Can President Trump bring back manufacturing jobs?
When Donald Trump announced a campaign stop in Erie, Pennsylvania in August, it seemed like an unusual move. The blue-collar community on the shores of Lake Erie had not voted for a Republican presidential candidate since Ronald Reagan in 1984. For decades, labor unions endorsed Democratic candidates and their members voted in step.
But the landscape in Erie was changing. Well-paying manufacturing jobs that once sustained families in the region were disappearing. Residents were leaving in search of better economic prospects.
General Electric Transportation, once Erie’s largest employer, began the election year by shedding 1,500 of the 4,500 jobs at its locomotive plant that paid, on average, a comfortable $34 an hour. Over the past three years, the company had gradually shifted production to a non-union facility in Fort Worth, Texas in an effort to minimize costs and keep up with global competition.
Erie, along with dozens of other manufacturing hubs along the Rust Belt, have seen seismic shifts as technology has quenched the demand for manual labor on factory floors. Companies like GE that once sustained the region have either cut jobs, or closed entirely, in recent years. Since 1990, Erie County has lost 16,000 manufacturing jobs, representing 44 percent of the industry there. In the year leading up to the election, unemployment in Erie rose from 5 percent to 7 percent.
The anxiety and excitement was palatable at the ice hockey arena when Trump took the stage in Erie. His calls to lower taxes and punish companies from leaving the United States were greeted with thunderous cheers. Bucking conventional wisdom about America’s economy, Trump promised to renegotiate trade deals and “bring back” jobs that many economists say have been lost to automation.
“Erie has lost a lot, right?” Trump said. “Hang in, don’t leave. I promise we can fix it so fast. We will stop these countries from taking our jobs. We will stop these countries from taking our companies.”
On Election Day, Trump defied expectations in Erie, taking a county that Barack Obama won by more than 19,000 votes in 2012, and winning it by around 2,000 votes. His victory in Pennsylvania was the first by a Republican presidential candidate since 1988. Trump also won other traditionally Democratic states like Michigan and Wisconsin, propelled by voters from similar counties throughout the industrial heartland.
Trump’s message resonated with small business owners like Joe and Sondralee Orengia. A champion power lifter, Joe manages Joe’s Gym, while Sondralee operates Custom Audio, an electronics store. Both say they have seen fewer customers in recent years, and are excited about Trump’s promise to return manufacturing jobs and revitalize the Erie economy.
“The Democratic Party’s so strong here and then you get someone like Donald Trump who is really a very different candidate. I mean, we’ve never seen anything like him before,” Sondralee said. “I think a lot of people are fearful, especially the Democrats, but I think the people who voted for him, they’re hopeful.”
Joe Orengia voted for Democratic candidates in the past, but registered as a Republican for the first time after reading Trump’s book, “Crippled America: How to Make Our Country Great Again.” He showed his support by designing and selling “Pump for Trump” T-shirts that proudly displayed Trump’s face superimposed onto a cartoon power lifter.
Orengia, who is 70 years old, grew up in the 1950s during the heyday of manufacturing, when more than half of Erie workers were employed in factories. After apprentice school, he worked as an ironworker and helped construct factory buildings for companies like GE and Hammermill Paper Company.
“I was one of their best climbers,” he said. “I always got the job of putting the buildings together, which was fun. You climb up the column, a big piece of steel comes up, you bolt it up, you walk out, unhook the cable and stand there and wait for the next piece.”
Hammermill, which was bought by International Paper Company, shut its Erie factory in 2002. Many buildings that Orengia helped to build have been torn down.
“They were some of the best years of my life working down there, putting them up. They are gone and the people are gone,” he said.
Bringing Back Jobs
With Trump now in office, Orengia is hopeful for a revival in Erie. After the election, he watched as Trump struck a deal with Carrier, an air-conditioner manufacturer, to prevent around 800 of 1,400 jobs at an Indiana plant from moving to Mexico. Critics, however, say the one-off deal granting Carrier millions in tax breaks to preserve jobs in the U.S. does not make economic sense. Trump has also promised to renegotiate the North American Free Trade Agreement and impose tariffs on Chinese imports. In his first week in office, he signed an executive order to withdraw the U.S. from the Trans-Pacific Partnership.
