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Recovery is reaching blue-collar workers

September 15, 2018

The economic recovery is really beginning to reach into Trump country.

The president is famous for his extravagant promises, involving, invariably, the biggest and the best. The landscape is littered with examples, although he never promised to create blue-collar jobs at the fastest clip since 1984, something he achieved in the first half of 2018.

A labor market that has been rocky since the financial crisis, and hasn’t truly delivered for many workers for decades, is robust enough to reach all corners of the economy, including Trump areas that have recently been doing better than other parts of the country.

As the Brookings Institution observes, “goods-producing industries have been surging while services industries have seen their seasonally adjusted employment growth slow since 2016.” This is good news for smaller, more rural areas, which are now actually outpacing the growth rate in large urban areas.

According to Jed Kolko of Indeed Hiring Lab, “job growth accelerated between 2016 and ’17 in counties that Trump won by at least 20 points.”

Industries emphasized by Donald Trump have performed particularly well, in contrast to how they fared under President Barack Obama. Kolko points out that mining and logging employment has increased 9 percent the first 18 months of Trump, after declining nearly 14 percent over the last 18 months of the Obama administration. Manufacturing employment is up 2 percent in the first 18 months of Trump, whereas it was flat the last 18 months under Obama.

Several things are going on. As the labor market has tightened — in June, there were 6.7 million job openings and 6.6 million unemployed Americans — it has benefited workers down the income scale. “Among those without a college degree,” Kolko writes, “both non-Hispanic Whites, who lean red, and Hispanics and non-Whites, who lean blue, have seen strong gains under Trump.”

Relatively high oil prices give a boost to the extraction industry (and the manufacturers that make its equipment), while manufacturing in general benefits from a strong global economy.

The administration, for its part, has leaned into a pro-growth tax and deregulatory program meant to spur more investment and remove burdens on business. The goal has been to defeat fatalist predictions of a “secular stagnation” that supposedly meant that we could never realistically expect anything more than middling economic growth.

At the moment, the warnings are less of stagnation than of an alleged labor shortage that, according to CNBC, is nearing “epidemic proportions.” This is exactly what we need. As Josh Barro of Business Insider points out, a tight labor market puts welcome upward pressure on wages and creates an incentive for workers to get more training and employers to provide it.

This dynamic still needs time to take hold. Wage growth, at least by traditional measures, has been surprisingly sluggish given the low unemployment rate (the White House argues that wages are being mismeasured and underestimated). But in August, encouragingly, average hourly wages increased 2.9 percent from a year ago, the biggest increase since June 2009.

As for training, a report from the National Association of Manufacturers says that two-thirds of manufacturers plan to increase worker training in the next year. This is so important because it’s only possible to achieve sustainable wage gains by increasing the productivity of workers. And so far, despite the boom, productivity increases have still been lagging.

The encouraging news for blue-collar workers is welcome. But we should set our sights higher. Regaining what was lost in the aftermath of the financial crisis isn’t enough. The national priority should be, as Oren Cass of the Manhattan Institute argues in his forthcoming book “The Once and Future Worker,” returning to a lost golden age of work, when labor force participation rates and wage growth were both reliably high.

The implicit Trump pledge in the 2016 campaign was of jobs good and stable enough to make a decent living and raise a family. That should never be overpromising in America.

comments.lowry@nationalreview.com

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