How ‘trade’ became a dirty word

  • by FMR
  • 10 Days ago
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U.S. President Donald Trump greets supporters at the “Make America Great Again” rally on March 10, 2018 in Moon Township, Pennsylvania. (Nicholas Kamm/Getty Images).

As President Trump signed hefty tariffs on most steel and aluminum imports Thursday, his top economic adviser Gary Cohn stood in the back of the Roosevelt Room with his arms crossed and a pained look on his face. Cohn, who announced last week he’s resigning from his role, disagreed vehemently with Trump over the tariffs. Most Republican lawmakers, business leaders, economists and Wall Street traders agree with Cohn that restricting trade is a mistake, and they are baffled at how trade became such a dirty word in the White House — and parts of America.

Kameen Thompson is trying to help them understand. Thompson, a 37-year-old steelworker from outside Philadelphia, drove through a snowstorm to be in Washington D.C. on Thursday. He hoped to stand by Trump during the signing of the tariffs, but the United Steelworkers union asked him to do a harder job: Go to Capitol Hill and educate lawmakers.

Thompson said he explained to them how he worked in construction and call centers during his teens and early 20s. It was a good year when he made $35,000. In 2005, his best friend’s brother told him about a steel job at the ArcelorMittal plant in Conshohocken, Pa. He was hired, and overnight his pay jumped to $80,000 plus benefits.

“I haven’t dipped under $80,000 since I started working in steel,” said Thompson, who is now the president of his local union, USW 9462. “That’s something you can build a family on.”

The money changed his life and gave him sense of purpose. The reason the plant was hiring in 2005 was a big order from the military to supply high-strength steel to provide more amour for Humvees in the Iraq and Afghan wars.

Thompson’s plant hummed with around 400 union workers until 2012. Then military orders dried up and the old customer base was gone, some closed during the Great Recession and some switched steel mills for their supplies. In 2015, metal prices crashed, driven largely by China flooding the world market with cheap steel. Today the plant in Conshohocken has about 200 union workers with more layoffs planned for later this year.

When Trump started campaigning to save blue-collar jobs and punish countries that don’t play fairly on trade, his message resonated among manufacturing workers, many of whom were going through fresh rounds of layoffs and pay freezes.

“Lot of steelworkers who were maybe Democrats didn’t switch party per se, but they switched to person who had their best interest,” said Thompson.

Workers like robots, but hate trade

Trump talks often about unfair trade, but experts say automation is the real threat to blue-collar jobs. Research by professors at Ball State University found that 88 percent of manufacturing job losses between 2000 and 2010 were due to robots and technology. It helps explain why manufacturing output in the United States is near a record high today, but blue-collar employment is way down from its peak in 1979.

But there’s a different view in the Rust Belt. Job losses from trade are far more visible to most workers than job losses from automation. When a factory closes and jobs go overseas — or even to another state — hundreds of workers lose their jobs overnight. In contrast, when robots arrive, only a few workers are displaced and they are often sent to other parts of the factory.

“Automation doesn’t close plants, it refits them. It’s more of a gradual change, like the slow boiling of the frog,” said Gordon Hanson, director of the Center on Global Transformation at the University of California San Diego. “The China shock throws the frog into a pot of boiling water.”

Robots also tend to take over the most backbreaking jobs in the factory, allowing workers to save their bodies and transition into more high-tech roles overseeing machines, jobs they hope will be less likely to be sent abroad.

Many economists and Wall Street bankers also like to point out that manufacturing is a small part of America’s economy today — just 12 percent. What they miss is that manufacturing remains core to the local identity in much of the Rust Belt.

“People really identify with these occupations that for so long defined these communities. They identify as scrappy, hard-working folks,” said Jill Ann Harrison, an associate professor at the University of Oregon who grew up in Youngstown, Ohio and studies deindustrialization.

Even if people don’t work in the mills, they grew up seeing the unions and factories sponsor the local Little League teams and charity events. Their relatives work — or worked — in the factories that still dominate to town’s landscape, not unlike the Brooklyn Bridge in New York City.

Even in Pittsburgh, which has seen one of the greatest reinventions of the early 21st century as a high-tech city, people still identify with steel.

