The blue-collar economic recovery

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.

COMMENTS