Trump’s corporate-friendly trade, tax, and labor policies betrayed manufacturing workers in Midwest: Study
September 28, 2020 Common Dreams
Manufacturing workers in four crucial Midwest states that President Donald Trump won in the 2016 presidential election have been hurt the most by the Trump administration’s trade and industrial policies.
That’s according to a new analysis—titled “Promises Unfulfilled: Manufacturing in the Midwest,” released Monday by The Century Foundation (TCF) and Policy Matters Ohio, with support from The Groundwork Collaborative—which adds more evidence that, contrary to the White House’s proclamations that the president successfully ushered in a revival of manufacturing jobs, Trump’s trade and industrial policies have been bad for U.S. workers.
In their analysis of job and wage growth trends since 2000, researchers found that even before the Covid-19 pandemic wreaked havoc on the economy, the manufacturing sector in Michigan, Ohio, Pennsylvania, and Wisconsin had already entered a recession, which they attribute to Trump’s “disastrous trade war with China, weak trade negotiations with other countries, and policies that favor multinational corporations that manufacture overseas.”
Although the study focuses on the negative impacts of Trump’s tax, trade, and labor policies on manufacturing workers and their communities in the Midwest, the report’s authors are clear that the problem of industrial decline did not begin with the Trump administration.
“For too long, big, multinational corporations pushed some of our elected leaders to embrace harmful trade liberalization polices,” the report states. “These policy choices enabled corporations to shed one million manufacturing jobs in Pennsylvania, Ohio, Michigan and Wisconsin over the last three decades,” leading to “deindustrialization so severe it shrunk once thriving Midwestern cities.”
The analysis shows that while growing recognition in the past few years of the economic hardship caused by factory closures and the offshoring of production has spurred calls to bring back good-paying manufacturing jobs, the trade and industrial policies implemented by the Trump administration “have failed to reduce manufacturing job declines.”
In fact, more than 300,000 jobs in the U.S. have been lost to offshoring during Trump’s presidency, according to the Department of Labor. Earlier this year, the Economic Policy Institute estimated that the total loss of jobs due to the worsening trade deficit with China was much higher—700,000 lost to China alone in 2017 and 2018.
Trump and the Republican Party even incentivized offshoring. As a report (pdf) by the the Institute for Policy Studies explains, the Tax Cuts and Jobs Act of 2017 “cut the overall corporate tax rate from 35 percent to 21 percent,” while slashing “corporate taxes on foreign profits from 28 percent to 10 percent.”
The report focuses on three case studies, each one highlighting how Trump’s tax, trade, and labor policies hurt manufacturing workers in the Midwest despite his administration’s promises to revive to the once-thriving industrial heartland.
A project by electronics company Foxconn in Racine, Wisconsin “failed to deliver on jobs promises despite a record $4 billion subsidy,” underscoring “the problem with tax giveaways as economic development strategy.”
General Motors’ decision to close its assembly plant in Lordstown, Ohio in favor of offshoring production to a Mexican factory where labor is cheaper “shows how trade policy continues to facilitate the transfer of quality jobs to low-wage suppliers and does too little to protect workers on either side of the border.”
When workers at Fuyao Glass in Moraine, Ohio tried to form a union, the company successfully crushed their attempt, demonstrating “the need and failure to enforce existing labor protections.”
“President Trump promised a blue collar resurgence,” said Mike Shields, a researcher at Policy Matters Ohio, a nonprofit research institute, and co-author of the report. “But data show the manufacturing sector entered a recession, deepening pain in the Midwest, even before the Covid-19 pandemic and recession. There has been no manufacturing recovery in the Great Lakes region.”
According to the study, “manufacturing job growth declined more in Michigan, Ohio, Pennsylvania, and Wisconsin than the rest of the country” under the Trump administration. While manufacturing employment in the rest of the country increased by 0.7%, these jobs in the Great Lakes region decreased by 0.5% in 2019.
All of the states being examined have a trade deficit in their 10 biggest export industries, all of which are in the manufacturing sector. During Trump’s time in office, the deficit has grown in eight of the 10 major export industries in these four states, according to the analysis.
For example, plastics and rubber manufacturing, a significant economic activity in Ohio, experienced a decrease in exports from 2016 to 2019 and now has a larger trade deficit.
“With good policy, the manufacturing sector can be a source of more equitably shared prosperity,” the report notes, pointing out that “manufacturing workers with a high school diploma or less earn a wage premium over their counterparts in other sectors,” and sometimes the premium is higher for workers of color.
However, as employers use tactics like union busting, offshoring, and outsourcing to drive down wages, the premium decreases for the sector’s employees, hitting women and nonwhite workers with manufacturing jobs especially hard.
Although people who work at manufacturing jobs in the Great Lakes region are still paid more than their counterparts who work in other industries, the wage premium has shrunk from $3.72 in 2000 to $2.74 in 2019. For women, the premium is $0.88 compared to $1.81 for men, and the premium is lower for African-American ($1.46) and Hispanic ($0.93) workers than it is for white ones ($2.88).
“Manufacturing has long been the economic backbone of the Midwest economy and it can thrive again,” said report co-author Andrew Stettner, a senior fellow at TCF, a progressive think tank. “We need strong leadership to negotiate trade with other countries and trade policies that serve workers, not multinational companies that send jobs overseas.”
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