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Donald Trump’s Not-So-Great Economy

Dig just a little below the surface and you’ll find that the much-discussed gains for working people are mostly illusionary

Wages have risen only 12.4 percent since 1977, despite a sharp 77 percent escalation in productivity. (Photo: Craig Ruttle/AP)

Wages have risen only 12.4 percent since 1977, despite a sharp 77 percent escalation in productivity. (Photo: Craig Ruttle/AP)

Donald Trump and his fans are fond of loudly trumpeting that 70 percent of Americans give the economy a positive rating. Even Trump’s “enemies of the people,” the mainstream media, routinely celebrate the economy, describing it, for example, as “on fire,” and a “tremendous achievement, namely an economic boom uniquely his.”

But dig just a little below the surface of Trump slogans and media headlines, and you’ll find that the much-discussed gains for working people are mostly illusionary. For workers, pay increases averaging just 3.2 percent—84 cents an hour in 2018—still leave working-class people in essentially the same place as four decades ago. Wages have risen only 12.4 percent since 1977, despite a sharp 77 percent escalation in productivity.

Moreover, much of these limited pay hikes remain vulnerable to the deterioration of health-care coverage at the hands of employers who are increasingly transferring the weight of rising health costs to workers. For example, the cost of deductibles has tripled since 2008, growing eight times faster than wages.

“The bigger issues [for working families] are low wages and the increased cost of health care,” economics professor emeritus Michael Rosen of Milwaukee Area Technical College tells The Progressive. “Even where workers are finally getting raises they are frequently eaten up by health care cost increases, which employers force employees to pay in increased premiums, deductibles, and copays.”

Further, the low official jobless rates mask a bigger set of problems, including the sharply decreasing labor-force participation and social dislocation of older males without a college degree. This is reflected in the opioid epidemic and rising suicide rate that have brought about a decline in life expectancy among middle-aged working-class Americans, characterized as “deaths of despair.”

In fact, in 2016, the United States had the second lowest labor-participation rate (almost 63 percent) among the thirty-five nations which make up the Organization for Economic Development and Cooperation.

And despite Trump’s hollow rhetoric about restoring America’s manufacturing base and caring for the nation’s “forgotten men and women,” there have been no large-scale increases in factory jobs in key manufacturing states like Pennsylvania, Ohio, Michigan, and Wisconsin. These were all states carried by Trump in 2016 in the wake of the United States losing six million production jobs since 2000.

Despite Trump's rhetoric about restoring America's manufacturing base, there have been no large-scale increases in factory jobs in key manufacturing states.

Instead, the industrial Midwest has continued to suffer high-profile job losses like the closing of GM’s Lordstown, Ohio plant. GM, which accumulated a $12.8 billion profit in 2017, has 15,000 workers in Mexico earning an average of $3 an hour. Shifts of production to Mexico by firms like Rexnord have still been taking place, despite Trump’s non-stop rhetoric about retaining jobs in the United States. In Michigan, eighteen counties carried by Trump in 2016 have lost manufacturing jobs

Similarly, in Pennsylvania, eight Trump-voting counties have suffered drops in factory jobs. In Wisconsin, ten Trump-voting counties have witnessed losses in manufacturing work. A Trump-promoted Foxconn plant in southeastern Wisconsin—an area which Trump won in 2016—has gone through numerous changes, making the promised 13,000 jobs highly improbable. This comes as very bad news after public officials agreed to dole out up to $4.5 billion in state and local “incentives.”

America’s real surge in manufacturing jobs has happened largely outside the Midwestern rustbelt where Trump made such grandiose promises. Instead, growth has been occurring where manufacturing was already increasing before his election.

“The Mountain West and the energy-rich Great Plains have experienced much faster factory job growth than the Great Lakes states that are crucial to Mr. Trump’s hopes of winning a second term,” The New York Times reported. “Nearly every state west of the Mississippi added manufacturing jobs faster than the national average in 2017 and 2018, the analysis shows. Ohio, Wisconsin, and Pennsylvania were all at or below average.”

Neither these states nor the nation will be rescued by an erratically imposed set of tariffs whose scatter-gun effects may well do further harm to U.S. workers and consumers.

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So are we seeing the “great Trump economy” restore America’s economic greatness? Hardly. A look at the evidence reveals miniscule pay hikes eroded by health-care costs, ongoing insecurity about the spread of low-wage jobs, residual insecurity due to offshoring and automation, and relatively few jobs returning to depleted Midwest factory towns.

So are we seeing the “great Trump economy” restore America's economic greatness? Hardly.

And, of course, all of this is occurring against a backdrop of ever-accelerating inequality fueled by Trump’s tax cuts and a host of other policies enriching the top 1 percent while his “forgotten men and women” face only more neglect.

Over the past three decades, Federal Reserve data shows that the wealth of the top 1 percent increased by a stunning $21 trillion. Meanwhile, the bottom 50 percent of Americans experienced a $900 billion loss.

Incomes currently reflect much of the same pattern of inequality, with the top one-tenth of 1 percent hauling in 188 times as much as the bottom 90 percent, according to economist Emmanuel Saez. Meanwhile, corporate CEO compensation soared at twice that rate, reaching a median of $18.6 million in 2018.

Trump frequently boasts that the stock market has climbed 32 percent during his reign—as if it were a barometer of overall prosperity for Americans. But increases in stock value benefit only a small portion of the nation; 84 percent of the value of stocks is held by just 10 percent of the public.

Corporations and their owners are devoting huge amounts of capital—much of it gained after the $1.5 trillion 2017 tax cuts accruing largely to corporations and the wealthy—to stock “buybacks.”  Buybacks increase the value of stocks held by current owners while adding nothing to new investment in purchases of new equipment or research for future growth.

“For the first three quarters of 2018, buybacks are up 52.6 percent to $583.4 billion,” reported S&P Global.

In a recent opinion piece, Democratic Senators Charles Schumer and Bernie Sanders cited these numbers and announced plans for legislation aimed at increasing corporate investment in workers and limiting corporate stock buybacks.

The experience of inequality in a vastly separated society remains far more real to many working people than talk about the “great Trump economy.” The universe of large-scale aggregate statistics cited by Trump and the media is not the world where working families experience the economy, notes former Labor Secretary Robert Reich.

“Most Americans don’t live in that economy,” he points out. “They live in a personal economy that has more to do with wages, job security, commutes to and from work, and the costs of housing, health care, drugs, education and home insurance.”

Roger Bybee

Roger Bybee is a Milwaukee-based freelance writer and progressive publicity consultant whose work has appeared in numerous national publications and websites, including Z magazine, Common Dreams, Dollars & Sense, Yes!, The Progressive, Multinational Monitor, The American Prospect and Foreign Policy in Focus.

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