Trouble on the Horizon for the Trump Administration – Part 4: Jobs

One could make good argument that it was Donald Trump’s promises to increase American jobs, and especially to protect manufacturing jobs, which were critical to his election victory.  Clearly those were his best selling points in the critical states of Michigan, Wisconsin, and Pennsylvania.  Ironically, those are the promises, among the many that he made during the campaign, which he is least likely to be able to keep.

Even while the total number of jobs has been increasing steadily in the US under President Obama, we are still losing manufacturing jobs.  Last mouth while the economy added 178,000 jobs, we lost 4,000 jobs in manufacturing.  While Trump may be able to strong arm a company or two and keep them from relocating their manufacturing plants in other countries (if the Vice President-elect throws in enough sweeteners), but he won’t be able to stop the majority of the manufacturing jobs from being outsourced in the future to countries with low labor costs.  And he definitely will not be able to do anything about the biggest manufacturing job killer by far, automation.

While it is true that our country has lost 5.6 million manufacturing jobs, 85% of those jobs were lost to automation and other technological innovations according to a study by the Center for Business and Economic Research at Ball State University while about 13% were lost to outsourcing.  For instance GM now employs only one third of the number of workers than were on its payrolls in the 1970’s, but the company now makes many more trucks and cars.  With automation American workers are growing more productive so fewer of them are needed and in the future their jobs will likely be taking care of the robots that do the real work.  Donald Trump cannot stop, or even slow down automation.

As wage rates increase in other countries, and because of automation, manufacturing plants lost to foreign countries are starting to return to the United States, but the manufacturing jobs have been lost forever.  Here is one example from an article in Robot News (a trade magazine), “Michigan electric toothbrush maker Ranir just brought back one fifth of their toothbrush production from China to their facility in Grand Rapids…(in this new factory) they make 13,000 toothbrush heads a day for retailers like Wal-Mart,, Target, and Walgreens.  How many jobs were created?   Not four thousand, not four hundred. Four.”

So Trump will not be able make good on his promises to increase good paying manufacturing jobs.  In fact, with automation we will not be able to keep the manufacturing jobs we have now.  In addition, on the overall job front it will be very difficult to maintain the US unemployment rate have today for the next four years, much less lower it.

The latest job report for November 2016 indicates that unemployment in this country has dropped to 4.6% (a nine year low) and last month the number of jobs increased by a net 178,000, the 81st month of consecutive job increases under President Obama. (Please recall that in October of 2008 employment had declined for the 10th month in a row, dropping by another 240,000 jobs in October alone, and bringing the total number of job losses to 1.2 million since the great recession began in December 2007.)

However, one cannot expect for that trend to last much longer or for unemployment figure to get much lower.  Most economists define full employment as an unemployment rate of between 4% and 6%.  The economy is self balancing.  Once the unemployment rate goes lower, inflation sets in and usually a recession is not far behind.   (I’ll cover that topic for another future segment.)  Note that since January of 1970, unemployment dipped below 4.6% during only two periods – February 1998 through June of 2001 and July of 2006 through July of 2007.

So let’s skip forward three years from today.  Unless he is totally disillusioned with the job and anxious to get back to the world of real estate and sexually groping women with impunity, Donald Trump will be preparing his second run for President.  He may have Republican opposition in the primaries or he may be trying to figure out which of the Democratic candidates he will be facing.  One thing for sure, his political advisors will be strongly suggesting that he not say a word about the lack of job growth during his term in office or how he was unable to save manufacturing jobs.

On the other hand I can almost guarantee that his opponent(s) will have a lot to say about jobs and will have plenty of statistics to back up their arguments.  Of course, Trump is sure to employ lies in his defense, but this time workers in Michigan, Wisconsin, and Pennsylvania won’t need statistics and won’t be taken in by Don the Con again – they will have experienced the truth in their own lives.

Cajun      12/21/2016



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