“Let’s face it, we’ve got one of best football teams in the world: the Pittsburgh Steelers. You’re not going to hear them called the Pittsburgh technologies. Steel is how we’re identified,” said Scott Sauritch, a 58-year-old who works at one of the U.S. Steel plants just outside Pittsburgh. His father also worked in steel.
‘Hating NAFTA is symbolic’
Sauritch’s father was caught in the mass layoffs in the 1980s that saw steelworkers decline from 400,000 in 1980 to about 250,000 by 1990. The job losses have trickled along ever since, according to data from the American Iron and Steel Institute. But there was a sort of last gasp in 2015 when metal prices plunged to crisis levels. For workers like Sauritch, there was a feeling that they had survived so much and now there was a final death threat to their way of life.
Hanson has dubbed it “accumulated despair.” While it festered for years, it seemed to hit a tipping point when Trump came on the political scene. Trump helped channel that anxiety toward trade with China and the North American Free Trade Agreement (NAFTA).
In many Rust Belt communities, over 20 percent of prime age males are not working now, according to new research from Brookings Institution. Once the blue-collar jobs go, the white collar jobs often do too in towns and smaller cities.
The older generation in the Rust Belt typically longs for the manufacturing hubs and jobs to return. But for younger workers, it’s more nuanced.

“When people say they want the coal jobs back, I don’t know if they mean it literally, but they are saying, ‘give us back the economy we had in the 1960s and 1970s,'” said Josh Pacewicz, a Brown University sociology professor who has extensively studied Rust Belt towns. “Hating NAFTA is symbolic.”

Andy Meserve, the 42-year-old president of the USW in Hawesville, Ky. who works at one of America’s last remaining primary aluminum smelters, has two daughters. While he thinks it’s important to have aluminum jobs stay in America, he doesn’t necessarily want his own daughters to do the same job he does. Temperatures at the plant can climb to 140 degrees. Workers try to drink water constantly, but they often leave covered in sweat.
“I really hope they don’t have to work in the environment I have to work in,” Meserve said.
Disappearing $60,000-a-year jobs
While jobs are plentiful in America now, seven of the 10 fastest-growing occupations in the country pay less than $32,000 a year, according to the Labor Department. It’s a so-called barbell effect: There’s a lot of growth in high-skilled jobs that pay around $100,000 a year and then a lot of growth in low-skilled jobs that come with low wages. The middle is hallowing out.
Meserve can see it in Kentucky. He works at Century Aluminum, which has promised to rehire 300 workers into $60,000 a year jobs with benefits now that Trump has signed the tariffs. Meserve saw what happened to some of his friends who were laid off in 2015. Many got other jobs, but few got ones that paid as much.
There are two main ideas on how to help these workers and towns. One is to move workers to places where jobs are more plentiful. The other is to try to help communities revive.
Trump’s tariff solution is meant to usher in a revival. The benefits of saving some aluminum and steel jobs in towns like Hawesville and Conshohocken appear immediately. It’s playing well in many communities Trump feels are his base.
“This is really good,” said Sauritch of the tariffs. “People looked at us like we’re dinosaurs. They don’t see the importance of the steel industry.”
But there’s concern that saving some blue-collar jobs in steel might cost other jobs in industries that buy steel and use it to make other products. That’s what happened when President George W. Bush put tariffs on steel in 2002.
Eric Rosengren, president of the Federal Reserve Bank of Boston, has seen a different approach work to revitalize old manufacturing towns in New England. While keeping some specialized manufacturing jobs helps, it tends to work best when it goes hand-in-hand with building a new base of jobs and getting better community programs to fight social problems like drugs.
Rosengren points to the success of Lawrence, Mass., in transforming itself from being known as the “city of the damned” to a place a Forbes columnist predicted could easily produce the “next Mark Zuckerberg.” Lawrence won the Boston Fed’s “Working Cities” competition in 2014 for its innovative revitalization and workforce development plan.
“It doesn’t take that many people to change a city of 30,000,” said Rosengren. “If you have a good nonprofit, a good local leader in the state government and some business leaders, that’s enough to drive change in that community and make a big difference for the people that live there.”
But workers like Thompson aren’t sure they can wait years for a turnaround. The next round of layoffs is scheduled for April at his plant in Conshohocken. He’s hoping the tariffs change the ArcelorMittal executives’ minds.
““The tariffs leave us in a better spot today than we were a week ago,” said Thompson.


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