Despite the president’s promise to bring jobs back to the United States, technology has caused massive upheaval in the manufacturing industry. Labor-intensive manufacturing is rapidly disappearing from communities like Erie and economists say traditional factory jobs are not coming back.
The number of manufacturing jobs in Erie reached its peak in 1950 when almost 50,000 people were employed in the industry, according to government data analyzed by Kenneth Louie, the director of the Economic Research Institute of Erie at Penn State University.
Manufacturing thrived in Erie through the 1960s, but then starting in 1975, jobs began to disappear. Losses accelerated during the recession in the early 2000s, as well as during the 2008 financial crisis. Now, around 20,000 manufacturing jobs are left in Erie.
Many of those jobs have been replaced by jobs in the service sector that don’t pay as well, according to Louie.
“The loss of manufacturing jobs really isn’t just the loss of jobs but the loss of good paying jobs,” he said.
There are exceptions to the rule. Some service sector jobs, such as those in health care and education, can pay more than manufacturing.
Economists say that automation is by far the biggest factor behind the decline in manufacturing jobs across the country. Technological advances mean that fewer factory workers are required to maintain the same level of output.
Since 2001, roughly one-in-three manufacturing jobs have been lost in Erie, but manufacturing output has remained relatively steady. Manufacturing represented 28 percent of Erie’s GDP in 2001. In 2015, it was 26 percent.
This pattern holds true across the country, according to Mark Muro, the director of policy at the Metropolitan Policy Program at the Brookings Institute. Today, it only takes six workers to generate $1 million in manufacturing output, says Muro. The same level of output would have required 25 workers in 1980.
“Trump deserves credit for taking seriously the anxieties and anger and frustrations in these communities,” Muro said. But his promise to renegotiate the North American Free Trade Agreement and bring back millions of jobs is a “pipe dream,” Muro added, as modern, high-value manufacturing requires fewer workers.
Some leaders in Erie are betting on advanced manufacturing to be the future of the local economy. They point to seemingly abandoned factory buildings along Erie’s 12th street industrial corridor that are home to high-tech manufacturing equipment. However, these jobs often require a college degree, shutting out many former factory workers. Incomes in Erie, as a result, have not kept pace with the rest of the country.
U.S. trade with China in the last 15 years has also cost manufacturing jobs in communities like Erie. China, with its steady supply of low-wage workers, can produce labor-intensive goods at a much lower cost.
David Autor, an economist at the Massachusetts Institute of Technology, says trade with China has improved the standard of living for many Americans — but not every community has benefitted equally.
“People with a college education have by and large benefitted. They get lower priced goods and services and they are not in competition for work,” Autor said.
Manufacturing communities like Erie, however, have borne the brunt of the negative consequences of trade, according to Autor’s research. In a paper published a week after the election, Autor noted that swing states like Pennsylvania, Michigan and Wisconsin would have elected Hillary Clinton instead of Trump if the effects of Chinese imports had been reduced by 50 percent.
“People aren’t just blaming the boogeyman for the challenges that they face without any justification,” Autor said. “Globalization actually was a big deal.”
Competition from abroad, Muro noted, is just a part of the challenge facing communities like Erie. GE’s move to a non-union factory in Texas, he said, also demonstrates the “constant drive” among companies to reduce costs and increase productivity. The Trump administration has not spoken out against companies that shift jobs to other parts of the U.S. in search of cheaper, non-union labor.
A spokesperson from GE Transportation says the company has seen fewer locomotive orders from North American companies in recent years. GE has culled jobs in Erie to become more cost-effective and competitive in the global market. The company insists it is committed to its Erie plant, which recently designed and built locomotives that were shipped to Angola and Pakistan.
Such challenges, aside, Joe Orengia is still hopeful about the promises Trump has made. “I’ve got to give him a chance,” he said. If things get “even just a little bit better” by 2020, Orengia will vote for him again. ”If things get worse, no,” he said.
This story is part of an investigation from Frontline called “How The Deck Is Stacked: The realities of getting ahead in the new American economy.” You can read the original story here.