(What’s Left of) Our Economy: Illegal Immigrant Poverty Rates Mock Claims that they’re U.S. Economic Saviors

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Census Breau, citizens, illegal immigrants, illegal immigration, immigrants, Immigration, non-citizens, Pew Research Center, poverty, social mobility, taxes, Vox.com, {What's Left of) Our Economy

As the U.S. immigration policy debate rages on, claims continue that more lenient admissions policies, including amnesty policies that would clearly strengthen the magnet for more illegal immigration, are urgently needed to fix the nation’s demographically imperiled pension finances.

One of the latest examples comes from the left-leaning news and opinion site Vox.com:

“Economic estimates show that immigration would help save the Social Security system. Not just legal immigration — illegal immigration too.”

“Undocumented immigrants and immigrants with legal status pay billions of dollars each year into the Social Security system through payroll taxes. Based on estimates in the trustees report, the more immigrants that come in, the longer the Social Security system will stay solvent. That’s because immigrants, on average, are a lot younger than the overall US population, so their retirement is far off. And undocumented immigrants pay for Social Security, but they’re not allowed to get benefits.”

I’ve previously debunked such claims about illegal immigrants by showing both that their contribution to the national tax haul currently is much less a drop in the national bucket, and that it’s likely to stay tiny because social mobility in America has slowed to a crawl – meaning in particular that prospects keep getting bleaker for major income ladder climbing by the kinds of low-skill, poorly educated workers who dominate illegal immigrants’ ranks.

So it’s important to report that some recent data from the Census Bureau strongly confirms that mobility point – along with suggesting that one of the best ways to give illegal immigrants a leg up is to cut back their numbers seriously.

The statistics come in the form of figures kept by the Bureau on the “detailed social and economic statistics for age groups as well as racial groups that include the Hispanic, black or African-American, Asian and foreign-born populations.” These include numbers on poverty rates for native-born Americans, naturalized foreign-born citizens, and non-citizens (who of course by definition are foreign born). The latter aren’t necessarily illegals – for a variety of reasons, many legal immigrants never apply for citizenship, or don’t do so right away. But the non-citizen group would include all the illegals.

It seemed to me that the best way to tell if this non-citizen group and its illegal members are making noteworthy economic progress would be to focus on those in the 18-64-year old age group – i.e., those overwhelmingly likeliest to be employed, or seeking employment. The data go back to 1995 and up to 2015, so changes over a respectable period of time can be assessed. Below are the main findings, which also compare how poverty rates for non-citizens of working age have fared versus their native-born and naturalized citizen counterparts.

Year      native born 18-64s    naturalized 18-64s      non-citizen 18-64s

1995          10.8%                           8.4%                           25.7%

2001            8.8%                           8.1%                           17.8%

2007         10.0%                            8.5%                           19.9%

2009         11.9%                          10.1%                           24.2%

2015          9.7%                             8.9%                           17.9%

The most obvious takeaway is that the the poverty rates for the non-citizens of working age have remained much higher than those for the rest of the population of working age. And in absolute terms, for a high-income country like the United States, they’re exceedingly high.

These numbers also show that the poverty rate for the working age non-citizens has declined considerably faster than that for native-born Americans (-30.35 percent vs -10.19 percent). And that 30-plus percent drop contrasts especially strikingly with the change in the naturalized citizen rate – which actually rose by 5.95 percent.

So doesn’t that latter trend strongly suggest that illegal workers do keep increasing earnings significantly? Not so fast. First, remember that the performance of the illegals is undoubtedly worse than that of non-citizens as a whole. After all, illegals don’t have a heck of a lot of bargaining power at the workplace. Second, as RealityChek regulars know, the most accurate read on economic trends comes from comparing similar phases of the economic cycle – e.g., recessions with recessions, expansions with expansions.

And in that vein, what the data underscore to me is that the biggest drop in the working age non-citizens’ poverty rate came during the last half of the strongest and longest American expansion to date – that which lasted from 1991 to 2001. Between 1995 and 2001, it fell by 30.73 percent. During the bubble era expansion of 2001-2007, the non-citizen poverty rate actually increased (by 11.80 percent). Their fortunes improved notably during the first six years of the current expansion – decreasing by 26.03 percent. But that slowdown was more modest than that of the 1991-2001 recovery.

It’s certainly possible that since then, the rate has fallen further – and that this expansion will start speeding up, leading to additional improvement. But given the length of this recovery (more than nine years), that would be surprising – at least for any prolonged period.

Further improvement, however, could indeed be on the horizon because during the current recovery years, when that 26 percent fall in the poverty rate took place, the illegal immigrant population shrunk – from 11.5 million to 11.0 million, according to the pretty authoritative Pew Research Center. I say “pretty authoritative” because measuring activity related to illegality is always difficult. But these Pew data strike me as reasonable because all else equal, whenever the supply of anything (like illegal immigrant workers) decreases, its value (earnings) tends to increase.

So if the Trump administration can keep illegal inflows down, illegal workers’ poverty rates seem likely to fall further because of rising pay. But ironically, this development would also weaken the case that illegals will prove to be the U.S. economy’s financial salvation. For their incomes will remain very low in absolute terms by any reasonable measure, and their numbers will be smaller than their supporters seem to assume.

Moreover, the less illegal immigrant competition they face, again all else equal, the higher the pay of the much greater population of native-born workers will rise. Legal immigrants stand to benefit as well.

Something to keep in mind when you next hear some Open Borders enthusiast shout, “Abolish ICE [U.S. Immigration and Customs Enforcement]!”

