Trump’s Economic Gamble
The president is betting on his three favored industries—manufacturing, mining, and construction—to drive growth. But those sectors have been shrinking for decades.
Donald Trump invariably presents his agenda as prioritizing the American economy over abstract ideals like global cooperation.
But that’s not accurate. With decisions like last week’s blustery withdrawal from the Paris climate accord, Trump’s agenda prioritizes some segments of America’s economy over others. He’s attempting to restore the primacy of industries that powered the American economy in the mid-20th century: particularly manufacturing, fossil fuel extraction, and construction. In the process, Trump is sublimating—if not opposing—the needs of the sectors likely to drive more growth through the 21st century: information technology, professional services, clean energy, entertainment, education, tourism, health care.
Trump is betting on industries that remain important components of the U.S. economy, but whose greatest contribution to American prosperity is behind them. He consistently slights the industries whose greatest contributions lie ahead. If Democrats can resist the temptation of reflexive anti-business populism, Trump is offering them a huge opportunity symbolized by last week’s widespread condemnation of his Paris withdrawal from cutting-edge companies and corporate leaders including Apple, Google, Amazon, Microsoft, Tesla, and General Electric.
When Trump talks about the economy, manufacturing and fossil fuel production usually take first billing, followed by construction—the target of this week’s infrastructure proposals. He typically cites these industries to justify imposing trade barriers or abandoning trade deals, restricting immigration, and rolling back environmental regulations, particularly on energy production and the carbon emissions linked to climate change.
It’s far from certain Trump’s agenda will benefit these industries as uniformly as he claims. The federal International Trade Association has calculated that about one-fourth of manufacturing jobs are tied to exports, even more for key sectors including aerospace, computers, and chemicals. If Trump’s confrontational approach to trade provokes retaliation from other nations, those exports—and the jobs they support—could be lost. Likewise, Trump’s push to unravel former President Barack Obama’s agenda for confronting climate change may boost coal and oil production at the price of suppressing lower-carbon alternatives like solar, wind, natural gas, and nuclear power that already cumulatively employ far more people.
But even if you count Trump’s approach as an unqualified benefit for his favored industries, he’s still banking on sectors that have been shrinking for decades. The number of Americans working in manufacturing peaked in 1979 and is over one-third lower today, according to the Bureau of Labor Statistics. Mining employment (mostly extracting oil, gas, and coal) peaked in 1982, and is over two-fifths lower now. Construction jobs haven’t fallen as sharply, but they peaked amid the housing bubble in 2006.
Measured as a share of all employment, Trump’s three favored industries have plummeted precipitously. In 1965, they provided about one in every three non-agricultural jobs. That fell to about one-in-four in 1983 and one-in-six in 2004. In May’s job report, manufacturing, mining, and construction accounted for fewer than one-in-seven jobs; the BLS projects that number will fall below one-in-eight by 2024. Trump is trying to move the economy with a lever a fraction of its size 50 years ago.
Job growth is now driven more by post-industrial occupations, which have more to lose from Trump’s agenda of “deconstructing” government at home and erecting barriers to immigrants and imports from abroad. Health care and education, and government at all levels, would face an employment squeeze from the budget cuts Trump is seeking. Business and professional services, from accounting to architecture, would have benefited from intellectual property protections and greater market access in the pan-Asian trade deal Trump jettisoned and the European deal treading water. Information technology and entertainment companies share those concerns. Travel and tourism firms fear that Trump’s confrontational immigration agenda (particularly his judicially-blocked temporary ban on entry from six Muslim-majority nations) will depress foreign visits to the U.S.
Together these sectors account for over four times as many jobs as the manufacturing, mining, and construction industries Trump touts.
Against these realities, Trump’s drive to boost those industries looks like the economic equivalent of his approach to cultural and demographic change: an attempt to restore an irretrievable earlier America. Compared to the overall economy, these three industries’ workforces tilt more toward men and away from urban centers: the non-partisan Economic Innovation Group, which studies regional trends, calculates that non-metropolitan areas, which provided Trump’s geographic base, host a larger share of jobs in mining and manufacturing than in any other employment sector except farming and logging.
By aligning so unreservedly with a “coalition of restoration,” Trump has opened the door for Democrats to assemble a “coalition of transformation” that welcomes not just demographic but also economic change. The nearly 100 companies that legally intervened against Trump’s Muslim nation order were a who’s who of American innovation; many of the same firms condemned his withdrawal from the Paris accord. All of them believe prosperity is more likely to come from enhancing the free flow of products, people, and ideas than from walling them out.
Neither party can afford to write off any region or any segment of the economy. But Trump’s narrow focus on a few traditional blue-collar industries leaves Democrats gaping openings. Trump’s agenda offers little to the growing ranks of low-paid service workers. Conversely, he is inviting Democrats to court workers in the white-collar, urbanized and increasingly globalized engines of today’s growth. Even the most manufacturing-dependent states would benefit more from a forward-looking economic diversification strategy than an attempt to reverse the technological advances that “make it easier to produce more with fewer people,” notes John Lettieri, the EIG’s co-founder.
Trump’s economic agenda is so focused on the past it might as well come with tail fins. In economics, as much as culture and demography, the president is ceding to Democrats the future—if they are smart enough to claim it.