Donald Trump’s Empty Economic Plan

Trump’s ideas for job creation will do far more harm than good.

In a short video featured on his official campaign website, GOP nominee Donald Trump promises to become “the greatest job-producing president in American history.”

“One of the things I’m most proud about is that I create jobs,” says Trump, while images of various Trump-branded buildings flash by. “Over the years, tens of thousands of jobs for the country, and I will do that for you.”

Trump has, however, offered shockingly few details about his plans for job creation or economic growth, given the importance of this issue to his campaign. Nor did that change with his acceptance speech at the GOP convention this week, where his discussion of the economy was a post-script to his broader theme of “law and order.” To the extent he offered any sort of economic vision, it was resoundingly pessimistic, protectionist and destructive – and unlikely to produce the jobs he promises.

While Trump’s acceptance speech included nods to the standard GOP tropes of ending government waste, eliminating “excessive” regulation and repealing Obamacare, the three pillars of Trump’s economic agenda appear to be ending free trade, cutting taxes and blocking immigration. Trump pledged to renegotiate NAFTA “to get a much better deal for America,” promised tax cuts that would “cause new companies and new jobs to come roaring back into our country,” and vowed to end immigration that has “produced lower jobs and higher unemployment for our citizens.”

None of these strategies are proven job creators – in fact, quite possibly, the opposite. According to the World Trade Organization, the United States is currently the world’s largest exporter of commercial services and the second largest exporter of goods. While opponents of trade point to the decline in manufacturing jobs as proof of trade’s “job killing” power, economist Stephen Rose points out that the decline in manufacturing employment began in the early 1970s – 20 years before the signing of NAFTA and while America was in fact enjoying a trade surplus with the rest of the world. Much of the decline in the number of manufacturing jobs has to do with increases in productivity – e.g. through automation – and in fact, the amount of U.S. manufacturing output is at an all-time high, even as the number of workers is declining.

As for immigration, an enormous amount of economic research has shown the benefits of immigration to receiving countries, including more jobs for local economies, more revenue in taxes and more opportunities for native workers to move upward. According to the Kauffman Foundation, 28.5% of new entrepreneurs are immigrants, and more than 40% of Fortune 500 companies have immigrant founders.

There’s also less than convincing evidence that tax cuts lead to job growth. One analysis, by Brookings Institution economist Gary Burtless found that job growth under President George W. Bush’s administration was significantly lower than it was under Presidents Bill Clinton, Ronald Reagan and the combined terms of Richard Nixon and Gerald Ford – despite Bush’s massive tax cuts in 2001 and 2003. As for Trump’s tax cut plan – the only somewhat specific proposal he has released – a study by the think tank Third Way finds that it would primarily benefit Trump himself.

Trump’s economic plan is so much snake oil, and it’s a big disservice to his supporters, many of whom have been drawn to the candidate by perceptions of economic disenfranchisement and pessimism. Trump’s promise to “Make America Great Again” appeals to an enormous sense of loss and backward momentum that many middle-class Americans – rightly – feel. But while Trump seems happy to exploit Americans’ feelings of insecurity, he has so far offered nothing concrete or credible to solve it.

If Trump truly cared about the Americans for whom he wants to serve as their “voice” – as he declared in his speech – he should offer a plan to restore the tremendous loss of wealth that Americans suffered as a result of the financial crisis and the recession.

Among non-college-educated Americans – the heart of Trump’s base – median net wealth has continued to fall since the recession, much of it the result of continuing declines in homeownership. According to the St. Louis Federal Reserve, the real median net wealth of high school graduates in 2013 was down by a whopping 36% compared to 1989. This loss of financial stability is what’s fueling the deep sense of “precarity” and financial fragility that many households are experiencing.

Trump should also offer ideas to solve another underlying cause of economic uncertainty among his base: an unfolding crisis in long-term unemployment and declining workforce participation, particularly among prime-age men.

While the overall unemployment rate has continued to decline, 1.9 million Americans – about a quarter of all unemployed – have been jobless for 27 weeks or more (what the Bureau of Labor Statistics defines as “long-term unemployed”), and nearly 1.4 million Americans have been out of work for a year or longer. Many Americans have in fact given up trying to work again. Among Americans without a high school diploma, only 46% are still part of the labor force, and among men ages 25 to 54, workforce participation has declined by more than four percentage points since 1994.

One concrete proposal Trump did mention this week – re-employing coal miners – would make a barely a dent in job creation, even if the Americans among the long-term unemployed were to take those jobs. According to BLS, the number of mining and logging jobs peaked in 1981 at about 1.25 million jobs and only employs a total of about 700,000 jobs today.

While Trump purports to be a champion for those the modern economy has left behind, the lack of a genuine plan betrays a lack of sincerity, interest or imagination – or perhaps all three – in solving the legitimate economic problems faced by his base and the American middle class. The economic insecurity Americans are experiencing today goes far beyond what the construction of a few new hotels and casinos can fix, and there is little Trump offers that would directly benefit households in managing their increasingly difficult day-to-day financial struggles. Instead, what he offers are scapegoats – trade and immigration – and false ones at that. But so long as Americans’ discontent can be the fuel for his rise, Trump has likely decided that he stands more to gain by stoking this anger instead of quenching it.

Americans, however, deserve better. They deserve an economic agenda that calls for smart government policies to encourage the innovation that actually creates jobs; that provides workers with the education and skills they need to find the jobs they want; and that will invest in the infrastructure necessary to spur economic growth.

Fortunately, that agenda already exists. It’s Hillary Clinton’s.

 

Anne Kim

Anne Kim is Senior Writer at the Washington Monthly.