(What’s Left of) Our Economy: A Trade Cover-Up at Bloomberg? Or Just Ignorance?

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Bloomberg, exports, food insecurity, health insurance, hunger, Idaho, imports, Matthew Winkler, poverty, Trade, trade balances, Trump, wages, {What's Left of) Our Economy

Memo to Bloomberg News and its Editor-in-Chief Emeritus Matthew Winkler: If you’re going to try to foist a flagrant piece of trade fakeonomics on your readers, choose a contention that can’t be debunked after twenty minutes searching on Google.

According to an August 18 article by Winkler, Idaho is America’s “top performing” state economy and “relies heavily on international trade for its success.” Moreover – irony alert! Even though its “21^st century economy…shows that the U.S. does best when it puts the world first,” the state’s (inexplicably) doofy voters went for that quintessential America-Firster, Donald Trump, in the last year’s presidential election – and by a two-to-one margin!

And the author marshals some impressive statistics to back up this claim. Winkler’s big takeaway on Idaho:

“It’s had the best combination over the 12 months that ended on March 31 of robust personal income, job growth, stock-market gains and home-price appreciation because its largest employers sell the bulk of their products overseas, count the world’s biggest multinational companies among their customers and suppliers, and make most of their money from the technology driving globalization.”

He seems unaware, however, of all the data showing that Idaho’s trade performance has been anything but impressive. For example, let’s look at the state’s goods export performance, and over an analytically respectable period of time.  This information is easily found on the Census Bureau’s website. These data show that, from 2013 to 2016, measured in current dollars, Idaho’s goods sales overseas actually shrank as a share of the U.S. total: from 0.4 percent to 0.3 percent. Moreover, its exports as a share of its the state economy fell faster than the corresponding figure for the entire country – by 23.76 percent versus 17.09 percent.

Idaho has indeed grown faster than the nation as a whole during this period – by 6.57 percent in toto in constant dollars (the same value unit used for the above trade figures) versus 6.48 percent. But it clearly hasn’t grown much faster. And exports have hardly been at the leading edge.

It’s true, moreover, that Idaho has run a merchandise trade surplus during this period. Indeed, it’s risen from $244 million to $383 million. (We’re back to pre-inflation dollars here, because the Census state trade date don’t adjust for price changes.) But that’s mainly because its imports have tanked. Does Winkler view that as a positive? If so, he wouldn’t be much of an enthusiast for trade’s contribution to the U.S. economy overall – since in those years it ran a goods deficit that grew from $738.8 billion to $778.2 billion.

Similarly, Idaho has performed relatively well in terms of those measures that shed light on how well its economy has been performing for its inhabitants. For example, its wages have been growing faster, in current dollar terms, than their national counterparts, both measured by the average and by the median. The former in Idaho is up during those years by 7.43 percent, versus 5.57 percent for the United States as a whole. The latter is up 7.93 percent between 2013 and 2016 versus 6.85 percent for all American workers. (See this Bureau of Labor Statistics site for national- and state-level information for 2016 and this source for the 2013 numbers.) At the same time, how can trade and especially exports be credited if the latter have fared so poorly?

In fact, if the state’s trade performance was really up to snuff lately, maybe its average and mean wages wouldn’t be lagging the national averages so significantly as of last year – by 11.45 percent for the former and by 15.55 percent for the latter. In addition, maybe its poverty rate wouldn’t rank in the top half nationally. Along with its level of hunger and food insecurity. And the percentage of its population lacking health insurance. (Find these and more such info here.)

Again, these data are no secret. But Winkler either was completely unaware of them and had no interest in thorough research, or he was hoping you wouldn’t find out.

Im-Politic: The Polls Say “Let Trump Be [Campaign-Version] Trump”

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2016 election, ABC News, budget, conservatism, discretionary spending, entitlements, Freedom Caucus, healthcare, Im-Politic, Immigration, independents, NBC News, Paul Ryan, polls, poverty, Republicans, The Wall Street Journal, Trade, Trump, Washington Post

They’re only polls and we all should remember how badly most polls blew their calls in the last presidential election. But two new surveys from the Washington Post and ABC News on the one hand, and the Wall Street Journal and NBC News on the other, are signaling to me anyway that Donald Trump has made a major mistake so far in his young presidency in tilting so markedly toward the keepers of the orthodoxy (especially the most doctrinaire versions) in his own party. Instead, he should have been focusing all along on developing a promising new American political center of gravity that he started defining (in his own imitable way) during his campaign.

As widely observed during the 2016 elections, Mr. Trump was anything but a conventional conservative – at least as the term has been understood for the last quarter century. Yes, he made frequent nods toward cutting taxes and regulations, as well as to balancing budgets (objectives that of course aren’t always consistent). He also expressed some support for social conservative positions like further restricting abortion and appointing “strict constructionists” to the Supreme Court. But as also widely observed, if that mix of views was what voters in the Republican primaries and general elections really wanted, they would have voted for an orthodox conservative.

Instead, Mr. Trump trounced his opponents even though he at least as often promised to protect massive federal entitlement programs heavily relied on by the middle class and senior citizens; to guarantee adequate healthcare for non-seniors who can’t afford it; to preserve government support for Planned Parenthood’s provision of non-abortion-related women’s health services; to uphold the rights of gay, lesbian, and transgender Americans; and of course to ignore free market dictates when they seemed to undermine public safety and prosperity by fostering unrestricted trade and immigration.

