On January 27th, the White House announced a Manufacturing Jobs Initiative as part of the job creation agenda. Fresh off a campaign pledge to create 25 million jobs over the next 10 years, President Trump has made it evident that he intends to keep his campaign promises. Unfortunately, this manufacturing initiative will yield short term results that created long term negative consequences.
President Trump’s regressive initiative to revitalize the manufacturing industry is a romanticized 1950’s era dream. America is no longer in the throes of an industrial revolution within an isolated national economy. The U.S. will most likely never be the manufacturing powerhouse it once was, and most would argue that isn’t a bad thing. We are moving away from manufacturing and towards service and high-tech industries that are rich with diverse opportunity.
Just look at the manufacturing under the Obama administration. One of Obama’s second term campaign promises was to create 1 million manufacturing jobs; however, according to the Bureau of Labor Statistics this number peaked at 315,000. While this goal was not reached in the manufacturing sector, the overall unemployment rates dropped to 4.6 percent – the lowest it’s been since 2007. These numbers show that manufacturing isn’t the sector with the most promise for job growth.
Although manufacturing is a key part of the economy – over 12 million Americans are employed in this industry and 5,000 jobs were created in January – it is wise to exercise caution when manipulating the economy in an effort to bring back the additional 5 million manufacturing jobs that were lost.
There are still great US based manufacturing companies that remain competitive through the strong collaboration of R&D and production departments: Boeing, GE Aviation, Rockwell Collins, Intel, Tesla, and Corning are all pioneering examples.
If staying domestic does indeed prove fruitful for some industries, it will occur naturally within markets – instead of with stifling anticompetitive legislation and import tariffs. This means where there is a strong need for close interaction between product design and production as well as for a tight supply chain
Trump’s initiative is a classic case of isolationist tendencies that lead to protectionist trade policies- subsidizing our failing industries and placing tariffs on competing foreign imports. Recent instances of this are the protections of American steel under the Bush administration and American tires under the Obama administration. Both failed.
A 2003 study by Dr. Joseph François and Lauren Baughman found that Bush’s steel tariffs increased consumer costs, reduced US production of steel, and decreased employment in other industries. While a 2017 study by The American Enterprise Institute found that Obama’s tire tariffs cost consumers $926,000 per job saved and with every factory job saved, three retail jobs were lost.
Opposing protectionism initiatives looks bad in the short run, as seen in the notion of “stolen jobs.” However, protectionism is more detrimental in the long run because companies can’t keep up with industry competition abroad, can’t export their goods and services, and eventually have to sell off or fold entirely, as seen more recently in the automobile industry.
There is a disconnect between this initiative and global supply chains. Other countries create products in the U.S., employing thousands of Americans. Japan is prime example, according to NPR about 75 percent of the Toyota Camry is produced in the Kentucky and Indiana. Japanese produced but American made. The Manufacturing Initiative may put these kinds of jobs at risk.
In the moment, this never looks like the essential innovation that is actually occurring. It merely looks like job destruction. Change is painful, but opposing change by developing deals and enforcing new mandates will have adverse effects on our ability to stay relevant in the global economy.
So how do we encourage job growth in all sectors? A more viable solution is to find markets for these former manufacturing workers to thrive as well as building a highly-skilled workforce. To accomplishing this, we must build a strong foundation with better education and the closure of the digital divide. This involves preparing the next generation with more computer training in K-12 schools, increasing vocational schooling, and adopting a strong apprenticeship system to build a high trade skill workforce.
According to the New York Times, there is a strong need for middle-level trade workers, tech-related workers, warehouse employees, and engineers. Regardless, unemployment rates are low because Americans are adapting to the changing economy because we are filling the roles we need.
If the Federal government wants to “juice” job creation and our global economic advantage, Trump should instead focus on intervention in education and market niches that provide long term prosperity. We must ask ourselves where we want our country to head in the next four generations, instead of the next four years.