Some background: There is a sense that the globalization of the last several decades has mostly benefited the coastal elites, while the rest of the country has suffered with stagnating wages, job loss and drug addiction. It is not entirely true that trade is to blame, but there is no denying something is going wrong for many American men. Their participation in the labor market has been falling over time, suggesting they are not just unemployed, but leaving the labor force all together.
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Trump has warned Americans to expect some short-term pain as his administration steers the economy to a better place. On some policies he might be right; moving more resources from government and into the private sector could boost productivity and wages. Trump’s primary goal appears to be a restructuring of the economy to include more domestic manufacturing, which will help the male American worker. “The labor market’s going to be fantastic,” he said, “but it’s going to have high-paying manufacturing jobs, as opposed to government jobs.” Vice President JD Vance has echoed this sentiment.
BloombergThey are right that millions of Americans have been struggling in the last few decades. Among some segments of the population, life expectancy has been falling because of poor health and drug addiction. Some communities were decimated when manufacturing jobs disappeared and employment never recovered. Overall, there are fewer men working in their prime years.
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Why they aren’t working is not well understood. It could be rising family income from more women working. Technology has made not working more attractive. Drug addiction also keeps some out of work, though the causality is unclear. And there has been a big shift in the labor market — one that that didn’t favor men. There are fewer jobs in manufacturing and more jobs in fields that have historically skewed female, such as education and health care.
The administration’s logic seems to be that if the US re-creates the manufacturing-heavy economy of the 1950s and ‘60s, when the prime-male labor force participation rate reached 97%, more men will get back to work. But these are not the 1960s — and the blame doesn’t lie with trade.
Among the many reasons there are fewer manufacturing jobs, the biggest is technology. Robots do more of the work. In fact, trade is the reason America still has the manufacturing industry it does. Global supply chains make domestic manufacturing more competitive. Trade also makes goods cheaper (which especially benefits low-income workers) and propels innovation that has improved the quality of most Americans’ lives.
Yes, trade increased at the same time as the economy experienced a big structural change because of technology. That change caused dislocations, as it always does, but the alternative — less trade — would not have been better. In fact in many ways it would have been worse.
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Second, the shortage of good jobs is not the problem. Labor force participation is down, but unemployment is also very low. It’s not as if there aren’t enough jobs. The service jobs that replaced manufacturing often pay better, even if some of them are not as well suited to skills men tend to have. There is also a favorable job market in fields such as construction and many trades. The problem is that many of the men left behind either don’t live where the jobs are, or don’t have the training they need to thrive in a changing economy.
The solution to this problem is not tariffs. It is eliminating the many regulations that make it hard to build, move and change jobs.
Focusing more on deregulation would do far more to help more men get work. The Trump administration could also work with towns and cities to relax zoning laws, for example, making it cheaper to build and move, and with state and local authorities to help secondary education better serve the needs and learning styles of men. The right kind of education is critical in a job market where trade jobs also require familiarity with and an ability to adapt to technology.
Tariffs are flashy and require less work. But they’re useless as a tool to create jobs in specific sectors. In the end everyone — even the people they’re meant to help — will be worse off, and the situation won’t get any better as the economy continues to change.
