Gary Conkling: Tariffs won't reshore jobs because they never left
But writing for The Washington Post, Associate Professor Gary Winslett argues many of the jobs “lost” in the Rust Belt didn’t go overseas. They moved to the Sun Belt instead.
“The Rust Belt’s manufacturing decline isn’t primarily about jobs going to Mexico. It’s about jobs going to Alabama, South Carolina, Georgia and Tennessee,” Winslett wrote.
“In 1970, the Rust Belt was responsible for nearly half of all U.S. manufacturing exports while the South produced less than a quarter,” he said. “Today, their roles are reversed, with the Rust Belt hosting less than one-fourth of all manufactured exports and the South exporting twice what the Rust Belt does.”
Democrats and Republicans blame China for U.S. manufacturing job theft, pointing to statistics indicating more than 50 percent of its exports to the U.S. are manufactured items. However, a significant portion of those exports are products like Apple’s iPhone, which is designed in California but has never been manufactured in the United States.
Nike, based in Beaverton, sources its U.S.-designed brand apparel in Asia — 50 percent in Vietnam, 27 percent in Indonesia, 18 percent in China and 6 percent in Thailand, according to data for the fiscal year up to May 31, 2024.
Apple and Nike manufacturing jobs aren’t in America and never will be because it’s not economically competitive to make their products here, Winslett argues.
That’s also why most computer chips are manufactured in Taiwan.
One Taiwanese company produces 90 percent of the world’s most advanced chips. Collectively, Taiwanese companies account for 68 percent of global chip production.
Incentives pushed by the Biden administration, and approved by Congress, succeeded in luring some of that production back to the United States to secure domestic supply chains.
Winslett points to economic research indicating Southern states’ right-to-work laws have had a large influence on manufacturing moving south.
The average unionization rate is 13.3% in the Rust Belt, but only 4.3% in the South. “Southern states’ political leaders are quite open about how they see right-to-work as foundational to their competitiveness,” he says.
Another factor causing the southward shift for energy-intensive industry is cheaper electricity rates. Winslett says 10 Southern states have industrial electricity rates lower than 8 cents per kilowatt-hour, but no Rust Belt state has rates that low. For comparison, Oregon’s average industrial electricity rate is 7.83 cents per kilowatt-hour.
The most enlightening “innovation” Winslett cites for Southern industrial success is a commitment to build lots and lots of houses, which has kept housing prices relatively affordable despite dramatic population growth.
“Last year, both North Carolina and South Carolina each built more than four times as much new housing per capita as Massachusetts, according to U.S. census data,” Winslett says. “Florida, Georgia, Texas, Tennessee, South Carolina and North Carolina all built more housing per capita than Illinois, Ohio, Michigan, Pennsylvania, California, New York and Massachusetts.”
“That is not just a 2024 dynamic. That is true for every single year going all the way back to 1993,” he says.
“Comparatively low-cost housing makes it easier to attract and retain workers, which further attracts capital, which adds yet more investment and jobs, and the virtuous cycle spins upward.”
There’s more, Winslett says. State taxes in the Sun Belt are generally lower, permitting is easier and land is cheaper or even free.
And here’s the kicker. There are more immigrants living and working in Ruby Red states in the South than in the Rust Belt.
“More immigrants live in the South than any other region of the country,” Winslett says. “The region with the fewest immigrants? The Midwest. Immigrants promote growth, make the workforce more robust and create the goods and services that support manufacturing.
“Right-to-work laws, cheap energy, affordable housing, low-cost land, fast permitting, low taxes and immigration. That’s a powerful combination, and it has had big effects.”
Winslett goes on to note, “In 1992, there was not a single auto plant in Alabama. Today, Alabama is the No. 1 auto-exporting state, producing more than 1 million vehicles per year. That’s brought more than 50,000 jobs and billions of dollars in investment to Alabama.”
“Instead of a Big Three,” he adds, “it has a Big Five (Honda, Toyota, Hyundai, Mercedes-Benz and Mazda) along with an ever-expanding web of suppliers. This is just one example of the South’s burgeoning economic prowess.”
This trend, and the data Winslett has produced to support what’s happening, are sorely missing in the debate over tariffs and fair trade by the Trump administration and both parties in Congress.
“Both parties prefer simple villains, whether it’s China or greedy corporations,” Winslett says. “What’s needed isn’t more warm fuzzies about the way things used to be or globalization scapegoating. It is a clear-eyed approach that understands why companies choose Alabama over Ohio.”
Automation is the very real challenge missing from the national debate over manufacturing, Winslett Insists.
“Modern factories simply require fewer workers to produce more goods. This is true even for companies that are returning production from abroad. The takeaway: Even if you did somehow generate a huge wave of reshoring, manufacturing as the jobs machine isn’t coming back.
“But even accounting for this technological shift, it is the ongoing competition between states, far more than globalization, that has reshaped American manufacturing, creating uncomfortable truths that neither party wants to acknowledge.”
Winslett’s closes his case this way: “Manufacturing doesn’t chase nostalgia; it follows the bottom line. America’s economic future depends on embracing this reality rather than in indulging in turn-back-the-clock fictions.”
The North American Free Trade Agreement, and its successor agreement negotiated during Trump’s first term, sought to create a continental economic zone that removed trade barriers and leveled the playing field for U.S. workers and farmers. That agreement also addresses 21st century issues such as intellectual property protection and digital trade.
Part of the rationale for the agreement was to counter China by enabling U.S. manufacturers to diversify their supply chains and workforce without “going overseas.” The idea was to promote balanced, reciprocal trade in North America that didn’t undercut American wages.
The agreement signed by Trump was viewed as a way to integrate production and support economic collaboration, with variations in different parts of the United States bordering on Canada and Mexico. The agreement didn’t expressly deal with offshoring U.S. manufacturing jobs, which drew criticism from U.S. unions.
Data available online indicates there were 45,000 fewer manufacturing facilities in the United States in the 20-year period from 2002 and 2022. The drop runs the gamut from apparel, furniture, fabricated metal and chemical manufacturing.
What the data doesn’t reveal is why so many manufacturing plants disappeared.
For example, take the sharp decline in printing, with almost 13,000 plant closures. The data doesn’t identify the cause, which is consolidation in the industry, enabling fewer, larger firms to meet a similar level of demand with fewer workers.
Despite so many plant closures, U.S. durable goods exports hit a record $1 trillion in 2023, accounting for 63 percent of all manufacturing exports.
Contrary to popular belief, blue-collar employment in America is growing while white-collar employment is declining. Both types of jobs are being impacted by technological advances, automation and the advent of new types of skills, such as working with and maintaining robots.
White-collar workers are being introduced to the world of artificial intelligence. Immigration has become a factor in meeting demand for skilled jobs in fields such as health care and experience and willingness to work in agricultural, hospitality and construction sectors.
All of which argues for a national discussion about economic competitiveness in the 21st century that clarifies what is happening on the ground and identifies realistic opportunities to sustain and grow good-paying American jobs.
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