010 in the United States, which equates to less than 0.1% of the U.S. labor force.
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China is the most visible recipient of U.S. jobs. Manufactured goods imported from China would have surged substantially even had China not joined the World Trade Organization (WTO)—the development that Donald Trump claims “enabled the greatest jobs theft in history.” According to Brad DeLong, professor of economics and chief economist of the Blum Center for Developing Economies at the University of California, Berkeley, “The best estimate is that because China joined the WTO, the U.S. has 200,000 more jobs in manufacturing industries that export to China, and 500,000 fewer manufacturing jobs in industries where China exports to the U.S. The net loss is 300,000. That represents 0.22 percentage points of the U.S. labor force.”