Undoubtedly, much of candidate Trump’s appeal also sprang from simple, nonpartisan voter anger at the failures and self-serving priorities of the bipartisan national political establishment. But Mr. Trump did the best job of all last year’s presidential hopefuls of identifying the combination of specific grievances that created this anger: notably, over those jobs and incomes lost to Americans Last trade and immigration policies, over those related dangers posed by terrorism and leaky borders, and over the astronomical costs and risks of fighting seemingly futile foreign wars and defending free-riding allies.

The president’s Inaugural Address – which declared his intention to fix these problems with America- and Americans’- First policies – unabashedly proclaimed that President Trump would govern like candidate Trump.

Yet although the president has by and large kept his immigration promises, and approved some (limited) measures to combat foreign trade predation, his domestic policy proposals look like they’re right out of the Chamber of Commerce and Moral Majority playbooks. Nowhere has this development been more obvious than in his endorsement of House Speaker Paul Ryan’s healthcare plan, and in his release of a budget outline that, outside of defense spending, libertarians should be swooning over.

Late last month, I ventured that the president’s support for the “Ryan Care” proposal was a head fake: He had knowingly backed a measure so draconian that he knew it would fail, in order to establish some orthodox conservative street cred with Congressional Republicans and thus enlist their support for the pivot to greater moderation he had planned all along. Something like this scenario could still unfold; according to press reports, even the hard-core anti-government House Freedom Caucus members are growing more amenable to a compromise proposal that would preserve many of the more popular provisions of President Obama’s healthcare reforms.

But Mr. Trump’s continuing insistence on a federal spending blueprint that either eliminates or greatly slashes funding for medical and other scientific research, Chesapeake Bay cleanup, and food and heating aid for the poor, is not only plain bizarre, especially since the dollars involved are trivially small. It’s also politically inexplicable, because there’s absolutely no evidence that these are viewed as priority savings among any important Trump constituencies.

And that’s where the new polls come in. As per the headline results, Mr. Trump’s popularity at this point in his presidency is much lower than the ratings of most of his predecessors early in their first terms. In fairness, the Post-ABC survey also shows that the president would beat his chief 2016 rival, Hillary Clinton, in the popular vote if a new election was held – showing that he’s even more popular versus the Democratic nominee than on election day.

But the both polls showed the president’s support tightly concentrated among his own core voters and Republicans generally. Even accepting the claim that rapid partisanship by Democratic party leaders is proving effective in limiting Mr. Trump’s appeal to their rank and file, it’s still a sign of trouble for the president that his ratings among self-described political independents is markedly on the wane according to the Journal-NBC findings (falling to 30 percent) and low (38 percent) according to the Post-ABC survey.

One main reason: The Washington Republicans President Trump is apparently still courting are even less popular than he is. The Journal-NBC poll reports that many more Americans are dissatisfied with the Republican-led Congress nowadays than in February, and Ryan’s approval ratings are even lower. Moreover, the Republican-led Congress and the Speaker, in turn, are less popular than the president even among voters identifying as Republicans.

None of these results necessarily bodes ill for the Freedom Caucus. Its members don’t care for Ryan, either – allegedly for being too moderate. But many of the latest measures of Americans’ views of major policy issues do. For example, the Journal-NBC poll found that, since February, the share of respondents agreeing that “Government should do more to solve problems and help meet people’s needs” shot up to 57 percent. Even more independents (59 percent) endorsed this position. The share of total respondents believing that “Government is doing too many things better left to businesses and individuals plummeted to 39 percent.

More pointedly, the Post-ABC poll showed Americans opposing the Trump budget proposals by 50 percent to 37 percent overall, and independents disapproving by an even wider 52 percent to 35 percent margin.

The Journal-NBC survey also found record shares of Americans viewing “free trade” and “immigration” positively – at 57 percent and 60 percent, respectively. But the abstract nature of these questions could well have tilted these answers. One reason for supposing so: The Post-ABC poll reporting that, by a strong 73 percent to 22 percent, Americans favor “Trump pressuring companies to keep jobs in the United States.” Among independents, the results are an even better 75 percent to 19 percent.

So the recipe for Trump political success seems pretty clear: Dump the Freedom Caucus under the Trump Train on the budget and healthcare; preserve (and even boost to some extent) discretionary spending programs that strengthen the economy’s foundations and provide for the needy; keep the campaign promises on entitlements so highly prized by the middle class; and take bolder measures to Buy American and Hire American (as one new set of trade-related Trump jobs programs is called).

Keeping the focus on these priorities, along with a well thought out infrastructure program, should attract and keep enough backing among Republicans and independents to offset any losses in Freedom Caucus ranks, both in Congress and at the grassroots level (where they seem modest in number). Adding new policies to combat predatory foreign trade practices, moreover, should please organized labor enough to bring into the fold many union members and leaders plus the Congressional Democrats they strongly influence. An extra bonus – this program could well give President Trump the political leeway he needs to stay his course on immigration (which of course has seen a softening of his views on the so-called Dreamers).

Often in American history, calls to “Let [name your favorite politician] be [name that same politician]” have reflected core supporters’ naive beliefs that campaign promises can easily be turned into policy by the office-seekers they elect. But as is so often the case with the current president, Letting Trump be Trump, could confound the political conventional wisdom.

(What’s Left of) Our Economy: White House Fakeonomics on Tariffs and the Poorest Americans

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China, consumer spending, Council of Economic Advisers, incomes, Jobs, Labor Department, NAFTA, North American Free Trade Agreement, Obama, offshoring, poverty, tariffs, Trade, White House, World Trade Organization, WTO, {What's Left of) Our Economy

We’ve heard a lot lately about fake news. But President Obama’s outgoing Council of Economic Advisers (CEA) has just reminded us that at least as great a problem is fake policy analysis. For its new report emphasizing that tariffs are “an arbitrary and regressive tax” that hits low-income Americans especially hard glosses over and ignores completely the biggest trade-related income questions that any intellectually honest researcher would ask.

