For the record, the Economic Policy Institute (EPI) has done terrific work over decades on the domestic economic impact of U.S. trade policy decision and trade flow, and it’s been great to stand shoulder-to-shoulder with its economists and ther staff during many major trade policy battles starting with the North American Free Trade Agreement (NAFTA).
Which is why I have been absolutely baffled by a recent EPI report that shows signs of furnishing some major trade policy talking points for Democratic nominee Joe Biden’s presidential campaign.
Most puzzling of all: a table in the August 10 study purporting to show that (a) “President Trump’s erratic, ego-driven, and inconsistent trade policies have not achieved any measurable progress” in reversing the offshoring of U.S. manufacturing jobs and the related ,”decline of American manufacturing”; and in fact (b) that “Offshoring and the loss of manufacturing plants have continued under Trump, notwithstanding U.S. Trade Representative Robert Lighthizer’s claim that the administration’s trade policy is helping U.S. workers.”
Here are the main table figures that cover the first two Trump years and the record of its predecessor, the Obama administration (whose Vice President of course was Biden). I started with 2010 because during 2009, the first year of the Obama presidency, the nation was mired in a Great Recession for which he deserves absolutely no blame. In addition, EPI stops the table at 2018 because factory numbers afterwards aren’t yet available. (The gross output figures have been added by me to make further comparisons possible.)
Change in factory #s Change in mfg jobs mfg real gross output
2010: -11,283 -755,000 +5.37 percent
2011: -5,155 +222,000 +2.89 percent
2012: -2,938 +223,000 +1.93 percent
2013: -4,220 +101,000 +2.86 percent
2014: -4,056 +121,000 +0.79 percent
2015: -2,129 +192,000 +0.54 percent
2016: -999 +33,000 +0.04 percent
2017: -782 +50.000 +0.99 percent
2018: -1,005 +216,000 +2.31 percent
The first point that needs to be made is that, as must be obvious, these numbers show absolutely no consistent relationship between the annual change (and in this case, decline) in the number of the nation’s “manufacturing establishments” (what these official figures call factories) and the annual change in manufacturing payrolls.
For example, in each of these years, lots of factories kept closing, yet manufacturing employment kept rising. It’s true that rates of annual change have varied for both categories during this period. But these variations don’t seem to hold any significance, either. If they did, why would the number of closures fall notably between 2011 and 2012, while those years’ manufacturing workers’ numbers rise by almost exactly the same amount? And why the big difference between the number of closures in 2011 and 2012 on the one hand, and in 2018, on the other, and the close resemblance of the employment gains for each of those years?
Further, although it’s true that factory closures continued during the first two Trump years, the annual rate of closures slowed dramatically. Indeed, from 2010 through 2016, the average annual closure rate was 4,397. For 2017-18, this rate was 893.5. That’s not progress? And let’s be fair and not count 2010, because the manufacturing job losses of the Great Recession continued through its early months. The 2011-16 annual average factory closure number was still much higher (3,249.5) than during the Trump years.
Not weird enough for you? According to these EPI figures, despite factories closing at a much faster rate during the Obama years than during the Trump years, manufacturing employment grew faster. From 2011 through 2016, manufactring jobs grew by an annual average of 148,670. The comparable number for the first two Trump years was only 133,000.
At the same, time, this seemingly paradoxical relationship between numbers of factories and numbes of workers isn’t so completely paradoxical after all. For example, new kinds of machinery and other efficiencies have surely enabled many domestic manufacturers to consolidate their physical footprint, and actually boost production and hiring. Alternatively, manufacturing companies can increase their capacity by expanding existing plants rather than build new facilities.
Speaking of production, if we’re going to talk about the decline of American manufacturing, we need to talk about output levels and their changes, too. After all, it’s tough to boost or even maintain manufacturing workers’ numbers if production isn’t rising. Yet the annual growth numbers I’ve added to the table (which represent inflation-adjusted gross output), don’t show much of a relationship with closure numbers or employment numbers, either – and that’s the case even leaving out the quasi-manufacturing recession year 2010.
Still, don’t the EPI figures make clear that manufacturing hiring during the first two Trump years was weaker than during the Obama years? They sure do. As mentioned above, from 2011 through 2016, manufacturing payrolls grew by an average of 148,670 each year versus the Trump annual average in 2017 and 2018 of 133,000.
But are the EPI numbers the right numbers? I decided to check since the 50,000 manufacturing jobs increase presented for 2017 seemed way off to me. And there’s strong evidence that my suspicions were justified. Here’s what I found on the Bureau of Labor Statistics website. They represent December-to-December changes, and they’re seasonally adjusted. But the unadjusted numbers aren’t terribly different:
According to these data, the average annual manufacturing employment increase during the Obama years was 126,830 (again, recession-y 2010 is left out) and the annual average for the first two Trump years was 224,500. So advantage Trump here. The current administration enjoys a big edge even adding in 2019, when industry’s payrolls rose by only 59,000. That performance brings the Trump annual average down to 169,330 – still considerably higher better than the Obama years’ performance.
The EPI report correctly notes that 2020 has been much worse so far for manufacturing employment, and reasonably argues that even though the CCP Virus pandemic has been mainly responsible, “If President Trump wants to take credit for the job growth at the tail end of a decade of recovery from the Great Recession, then he must also own this collapse, thanks to his administration’s mismanagement of the pandemic.”
But if we’re going to start blaming non-trade policy-related factors for changes in manufacturing performance measures, let’s at least be consistent. For manufacturing hiring and growth (1.30 percent) undoubtedly were held down in 2019 by the safety woes experienced by aerospace giant Boeing – and therefore by its vast domestic supply chain – and by the six-week strike at General Motors.
Combine those developments with the inevitability of manufacturing inefficiencies as companies and entire industries adjust to a dramatically different trade policy environment, and the Trump record looks remarkably good. Unless EPI (and other Trump critics) believe that a painless way to transform U.S trade and manufacturing policies (which the institute strongly supports) has ever been possible?
President Trump was clearly (though anything but disastrously) mistaken when he claimed in early 2018 that trade wars are “easy to win.” Let’s hope that the EPI report isn’t a sign that a Biden administration and other critics would peddle the same pipe dreams.