Donald Trump, foreign direct investment, free trade agreements, Im-Politic, inflation-adjusted growth, inflation-adjusted wages, James Oliphant, Jobs, Mainstream Media, manufacturing, manufacturing jobs, offshoring, Reagan Democrats, Reuters, South Carolina, Trade, trade policy, wages
I give credit to Reuters reporter James Oliphant for recognizing Republican presidential candidate Donald Trump’s potential to use attacks on U.S. trade policy to court so-called Reagan Democrats – working and middle class whites who have absorbed big job and wage hits from the offshoring friendly trade deals pushed in recent decades by the mainstreams of both major political parties, and especially by their presidents. After all, last month, I recognized how appealing Trump’s campaign would naturally find this strategy, which during the 1980s enabled former President Ronald Reagan to make deep inroads into traditionally Democratic voting blocs.
I give Oliphant less credit for falling into the standard, often mindless, journalistic habit of assuming that there are (at least) two respectable sides to every story, rather than making clear that, at least in the state he examined closely, Trump’s strategy is a complete slam dunk.
Oliphant notes that “there are signs that Trump’s strategy is working,” and cites some data showing that the pool of voters receptive to a critical message on trade could be “vast.” But he also strongly suggests that the South Carolina electorate, where the Republican hopeful is emphasizing these points, and which holds a crucial early Republican primary next year, is anything but the most promising. According to Oliphant:
“Critics say that Trump is proffering an outdated, simplistic, and overly pessimistic view of the U.S. economy, one that fails to grasp the multi-national complexity of global manufacturing. Nowhere is that more apparent than in South Carolina where 700 international firms employ 115,900 people, according to State Department of Commerce data. That makes for the highest percentage of private-industry workforce employed by foreign-owned firms.”
There’s no doubt that South Carolina has attracted a great deal of foreign direct investment. It’s also attracted much new domestic manufacturing investment, notably Boeing aerospace production. But the big question is whether this success has offset the losses inflicted on the state’s industrial economy by America’s longstanding offshoring-friendly trade policies? The (easily research-able) answer is a resounding “No.”
Oliphant presents one statistic pointing to this failure: The state has recovered only 40 percent of the manufacturing jobs it lost during the last recession. That’s actually better than the national average so far (38.60 percent). But the difference is peanuts. And there’s so much more data indicating major, trade-related weakness in South Carolina’s performance.
For example, the state is doing pretty well as a manufacturing jobs and investment magnet because it keeps pursuing a so-called low-road strategy. The average hourly production occupation wage in the Palmetto State is less ($16.93) than the overall U.S. average ($17.06). The state’s performance looks even worse by a related measure – its average hourly wage for the entire manufacturing sector ranks only 31st out of the 50 states.
But again, maybe this low-road strategy has helped lure an amazing amount of manufacturing production to the state? Enough to offset trade-related losses in industries like textiles and apparel? And maybe this new production is higher quality than that it’s replaced? So maybe South Carolina is better positioned than the rest of the country to be a manufacturing powerhouse over the long run?
Maybe some day. But there’s no evidence that this is the case so far. After inflation, South Carolina’s manufacturing output has indeed gone up faster during the current recovery so far (14.59 percent) than it has nationally (11.44 percent). But at least some of that edge owes to the state’s real manufacturing production falling faster during the last recession (by 13.29 percent) than the nation’s output (10.29 percent).
(For data geeks, the state-level manufacturing output figures compiled by the Commerce Department are only annual, so they only show us the results for 2007-2009, and 2009-2014. The recession began at the end of 2007, and the recovery began in the middle of 2009. But this is close enough.)
Look back further, and South Carolina manufacturing has been even less impressive. Those aforementioned Commerce Department data provide apples-to-apples figures going back to 1997 – about the time lots of trade-induced offshored American manufacturing production began sending its output back into the nation. Since then, U.S. after-inflation manufacturing production is up 40.97 percent. South Carolina’s? Just about a third of that (13.47 percent).
No one’s saying here that the story of American domestic manufacturing lately has been all gloom and doom, that U.S. trade policy should be blamed for all its shortcomings, and that Donald Trump (and other trade policy critics) have all the answers for spurring a real renaissance in the sector. But if trade policy supporters, and journalists, want to hold up a poster-state, they clearly should forget about South Carolina.