CEA argues that “tariffs – taxes on imported goods – likely impose a heavier burden on lower-income households, as these households generally spend more on traded goods as a share of expenditure/income and because of the higher level of tariffs placed on some key consumer goods.”

But here’s the main point it glosses over: The vast majority of spending by poorer Americans goes to goods and service that are lightly traded, at best. Indeed, the White House economists provide the first clues themselves. As they show (in the figure below), even though the tariff burden on after-tax income does rise as such income falls, the absolute levels are very low – a little over 1.50 percent of such income for the poorest 10 percent of households.

Figure 2 Tariff burden relative to after-tax income

And as the next figure reveals, when totally untraded mortgage, rent, and utilities are removed, both the tariff burden gap between the richest and poorest Americans, and the absolute tariff burden, shrink dramatically. The latter falls all the way down to less than 0.60 percent of the total income of the lowest 10 percent.

Figure 3 Tariff burden relative to expenditures excluding mortgage, rent, and utilities

Looking at what lower-income households actually spend explains these rock-bottom numbers. According to the same Labor Department consumption data set used by the CEA economists, households in the lowest decile on the American income scale are spending fully 42 percent of their income on housing (which is not at all traded internationally) and another 17 percent on food (which is mainly produced domestically). Another six-plus percent of these households’ economic intake goes to health care, five percent to education, and a bit over four percent to entertainment (also all wholly or largely un-traded).

Interestingly, another 14 percent of the lowest-income group’s expenditures goes to transportation. U.S. oil imports are (lightly) tariffed. But assuming most of the poorest Americans don’t own, lease, or rent their own vehicles, the impact on their finances is surely minimal.

Add these numbers up, and clearly America’s lowest-income consumers spend hardly anything on imported goods that are subject to tariffs.

Moreover, here’s what the CEA economists completely ignore: The last few decades’ worth of trade policies they implicitly endorse here have wreaked havoc on the employment – and therefore incomes – of many of these same lower-income households.

Just look at what’s happened to domestic payrolls in two industries that used to provide jobs for many Americans who have no doubt fallen way down the income ladder: furniture and apparel. According to Labor Department data, since the North American Free Trade Agreement (NAFTA) went into effect in 1994 and ushered in the current era of U.S. trade policy, employment is down by more than a third in the former and by nearly 85 percent in the latter. Moreover, import- and offshoring-related job losses have been especially steep since China entered the World Trade Organization at the end of 2001 – as widely cited scholarship has emphasized.

As NAFTA also triggered a heated debate on trade policy in the United States, critics started printing up and handing out garments reading “My job went overseas and all I got was this lousy T-shirt.” Obviously, these are gifts that someone should have mailed the White House economists who suggest that tariffs have delivered the main trade-related hit to America’s poorest.

(What’s Left of) Our Economy: Times’ Manufacturing Story a Triumph of Hope Over Evidence

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Baltimore, inner cities, Mainstream Media, manufacturing, Marlin Steel, Nelson D. Schwartz, poverty, The New York Times, Twitter, {What's Left of) Our Economy

New York Times economics correspondent Nelson D. Schwartz deserves much credit for engaging me extensively on Twitter last week over his recent article on manufacturing’s potential as an anti-poverty weapon in the United States. It’s just too bad that, in the process, he reinforced the Mainstream Media’s budding reputation as a national institution that’s unusually stubborn about admitting substantive or methodological mistakes.

Schwartz’s October 28 article couldn’t have looked more encouraging. “Small Factories Emerge as a Weapon in the Fight Against Poverty,” declared the headline. And once one read a few paragraphs into the text, the implication was clear: A significant and growing body of evidence is showing that small manufacturing establishments are offering good jobs and the hope of middle class lives to inner city residents desperately needing such opportunities.

But no such evidence was presented. Instead, Schwartz provided a single example of a domestic manufacturer creating such employment and hope – a steel products company in Baltimore.

Schwartz contended that such operations “are vital if the United States is to narrow the nation’s class divide and build a society that offers greater opportunities for everyone — rich and poor, black and white, high school graduates and Ph.D.s.” And I fully agree with the proposition. But the article gave readers no reason to believe that the experience of Marlin Steel and its workers was being replicated anywhere else.

So I considered it entirely appropriate to tweet in response “Boosterish @NelsonSchwartz art on small factories as anti-#poverty “weapon” based on – get this – a single company.”

I was pleased to see Schwartz take the criticism seriously enough to respond. But the response itself was sorely lacking: “I guess you wanted more statistics and fewer people?”

After thanking him for the return tweet, I replied with the crucial question, “Data are always more important than anecdotes. How representative is Marlin’s experience?”

Schwartz insisted “There’s plenty of data in the story. The key is that manufacturing pays much more than service jobs available to the same folks.” But of course, that wasn’t my point. I was asking him for more examples of small factories alleviating urban poverty. And Schwartz never provided any.

I reminded him twice that my expressed concern was that his article never demonstrated that “Marlin’s experience was representative of anything” and that, if that is indeed the case, “then there’s no significant evidence for the claim made in the headline – and for the theme of the story.”

But Schwartz kept his focus on the superior qualities of manufacturing jobs on average versus service sector jobs, and their unique capability to “lead to the middle class” for “most non-college educated workers.”

