Someone Needs To Tell Trump About Automation

Someone Needs To Tell Trump About Automation

The first substantive claim President Donald Trump made in his second State of the Union address concerned what is perhaps his favourite non-Wallean topic: blue-collar jobs.

If there are two professions that Trump has awkwardly and effusively embraced during his tenure as president, it’s coal and manufacturing — you know, salt-of-the-earth jobs. Manly jobs. American jobs. Disappearing jobs.

“In just over 2 years since the election, we have launched an unprecedented economic boom — a boom that has rarely been seen before,” Trump said, before he got to the caravan 2.0 and his guests started falling asleep.

“We have created 5.3 million new jobs and importantly added 600,000 new manufacturing jobs—something which almost everyone said was impossible to do, but the fact is, we are just getting started.”

Later, after naming the rust belt states “whose dreams were shattered by NAFTA,” he lobbied for its replacement, which he exhorted Congress to recognise. “Our new U.S.-Mexico-Canada Agreement — or USMCA — will replace NAFTA and deliver for American workers: bringing back our manufacturing jobs… and ensuring that more cars are proudly stamped with four beautiful words: made in the USA.” [emphasis mine]

As usual, there is self-aggrandizement, exaggeration, and gaslighting at work here, but on this topic the bluster aligns more squarely with conventional wisdom, which makes it doubly important to contravene. Because the vast, vast majority of blue collar manufacturing jobs—those mythical jobs that have become a favourite fantasy of Trump conservatives and a political football for plenty others—well, they are not coming back. Automation has made sure of that.

First things first: That 600,000 jobs number is kind of a mystery—fact-checkers have flagged it as fishy, and according to the Bureau of Labour Statistics, it’s about 170,000 jobs too high.

Still, over the last two years, some 436,000 new manufacturing jobs have been created. But the job that Trump is probably picturing while he bloviates — a grease-stained blue collar worker on the assembly line — doesn’t look a whole lot like most of the actual jobs that the economy has added. He’d only have to check in with his own BLS to see that.

Last August, in a notice for its Monthly Labour Review titled “The fall of employment in the manufacturing sector,” the BLS explained how the landscape of American manufacturing is shifting:

“Today’s manufacturing output is at least 5 per cent greater than it was in 2000, but it has become much more capital intensive and much less labour intensive. Accordingly, workers in the sector are more likely to have at least some college education than their counterparts of years past. But there are far fewer manufacturing workers overall, with about 7.5 million jobs lost since 1980. These job losses have likely contributed to the declining labour force participation rate of prime age (between the ages of 21 and 55) U.S. workers.”

(The report also points out that this shift has been found by researchers to be a driver of opioid use and the climbing suicide rate, but I digress.)

“Much more capital intensive and much less labour intensive” means, essentially, more automation. The factories have been mechanised, and the new jobs they offer (operating and overseeing the machinery) tend to require more education. And as much as Trump loves to blame bad trade deals for the loss of American manufacturing jobs, automation has contributed much more to their decline than globalization.

“It’s not even close,” as Lawrence Katz, a Harvard labour economist, once told the New York Times.

So, if and when Trump does secure new labour guidelines in his updated NAFTA deal—like those necessitating a higher percentage of auto parts be manufactured in North America and that Mexico recognise labour unions to render competition fairer—the factories that will benefit will likely add few blue collar jobs back to their labour pools.

Ironically, one of Trump’s few policy contributions was explicitly intended to speed the process of automation, at his own roundabout exhortation — the massive tax cut for the wealthy and the business class enacted in 2017 was supposed to spur executives and managers to invest in technology and industrial equipment (i.e., automation gear) that would then boost productivity.

(Of course, most of it was instead returned to shareholders in the form of buybacks and dividends.)

Which is to say, Trump is at best deeply ignorant of the role automation is playing in the American work landscape. His inattention to the subject moved the Harvard Business Review to speculate about why he never tweeted about automation.

His Treasury Secretary, Steven Mnuchin, even once said automation-driven job loss “was not even on our radar screen.”

Trump just never talks about automation — it is entirely possible he is completely oblivious to the debate over its impacts and more likely he has waved it away in a meeting once in favour of continuing his narrative of deal-making the manufacturing sector back into being. Which may explain why his pledged efforts to restore the American manufacturing sector — like, say, Trump’s support for the coal industry in a world wracked by climate change — are so out of date and poorly aligned with reality.

It’s worth circling back to the fact that some manufacturing jobs are being added to the U.S. economy. Most of those were in the durable goods sector (i.e., products designed to last more than three years) and one of the chief drivers of growth there has been the military.

Just last December, CNBC noted that “Orders to U.S. factories for long-lasting goods rose at a modest pace last month, but the gain was driven entirely by demand for military aircraft. Excluding transportation equipment, orders fell.”

By some counts, defence jobs now make up 10 per cent of manufacturing demand.

It’d take a fuller accounting of the durable goods manufacturing sector to understand the full scope there, but it’s telling that, for the moment, it is not Trump’s trade dealing or his tax relief that’s driving the growth in factory jobs—it is the ever-expanding military industrial complex.