Trump Can’t ‘Bring The Jobs Back’ — Here’s Why.
The old adage goes: “How can you tell if a politician is lying? Answer: Their lips are moving.”
While countless politicians in every country around the world have told their own versions of “The Truth,” there is a huge difference between making false campaign promises/accusations and standing up at your Presidential inauguration, placing your hand on a bible, and making statements to the public that you know (or ought to) are flat out lies.
Here’s what happened: On January 20, 2017, shortly after taking the oath of office as President of The United States, Donald Trump turned to the TV cameras and gathered crowd, and said:
“We’ve made other countries rich while the wealth, strength, and confidence of our country has dissipated over the horizon. One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind. “
“We will bring back our jobs… We will get our people off of welfare and back to work rebuilding our country with American hands and American labor. We will follow two simple rules — buy American and hire American.”
Here’s the problem with that, it’s just not true, it’s not even possible. Let’s unpack the statements by looking across a few industries specifically:
MANUFACTURING:
Since President Trump highlighted “factories shuttering” we’ll start with that. First of all, between 1990 (when NAFTA was enacted) US manufacturing employment actually increased. Then at the turn of the millennia something drastic changed in manufacturing: affordable automation. Between 2000 and 2016, it is true that the US lost 5 million manufacturing jobs, however that can be divided into three sub-categories (source:US Bureau of Labor Statistics):
- The Economic Policy Institute identifies that 1.4 million of those jobs were lost specifically during “The Great Recession” between 2007 & 2009 when global demand plummeted bringing down US Manufacturing output. (a total of 2.3 million jobs were lost between 2007 / 2009, but 900,000 of them have been recovered) However despite there being 1.4 million fewer jobs than before the recession, US manufacturing GDP output is actually UP by 11% (source: US Dept of Commerce).
2. Of the remaining 3.6 Million manufacturing jobs lost between 2000 and 2016, an estimated 88% of them were lost to technology not trade (source: report from BSU Center For Business and Economic Research). These are the manual labor jobs that for cost, safety, quality or efficiency reasons have been replaced by robots. It would be nearly impossible to convince the US Manufacturers to turn off their robots and bring back the unionized labor workers they replaced.
China didn’t steal our jobs, automation did.
President Trump said, “We must protect our borders from the ravages of other countries making our products, stealing our companies and destroying our jobs.” — The only problem is that China didn’t steal our jobs, automation did, and it’s about to get a lot worse.
3. That leaves just 12% of the jobs lost, which were not the victims of automation or depleted demand, which truly did likely move internationally. The problem with globally sourced manufacturing jobs is that they typically service global customers. Much like the rest of the world, the US Economy has globalized substantially over the past 30 years. The bulk of US-owned international manufacturers are now earning the bulk of their revenues from international markets. This varies from sector to sector, but in the case of consumer electronics manufacturing, 70% of their revenues now come from these international markets. In the case of auto parts & equipment more than 65% of the top companies’ revenues are sourced internationally.
For example, GM now manufactures more vehicles in China than in the USA, but none of the vehicles built so far have been for the US market. It’s important to note that GM just started importing their first China manufactured car -the Buick Envision- for sales in the USA in 2016, which will likely open the floodgates and drive another nail into the coffin of Detroit and the UAW. Similarly, Ford’s manufacturing operations in China and Thailand, build over 1 million cars annually for 180 markets around the world (excluding the USA). None of those jobs could reasonably be moved “back” to the United States without the companies taking massive losses. In fact our system of quarterly growth pressures for the country’s biggest publicly traded companies specifically incentivizes them never to do this.
RETAIL:
The physical retail sector has suffered badly in the past 10 years, and it’s only going to get worse. Despite the fact that personal consumption expenditures have grown in the USA by $1 Billion since 2000, retail jobs are down by more than 400,000 jobs. In fact, 44,000 of those jobs were lost in the first half of 2016 alone. So if consumers are spending more, then where are the jobs going? Not to China or Mexico, but to Costco and Amazon.
While Amazon has announced plans to hire 100,000 more people in 2017, most of those employees will be working warehouse jobs in their distribution centers (where journalists have reported on the “hellish” working conditions (source: Mother Jones). What that doesn’t explain is that for every job created at Amazon, another two to three physical retail jobs are killed. The transition stems from the rapid migration of consumer spending from brick-and-mortar stores to online, mobile and Amazon “Alexa” powered purchases.
None of these jobs are coming back anytime soon. There is nothing the President of the United States could say that would convince people not to shop online at 2 o’clock in the morning, and wait instead to schlep to Bed Bath & Beyond the next afternoon.
According to an analysis of Bureau of Labor Statistics, Retail Sales Clerk is the #1 most common job in 42 states across the country, with Cashier being the most popular in 4 more states. This serves as a warning to how devastating this transition is going to be.
AND MANY MORE…
The same study by BLS showed that there are currently more than 2 million truck drivers across America, not counting couriers, Amazon delivery drivers, etc. All of these jobs are ripe to be disrupted by the billions of dollars being spent on autonomous trucks and delivery vehicles (including $4 billion in research grants by the government)! The potential for safety and efficiency improvements make this an area that would be very difficult for President Trump to put the brakes on.
Similarly in farming, the number of agriculture jobs in America have dropped massively, despite record gains in output. In the 19th century more than 50% of Americans worked on a farm, but by the year 2000 that was down to just 1.9%. The USA has actually run a trade surplus in agricultural products every year since 2000, despite the fact that the number of jobs are dwindling. Why? Automation. Today’s GPS controlled autonomous combines, and drone-based crop sensors allow a single farmer and a few crop-hands (just don’t check their immigration papers) to manage thousands of acres. In 2014 Farming was still listed as the most common job on the US Census in just two states (North and South Dakota) down from eight states in 1978. The US Department of Agriculture estimates that more than half of all agricultural crop workers in America are undocumented or unauthorized immigrants. If the majority of crop worker jobs have been automated, and the remainder are so difficult and low-pay that American workers don’t want to do them, then how can the President count on Agriculture to be the driver of his “Buy American and hire American.”
SO WHAT THEN?
Historically, inaugural speeches have been filled with the themes of hope and unity. Mr. Trump chose to break with that tradition painting a very bleak picture of the “American Carnage” and the “disrepair and decay” that the country has fallen into. However, what I really take issue with is not his portrayal of the state of the nation, but rather the trajectory. He clearly has advisers around him who know well all of the above, but he chose instead to pretend these facts doesn’t exist.
What America desperately needs today (and to be fair, neither party has been doing this) is clear and honest talk about the impending implosion of the job market. The country needs leaders who have the guts to tell it like it is, but also the vision to craft a direction for the country to survive it. Fleecing the general public with visions of an evil China, and dreams of bringing back factory jobs won’t help anyone. It’s time for some straight talk, but unfortunately I just don’t see that happening.