As I noted to Schwartz, “[N]o one would be more pleased than I by significant evidence that [manufacturing jobs are] coming back to inner cities, or could realistically return.” And there’s unmistakable value in observing that factory work can turn around bleak lives and neighborhoods, and in explaining in detail why – two of the article’s especially strong suits.

But portraying an isolated event as a trend violates a fundamental rule of journalism. Schwartz’s failure after repeated prodding to identify other Marlin-type successes, along with his unwillingness to acknowledge faulty judgment, can only further set back the news business’ ever tougher struggle to maintain its credibility.

(What’s Left of) Our Economy: Why Trump-ian Trade Policies Needn’t Doom the Third World

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China, David Cay Johnston, developing countries, Donald Trump, James Pethokoukis, Jobs, Kenneth Rogoff, poverty, progressives, protectionism, The Daily Beast, third world, Trade, wages, {What's Left of) Our Economy

A major test of a worthy journalist is whether he covers stories that clash dramatically with his own sympathies and/or those of his biggest fans, and David Cay Johnston’s latest piece – on the immense toll taken on third world economies by corrupt leaders – passes with flying colors. Moreover, Johnston’s work also strongly undermines a major emerging claim during this presidential campaign – that Trump-ian trade policies should be opposed largely because they would his close down a major growth engine for developing countries.

In his May 3 Daily Beast article, Johnston – a Pulitzer Prize-winner during his years at The New York Times – spotlights the work of “investigative economist” Jim Henry, whose research contends that, since 1970, crooked politicians have stolen just over $12 trillion from the third world countries they’ve ruled. As Johnston notes, this humongous figure represents about five cents of each dollar of total global wealth and about two-thirds of America’s current annual economic output. And he rightly observes that “Were all of the flight capital returned and invested smartly it would reduce human misery by raising living standards, especially by reducing child mortality while increasing both health status and life expectancy.”

According to Henry’s findings, almost a third of this stolen wealth has come from five countries – China, Malaysia, Mexico, Russia, Venezuela. The first has certainly made impressive progress reducing poverty largely via trade with the United States and other rich economies, and expanded trade with America in particular clearly has created a modern manufacturing complex – with all its wide-ranging benefits – in northern Mexico.

But if Henry’s work is on target, it means that some $9 trillion has been looted from much poorer regions – notably in sub-Saharan Africa – that have been left far behind as trade and investment have created ever more extensive economic integration between the world’s North and South. The political ramifications for the politics of American trade policy would be profound.

For during this presidential campaign in particular, Donald Trump’s rise to the threshold of the Republican nomination has prompted trade policy supporters to retreat into the argument that, whatever the harm they’ve done to the U.S. middle and working classes, recent trade deals and similar decisions deserve backing because they’ve achieved a major moral goal: reducing third world poverty.

In the words of James Pethokoukis of the conservative American Enterprise Institute, “Even knowing what we now know about the possible impact on U.S. jobs, should Washington have somehow limited trade and overseas investment with China — even at the cost of higher global poverty? Certainly the humanitarian answer is ‘No.'”

And according to Harvard professor Kenneth Rogoff, a former chief economist at the International Monetary Fund, “In the name of reducing U.S. inequality, presidential candidates in both parties would stymie the aspirations of hundreds of millions of desperately poor people in the developing world to join the middle class.”

Moreover, making explicit a point Rogoff left implicit, a writer from liberal website Vox.com used the same argument against Democratic presidential challenger Bernie Sanders: “Limiting trade with low-wage countries as severely as Sanders wants to would hurt the very poorest people on Earth. A lot.

“Free trade is one of the best tools we have for fighting extreme poverty. If Sanders wins, and is serious about implementing his trade agenda…he will impoverish millions of already-poor people.”

In fact, this position has long been an article of faith even among avowed progressives who have been highly critical of current trade policies – to the point of fingering American protectionism as a leading obstacle to third world economic progress.

Henry’s research makes clear that developing countries and their self-styled champions can adopt a poverty fighting strategy that doesn’t require shafting American and other developed country workers – cleaning up their acts. Johnston deserves great credit for reporting on these findings. Any chance that America’s political leaders throughout the spectrum will start paying attention?

Im-Politic: Why Sanders Really Isn’t Bernie-One-Note

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African Americans, Bernie Sanders, Bill Clinton, Bureau of Labor Statistics, campaign finance reform, Center for Economic Policy Research, China, free trade agreements, George W. Bush, Hillary Clinton, Im-Politic, manufacturing jobs, offshoring, poverty, race relations, sexism, trade policy, World Trade Organization

Truth in advertising: I have a lot of respect for Bernie Sanders and very little for Hillary Clinton. Still, here’s some data that I believe even many Clinton supporters will agree undermines her claim that her rival for the Democratic presidential nomination is a “single-issue candidate”whose obsessive focus on economic inequality and its roots in a money-drenched political system is ignoring crucial issues of racial and gender discrimination.

The data come from the government’s Bureau of Labor Statistics (BLS) and the private Center for Economic Policy Research (CEPR), and they make clear the harm done to African Americans by decades-long American trade policies that the former Secretary of State has strongly backed for most of her career, and the Democratic Socialist Senator from Vermont has consistently opposed.

According to a 2008 CEPR report, in 1979, blacks made up 23.9 percent of the workforce in American manufacturing, which is the part of the economy most extensively exposed to foreign competition. By 2007, this figure had sunk to 9.8 percent. And BLS data place this share at 9.7 percent as of last year.

Although there’s still by no means a consensus among economists concerning trade policy’s responsibility for manufacturing job loss, even this historically free trade-worshiping group of scholars keeps producing more and more evidence indicating that its share is considerable. So the above statistics make clear that African-Americans have taken an outsized hit both from Washington’s longstanding pursuit of trade agreements that have inevitably fostered production- and job offshoring, and from its equally longstanding failure to combat predatory foreign trade policies effectively.

