Fact 1: Manufacturing employment has increased in eleven out of the last twelve years. Read this report with data from the Progressive Policy Institute’s Ed Gresser. A tidbit:
Since the 2010 nadir, manufacturers have added jobs in 11 of the last 12 years* — the only exception, again, being 2020 during the COVID pandemic – and total employment has grown to 12.9 million. (8.4% of 154 million jobs). In both length and net totals, this rebound has surpassed that of the 1990s; by length alone, as of 2019 it matched the 1960-69 period** as the longest continuous period of manufacturing job growth in BLS’ records***. Some industry samples, from 2010 through 2022: automotive industries +370,000 (though from a dire financial-crisis low), food manufacturing +265,000, fabricated-metal products +197,000, machinery +130,000, chemicals +127,000, wood products +92,000, electrical equipment +55,000, rubber +22,000, furniture +20,000. Or, alternatively by state (from 2010, rather than the single-year growth reported above): Nevada +29,000, Georgia +72,000, Pennsylvania +11.000, California +70,000, Texas +115,000, Michigan +155,000. Most states remain below their 1998 counts, but one region — the Great Plains and Rocky Mountain West — has gotten all the way back.
It’s hard to tell why this is, but this employment growth in manufacturing is unlikely to be the product of government policies, given that the last three administrations all had very different approaches.
Fact 2: The International Trade Commission is going woke, as revealed by a report that is getting a lot of pushback from trade economists. Some background is needed here: U.S. trade representative Katherine Tai apparently agrees with the Biden administration’s claim that trade protectionism advances the goal of racial equity. Enter the U.S. International Trade Commission (ITC), which released a report showing that trade liberalization disproportionally hurts minorities.
Trade economists disagree. See, for instance, the careful analysis done by Gary Winslett, an assistant professor at Middlebury College. He reviewed five of the 74 studies which found that trade creates some racial disparities and shows how those findings are often a misattribution. An example:
The first is a 2019 study by Mary Kate Batistich and Timothy Bond. It found that in the late 1970s and early 1980s, cheaper imports from Japanese firms lowered employment among Black workers, but not White workers, but importantly, the study said that the reason this disparity happened was because those Black workers had been forced to attend segregated schools earlier in life, had had their education throttled by discrimination, and had disproportionately not finished high school. By the ITC’s own admission, Batistich and Bond “find only limited evidence for negative effects of race once education levels are taken into account.”
My colleague Christine McDaniel also looks critically at the ITC report in this piece. She notes that the ITC report’s focus on manufacturing imports ignores the fact that such imports, while important, aren’t the only aspect of trade. Trade is imports and exports, goods and services, inputs and final goods. Manufactured outputs are traded internationally, but so are services and agricultural goods. One needs to look at the full picture to understand the distributional impact of trade and trade policy. McDaniel’s article complements Gresser’s and Winslett’s pieces nicely. She writes:
In understanding worker outcomes from increased import competition, the dominant role of education, skills, and experience across these studies is inescapable. While outcomes from increased manufacturing imports differ across racial groups, once you control for educational attainment, skills, and occupation, the racial disparity shrinks. So, while there are worthy efforts to be made to eliminate the racial gap in wages and employment outcomes, the research demonstrably shows that policy efforts would be more effective on improving education and skills among certain racial and ethnicity groups. Workers with a more pliable skillset will be more resilient to increased trade, changes in technology, or even business cycles when they happen.
The whole piece is worth reading.
Interestingly, education is a much more important factor than trade for understanding racial disparities. This reality has been highlighted by those who have pushed back against the ITC report.
Finally, here is a new NBER paper (H/T to Scott Lincicome) titled “Racial Ethnic Equity and the China Shock” that, without knowing it, indirectly pushes back against the ITC report. The executive summary is here:
We examine how the labor market effects of import competition vary across Black, Hispanic, and white populations. For a given level of exposure to imports from China, we find no evidence that minority workers are relatively more harmed than white workers in terms of their manufacturing employment. However, Hispanic workers are overrepresented in exposed industries and therefore face greater manufacturing employment losses relative to whites on net. In addition, they experienced relative losses in non-manufacturing employment, largely due to their lower educational attainment and baseline industry mix. Overall, the China shock increased the Hispanic-white employment gap by about 5%, though these effects were short lived. In contrast, Black workers are less likely to live in areas or work in industries facing import competition, resulting in less negative effects on manufacturing employment relative to whites. In addition, exposed Black workers experienced gains in non-manufacturing and overall employment with no measurable wage consequences, while white workers saw depressed employment rates due to the China shock. The lasting effects of import competition in exposed areas were driven by white workers, while the experience of Black workers suggests that movement into non-manufacturing jobs was possible. White workers did not take advantage of these opportunities, perhaps due to better safety nets or perceptions that the available jobs were poor substitutes for those lost in manufacturing. The China shock narrowed the Black-white employment gap by about 15%. While many recent labor market trends have exacerbated Black-white gaps, import competition is a modest offsetting force.
Education is mentioned here, too.