Michael Hicks: The big jobs lie of the 2016 campaign
Thursday, May 12, 2016 9:45 AM
MUNCIE – A primary election has just passed and Sen. Sanders and Mr. Trump both won comfortably with some version of a promise to “bring back jobs and manufacturing to America.” Voters clinging to this hope need to steel themselves for a letdown. Here’s why.
No matter how you measure it, 2015 was the record year for manufacturing production in the USA. Right now manufacturing in Indiana and the USA is at record levels. There’s no ambiguity on this. I think inflation-adjusted dollars are the best measure, but in any available metric we are at record manufacturing production. We’re just doing it with far fewer workers.
Indiana has lost a quarter million manufacturing jobs since our peak year of factory employment back in 1973. The USA has lost 7.5 million manufacturing jobs since 1977, the national peak for manufacturing employment. These are simple facts deviously hidden in every public library in the country and on the internet accessible by the 550 million smart phones and computers in use in America.
Did NAFTA cause these job losses? Well, NAFTA was implemented in 1994, so if Bernie and the Donald are to be believed, American firms must have anticipated NAFTA by some 20 years (so much for all that short-term thinking on Wall Street). Moreover, in the 40 years since peak manufacturing, Indiana has created more than 1.4 million non-manufacturing jobs and the U.S. roughly 75 million jobs.
To be sure, our trade deficits have cost us manufacturing jobs. The high-end estimates are that today we have 1.5 million fewer manufacturing jobs across the nation because of foreign trade. All the other 6 million or so lost manufacturing jobs are due to mechanization, better technology and better production practices. Today’s typical factory workers make twice as much “stuff” in an hour as they did in 1977.
For every manufacturing job lost to trade, nearly nine have been lost to machines. But trade also creates jobs. We have 7 million more transportation and logistics jobs alone, likely attributable to trade since the 1970s. But that is sophisticated analysis, and this is a column about Sanders and Trump, so I’d better stop there.
Quite simply, for every manufacturing job lost since the 1970s, we have had 10 created elsewhere, and for every job lost to trade we have 100 more jobs created elsewhere. This analysis isn’t fancy econometric modeling or theory. It is simple data and middle school algebra. Every campaign knows it well, and every voter should.
The “bring jobs back” promise is simply a lie. It isn’t factory workers in Juarez or Beijing who’ve stolen factory jobs. The folks with master’s degrees in robotics working in Palo Alto, Calif., that have taken those jobs. The only way to get those jobs back is to adopt Bernie’s energy policies, which will leave many places without electricity.
There may be non-economic reasons to support these candidates (a Syria invasion perhaps, or heat-free Tuesdays in February), but Hoosier voters looking for a return to the 1960s factory scene richly deserve the bitter and lasting disappointment that awaits them.
Michael J. Hicks, PhD, is the director of the Center for Business and Economic Research and the George and Frances Ball distinguished professor of economics in the Miller College of Business at Ball State University.