The price paid by African Americans becomes even clearer when these percentages are translated into raw numbers. Based on the CEPR and BLS data, in 1979, 4.61 million blacks worked in U.S.-based manufacturing. Last year, this number had plunged to 1.49 million.

It’s important to note that some uncertainty surrounds this 2015 figure, because it’s based on one set of BLS data that peg the domestic manufacturing workforce at just under 15.34 million. These numbers come from the Census Bureau’s Current Population Survey (CPS), which uses answers from American households. My figure for 1979 comes from CEPR’s number of blacks’ percent of the manufacturing workforce, and from BLS total manufacturing workforce figures based on BLS’ own Current Employment Statistics. These use answers from American employers. The CES numbers peg the domestic manufacturing workforce at just over 12.30 million for 2015 – considerably lower than the CPS figure.

I wasn’t able to find an absolute number of 1979 manufacturing workers per the CPS methodology (crowd-sourcing hint!) but it’s difficult to imagine that the overall trend of disproportionate black manufacturing job loss would change significantly. And if something like three-plus million African Americans lost manufacturing jobs over the last four decades, does anyone – including Ms. Clinton’s supporters – believe that the impact on black employment and wage levels – wasn’t devastating? Does anyone believe that these policy failures didn’t play a huge role in turning Rust Belt cities with big African American populations – like Flint, Michigan – from centers of industry into centers of poverty? And that family break-up and related social ills in the black community weren’t greatly aggravated by the employment crisis suffered by the only sector of the economy with an historical record of enabling millions of working class Americans to lead middle-class lives?  

Starting this exercise in the late 1970s, moreover, is important because that’s when the American economy began opening wide to foreign competition. It also makes possible showing how blacks in manufacturing fared during the 1990s, a period lauded by Ms. Clinton as an economic golden age flowered under her husband, President Bill Clinton. But it was also a time when President Clinton spearheaded the first great wave of post-Cold War American free trade agreements.

Between the first year of Clinton’s presidency, in 1993, and the last, in 2000, the black share of American manufacturing workers fell from 16.5 percent to 13.6 percent. That’s a 17.58 percent fall-off. During the same period, the share of the overall U.S. workforce employed in manufacturing declined from 17 percent to 15.1 percent. That decrease was a much smaller 11.18 percent. Moreover, these data are all from the CEPR report, so it’s apples-to-apples.

During the ensuing administration of George W. Bush, black manufacturing job loss was even worse (21.6 percent), though this performance in part represented the hammering the entire manufacturing workforce suffered between 2001 and 2007 (19.44 percent of jobs eliminated). But even these numbers reflect poorly on the Clinton record. For it’s increasingly agreed that much of this manufacturing jobs massacre resulted from Mr. Clinton’s late-1990s decision to back admitting China into the World Trade Organization. It signaled to offshoring-happy American multinational companies that they could send floods of factories and jobs to the People’s Republic without fear of new U.S. tariffs on their U.S.-bound exports if the volumes became overwhelming.

Nothing in this post should be taken for agreement with the fundamental Clinton camp portrayal of Sanders as a Bernie-One-Note. But even if they were right, economic inequality – and its roots in the dangerously large role of money in American politics that’s produced a wide range of shortsighted and downright destructive policies, including on the trade front – is one heck of a big, loud note.

For although there’s no legitimate doubt that racial and ethnic minorities, and women, face their own distinctive problems in American society and the U.S. economy today, it’s equally clear that Sanders’ priorities, if executed well, would go far toward solving the most serious problems facing all these groups – not to mention the entire population. Ironically, during his first run for the White House, in 1992, Ms. Clinton’s husband recognized the need to focus “like a laser beam” on the economy – when it was in much better shape. There’s a strong case that her own campaign this year could benefit from taking that advice.

Im-Politic: Black Belt Lessons on Race

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Alabama, Black Belt, civil rights movement, Im-Politic, poverty, race relations, racism, segregation, Selma, South, voting rights

Glass half empty? Half full? Somewhere in between? I was confronted with those questions last week when a flood of civil rights-era memories was unleashed in my head from the least likely of sources.

It all began on Wednesday night, as I was watching a college basketball game. During one of the commercial breaks, an ad was broadcast that jerked me to attention with the phrase “black belt.” Anyone alive and alert to the news during the 1960s, or schooled in its history, should link these words with a stretch of counties in Alabama originally named for its unusually rich ebony soil, but later known for large African-American populations. (Geologically, the Belt stretches through the entire south, from Texas to Maryland.)

The Alabama portion in particular was the site of landmark civil rights movement events. Some were peaceful and inspiring, like the Montgomery bus boycott resulting from Rosa Parks’ refusal to submit to segregationist seating laws in public transit. Others, like the police suppression of the Selma voting rights march, were shamefully violent.

Wednesday night’s TV commercial mentioned none of this. Instead, it touted the region as a great place for hunting and fishing. My first reaction was pleasant surprise, given the Belt’s tumultuous history. Initially, it looked like another example of the South putting its tragic past behind it. A little further investigation, though, revealed a more complicated reality.

According to at least one scholar, like much of the majority black South today, the Alabama Black Belt is marked by “low taxes on property, high rates of poverty and unemployment, low-achieving schools, and high rates of out-migration” along with “a high number of single-parent households, high teen birth rates, and poor access to health-care services.”

