As the Presidential election cycle comes to a close, and that cannot happen soon enough, the question we are all faced with is do we support Hillary or Donald? Yes, there are third party candidates running, but none of them has a serious chance at being elected, and voting for one of them hands the race to whoever it is you are unhappy with. What to do?
Both candidates have excoriated international trade almost to the point of saying it is the source of everything wrong in this country, that is when they aren’t blaming each other, President Obama or the “other” major party. However, if we are going to be earnest in our consideration of the candidates, we want to look things more objectively. Looking through the lens of international trade, what do we find?
The International Trade Administration estimates that 11.5 million U.S. jobs are supported by American exports. Various sources indicate there are a total of 398 trade agreements which were entered into by countries around the world. The U.S. is a party to only 14 of them or 3%. We are getting out clocks cleaned internationally! What is next?
Both major party candidates say that America is losing jobs in its manufacturing base. Is that correct? How is that tied to international trade? Acknowledging that one can find studies that conclude almost anything to back up a position, we are going to turn to two coming from generally thought to be reliable sources. One was published by Ball State University in June 2015, and the other was released on October 6, 2016 by Pew Research Center.
The Ball State study is entitled “The Myth and the Reality of Manufacturing in America”. It was issued through the university’s Center for Business and Economic Research. The report itself can be found at: http://conexus.cberdata.org/ under “Related Studies”. What makes this report of particular interest is it recognizes the total number of manufacturing workers has declined, but looks at the root causes of that decline rather objectively. While acknowledging that trade has had an impact on job loss, the report goes on to conclude that manufacturing has rebounded from the 2007 to 2009 recession, but that due to automation and increased productivity, the number of workers employed has not. The report cites specific industry sectors which have rebounded and identifies others which have not. It notes that international competition is dependent on “production costs and productivity and transport costs of goods … The increase in productivity and decrease in price facilitates an increased quantity demand by consumers”. The most interesting comments in the report for our purposes focus on the total number of employees needed in 2010-levels of production using 2000-level worker productivity and concludes : “[h]ad we kept 2000-levels of productivity and applied them to 2010-levels of production, we would have required 20.9 million manufacturing workers. Instead, we employed only 12.1. million”!
What this Ball State study concludes is manufacturing continues to grow, but employment in this sector has remained stagnant for years, primarily due to “growth in productivity. Three factors have contributed to changes in manufacturing employment in recent years: Productivity, trade and domestic demand. Overwhelmingly, the largest impact is productivity. Almost 88 percent of job losses in manufacturing in recent years can be attributable to productivity growth, and the long-term changes to manufacturing employment are mostly linked to the productivity of American factories”.
The Pew Research Center released its study conducted with Markle Foundation under the title: “The State of American Jobs”. It looked a job retention generally and framed the discussion based on factors the Americans surveyed think are important to their long term employment. See http://www.pewsocialtrends.org/2016/10/06/the-state-of-american-jobs/. “Tectonic changes are reshaping U.S. workplaces as the economy moves deeper into the knowledge-focused age. These changes are affecting the very nature of jobs by rewarding social, communications and analytical skills. They are prodding many workers to think about lifetime commitments to retraining and upgrading their skills. And they may be prompting a society-wide reckoning about where those constantly evolving skills should be learned – and what the roll of colleges should be”.
The “vast” majority of those surveyed concluded that “new skills and training” are key to their future job success. They also see the need for more “education, training and experience”. Focusing specifically on trade-related issues, the Pew study states 80% of adults conclude that “increased outsourcing of jobs to other countries” is harmful to American workers. 77% think foreign-made products sold in the U.S. are also harmful. Those surveyed also cite increased use of contract and temporary workers and declines in union membership (57% and 49%) as harming American workers. Conversely, 68% conclude that exports and the sale of American products in foreign markets are helpful to workers!
The study also points out its analysis of employment data shows “that job categories with the highest growth tend to require higher social skills, analytic savvy and technical prowess. .. The shifting demand for skills in the modern workplace may be working to the benefit of women. Women, who represent 47% of the overall workforce, make up the majority of the workers in jobs where social and analytical skills are relatively more important, 55% and 52%, respectively. For their part, men are relatively more engaged in jobs calling for more intensive physical and manual skills, making up 70% of workers in those occupations. This is likely to have contributed to the shrinking of the gender pay gap … from 1980 to 2015 given that wages are rising much faster in jobs requiring social and analytical skills”.
Given the ever more complex international trading regulations and climate, it was notable that 63% of those with a 4 year degree or more felt they would need to keep advancing their skills “throughout their career, compared with 45% of those with no college experience who feel the same sense of urgency”. Equally noteworthy was that 61% of young adults (18 to 29) are more likely than “their older counterparts to see skills and training as essential.” 56% of those ages 30 to 49 also see on-going training as essential, as do about 25% of workers aged 50 and older.
The skills most Americans felt were critical to their success and are those they most relied on in their jobs are interpersonal skills, critical thinking, and good written and spoken communication skills. Some gained these skills through life experiences, others through work experiences and others through formal education. 72% say a lot of the responsibility for “preparing and succeeding in today’s workforce starts with [the] individuals themselves.” The discussion about where those skills should be learned was included in the report, and raises thoughtful questions about the value of a college education, and even how strong is education prior to college in terms of preparing individuals to enter the workforce.
Against this backdrop, it was not surprising to read “the pay gap between manual and analytical jobs has grown over the years”. There are notable comments regarding the roll schooling should play as well as observations about how secure workers feel in their jobs, which again varies based on the worker’s level of education and the nature of his or her job. Immigration and automation are also commented about. Remarkably regarding trade, “big majorities” acknowledge exports along with technology are aids to workers, but there is “no significant gap between Democrats and Republicans when it comes to the importance of global trade”.
Regardless of which candidate you prefer, they both should be held to providing the electorate with serious answers to the pressing issues of the day. Simply saying trade is bad and deals need to be renegotiated so they are fair to Americans, trade means outsourcing, and other similar inane sound bites should not be satisfactory. The U.S. is facing serious challenges to which we need serious answers, not quick one-liners. Where do we look for those serious answers? Certainly not in this election cycle unless we all visit our Members and Senators during the current recess or when next in D.C. They need to hear about the importance and positive influence of international trade to all of our lives and careers!