Nor has the region become entirely free of discrimination, or at least charges thereof. Last fall, for example, in what it described as a budget-cutting move, Alabama’s Republican controlled state government closed 31 driver’s license offices. According to critics, an outsized share of these closings came in the Black Belt, and they looked suspiciously like an effort to create new obstacles to voting in this predominantly Democratic area.

It seems beyond legitimate dispute that times have changed dramatically for the better in the Belt. How, for example, can anyone not take as a small encouraging sign the Wednesday night ad, sponsored by a “public-private partnership committed to promoting and enhancing outdoor and tourism opportunities” and “sustainable economic development” in the region? I can personally remember days when this would have been inconceivable.

At the same time, as signs of racial tensions resurface throughout the country, the Black Belt’s continuing economic and political struggles raise questions more and more Americans are asking: Should the nation mainly be proud of how much has been accomplished in this sphere? Or troubled that, more than half a century after official segregation began ending, so much more needs to be done?

(What’s Left of) Our Economy: Flint’s Water Crisis is Also a De-industrialization Story

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automotive, Detroit, Flint, General Motors, healthcare services, Jobs, manufacturing, Mexico, municipal finance, poverty, Rust Belt, services, taxes, third world, wages, water pollution, {What's Left of) Our Economy

When I began reading about the water crisis in Flint, Michigan, my first thoughts were of the Mexican factory towns near the U.S. border, where rapid and unregulated industrialization driven by manufacturing for the American market had produced pollution nightmares – including dangerously poisoned drinking water.

The shameful situation in Flint has many causes, but one that’s been neglected has been a development that makes the city a depressing mirror image of much of northern Mexico – rapid de-industrialization, stemming from the plight of the U.S. automobile industry, that has robbed Flint of the ability to pay for the kinds of public services Americans for decades have come to expect in a financially sustainable way.

According to Flint’s auditors, the city has long provided its citizens with “ a full range of services, including police and fire protection, the construction and maintenance of streets and other infrastructures, recreational activities and cultural events, water and sewer services, and sanitation/garbage pickup services.” The water crisis has made sadly clear that this standard agenda was in fact unaffordable for Flint. But the gap between the city’s first-world ambitions and resources that are markedly below that level has been evident for years from its chronic budget deficits and its heavy reliance on state and federal aid.

The earliest Flint budget figures on-line are from 2002, and show a $7.4 million deficit on $457.7 million in expenses and $445.3 million in receipts. Only 10.13 percent of those receipts came from combined income and property taxes. More than three fourths of the city’s take was generated by the Hurley Medical Center’s revenues. Last year’s figures make the city’s finances and tax base look stronger. The city ran a $568 million surplus on spending of $147.3 million and revenues of $147.9 million. And taxes represented 22.85 percent of those total receipts.

Those overall numbers, however, should tell you that something’s a little fishy. In fact, in 2011, the hospital was in effect taken off the municipal budget – despite its profitability. For that last year it was on those books, Flint’s government spent $567.3 million and took in $523.2 million, for a $44.1 million shortfall that was much larger proportionately than 2002’s. And taxes were a mere 6.15 percent of city revenue.

Even more disturbing, that 2015 Flint budget also removed all of 2014’s $24 million worth of sewer expenses and some $23 million of that year’s $44.2 million in water expenses. So even these necessities had revealed themselves as completely beyond Flint’s means.

Why is Flint is such a fix? Bad government is surely a big part of the answer. But so is dramatic economic deterioration. As has been widely noted, the city’s population is disproportionately poor and African American. But it’s also crucial to understand that over the last decade alone, Flint has steadily lost much of the material wherewithal that any municipality needs to be functional by recent American standards. Let’s start with the broadest economic indicators and then examine the trends in greater detail.

It’s tough for any country or community to succeed without economic growth, and Flint is a long-time laggard. According to Commerce Department figures (available at this interactive data base), from 2001 (the year before those earliest on-line financial reports date from) through 2014, Flint’s economy actually shrank in inflation-adjusted terms – by 8.67 percent. By contrast, America’s urban areas as a whole grew by 24.30 percent.

Census Bureau data show that the city’s population actually dropped more steeply from – 124,943 in 2000 to just over 99,000 in 2014. So in theory, there was more wealth to share in Flint. But in practice, it hasn’t worked out that way. Between 2000 and the Census Bureau’s estimated 2010-2014 average, median household income in the city fell by nearly 12 percent – and that’s before adjusting for inflation. No doubt a veritable and ongoing employment depression deserves much blame. During this period, the number of employed Flint residents cratered by 37.63 percent – from 45,885 to 28,618. And the poverty rate surged from 26.4 percent to 41.6 percent. That’s nearly triple the national rate in 2014 (14.8 percent).

Leading the way down in Flint has been manufacturing. Its real output (as also shown in that Commerce data base) plunged by 29.10 percent during this period, compared with 26.67 percent real manufacturing growth for all of the nation’s metropolitan economies. As a result, this sector shrank from more than 22 percent of the city’s economy after inflation to just over 17 percent. In U.S. metro areas as a whole, manufacturing stayed at somewhat over 11 percent of real gross product.

Flint’s manufacturing’s woes, in turn, overwhelmingly stem from the troubles of the American automobile industry. Flint is nothing less than the birthplace of General Motors, and has long been known as “Vehicle City.” Back in 1978, GM employed more than 80,000 Flint-area residents. Production figures are harder to come by – the Commerce Department doesn’t break out automotive output for Flint for most years precisely because it has been so GM-dominated, and therefore publishing the numbers would release proprietary data. But as of 2013, the automotive sector is recorded as representing nearly 71 percent of the Flint metropolitan area’s inflation-adjusted manufacturing production.

The GM employment footprint, however, had shrunk to some 8,000 by 2006, and as this time-line makes clear, the company has closed down many more and larger facilities in the area since the 1980s than its opened or expanded. Just as important, the rest of Flint’s economy didn’t fill in nearly enough of the resulting gap.

The entire private sector service providing complex in the city grew in real terms by only 5.71 percent – versus 30.31 percent for American metro areas as a whole. Flint’s hospital apparently couldn’t the city’s economy, either. In Flint, health care services expanded their output by only 16.76 percent after inflation between 2001 and 2014 – much less than half the nation-wide rate in cities (42 percent). And where services growth in Flint was strong – as in the information sector – it remained far too small to make a major difference.

Flint’s de-industrialization of course changed the city’s job mix, too – and not for the better. In 2000, according Census figures, manufacturing accounted for 23.2 percent of the jobs held by city residents. During the 2010-2014 period, this share sank to 14.1 percent. The rest of Flint’s major employing sectors fared much better relatively speaking – especially, it seems, the healthcare industry. Its supersector – what I’ve called the government-subsidized private sector – boosted its share of Flint employment from 23.5 percent to 27.9 percent during this period. But Flint’s biggest job loser – manufacturing – pays better than average wages. Except for that subsidized private sector, most of Flint’s biggest job winners pay below average wages.

As a result of the growth and job-related setbacks, Flint’s tax base shriveled. And the damage was hardly limited to individual taxpayers. According to the city’s 2015 financial report, “Property values within the City are believed to have hit the bottom, declining from $1.804 billion in 2002 to $1.192 in 2011 and further declining to $969.13 million in 2012.” Only “slight increases are projected over the next few years.”

Because de-industrialization isn’t responsible for all of Flint’s predicament, it’s way too early to say that the city is doomed to third world status. Other so-called Rust Belt municipalities have fared considerably better, no doubt in part because they weren’t so heavily invested in a single industry like Flint – and its much larger, also wheezing neighbor, Detroit. But because of manufacturing’s matchless record of creating middle class jobs for working class Americans, and because so many former manufacturing centers continue to struggle, expect de-industrialization’s impact to keep threatening Flint’s ability to deliver first world-level services, and its claim to first world status, for years to come.

(What’s Left of) Our Economy: No Easing American Poverty While Policy Blindspots Persist

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American South, Chico Harlan, Immigration, Jobs, mass transit, poverty, single mothers, The Washington Post, Trade, transportation, wages, welfare, {What's Left of) Our Economy

Chico Harlan and some colleagues at the Washington Post have done some terrific reporting recently on the poverty-heaviness of the American South and especially the new developments fueling it, and his piece this week on its increasing suburban-ization is no exception. (Click here and here for two earlier articles.) Except I take exception in one regard. Harlan here seems to gloss over the role played by poor – and avoidable – personal choices, both by currently poor southerners and by their forebears.

By following the odyssey-like travel forced on one young low-income Atlanta-area woman even to go job-hunting, Harlan convincingly shows the harm done by the dispersal of poor populations from inner cities combined with the lousy mass transit systems in suburbs and equally bad transit links between those suburbs and urban cores. And in fact, recent research makes clear that the transit dimension of poverty and near-poverty is hardly restricted to the south. So it’s completely appropriate to sympathize with Lauren Scott, who can’t afford a car, as she spends literally hours on buses heading to and from job interviews and following up other employment leads.  It’s just as appropriate to condemn the zoning laws and other state and local policies that make such travel so excruciating and time-consuming.

At the same time, I wish Harlan had spent more space discussing other aspects of Scott’s life that deserve more scrutiny, and that shed more light on poverty in America today. For example, she’s a single mother, which the author documents both pushed her below the poverty line to begin with, and which has limited the kinds of positions she could hold and applied for. In Scott’s case, Harlan writes, she was misled by a faulty medical diagnosis of permanent infertility. At the same time, that’s hardly the only, or even a major, reason for out-of-wedlock births by mothers who literally can’t afford motherhood.

In addition, she has a battery charge on her record. A dubious roommate helped drain her modest savings, and her family was in position to help. Her daughter’s father had flown the coop. Scott had “long ago lost contact with her mother.” The article makes no mention of her own father. And although one of her siblings is serving in the military, another has just been released from prison.

All of which puts in interesting, to say the least, perspective Harlan’s observation that “A generation earlier, even people in Scott’s situation had advantages that she lacks. They tended to live in the middle of Atlanta, near the subway, and they received welfare, cash payments from the government that were available to nearly all in deep poverty, regardless of whether they had a job.”

Not that the author implies that this system was ideal. But Scott’s personal and family history strongly indicates that it wasn’t even acceptable – and had destructive effects on its intended beneficiaries.

I also wish that Harlan had mentioned other sources of new and resurgent poverty in the south and elsewhere in America – especially the offshoring-friendly trade policies and Open Borders/amnesty-friendly immigration measures that have destroyed so many family wage job opportunities for the nation’s working class and working poor. Some attention is now being paid throughout the policy community to domestic moves that could alleviate poverty – like the aforementioned transportation improvements and more generous family and medical leave requirements, along with more familiar proposals like further expanding the earned income tax credit, raising the minimum wage, and of course improving the schools. But the near future could well see trade and immigration pressures on native-born workers – which have the greatest direct effects on job-creation and preservation – grow even stronger.

As a result, I’m hoping like heck that 2016 is a better year for Lauren Scott, who like many of America’s poor really does want to overcome past mistakes and work for a living. I just wish I was more optimistic.