Is Trump Right? Unemployment Has Been Deadly for the Middle Class

A note reading "You're fired", likely sending a middle class worker to the unemployment office

A note reading “You’re fired,” likely sending a middle class worker to the unemployment office | iStock.com

Donald Trump’s election came, in part, thanks to his economic message. Concerns over unemployment, trade policies, and the average American’s dwindling bank account won him support all across the country. The middle class, we’ve heard, is being hollowed out or left behind, and there are numerous reasons that it has occurred. But Trump has promised to spur domestic investment, and ensure that jobs destined for other markets remain in the United States.

But it’s going to be very hard to do. Trump’s team worked out a tax reform, but most of the benefits will be enjoyed by corporations, not individuals. Trade policy is currently taking center stage, but it’s too early to see how that will play out.

And it appears that Trump was right on one thing. Our trade policies, in certain instances, have been a “disaster.” That’s not to say that the majority of people aren’t benefiting from globalization. We now have cheaper goods and services, for example. Your local Walmart likely wouldn’t exist without liberal trade policies.

But for the middle class — the workers who’ve seen their jobs lost to foreign markets or automation? It’s been a deadly sequence of events.

Next: Trade policies and suicides

Trade policies and suicides

Laid-off workers attend a computer skills class

Laid-off workers attend a computer skills class | John Moore/Getty Images

Deadly because the data confirms there is some link between job losses and increased suicide rates.

When people’s jobs move to China (or anywhere else), they enter the ranks of the unemployed. In many parts of the country, there simply aren’t any other opportunities — and this can affect people in a number of ways. Depression, drug addiction, and perpetual poverty set in.

As we’re seeing, this is leading to increased suicide rates, spurred by chronic unemployment.

A recent paper, written by Federal Reserve Board economist Justin Pierce and Yale School of Management professor Peter Schott, digs into it. By looking at how mortality rates have changed in the years since 2000, they found that communities with high job losses have experienced higher rates of suicide.

“We find that counties more exposed to a plausibly exogenous trade liberalization exhibit higher rates of suicide and related causes of death, concentrated among whites, especially white males,” the paper said. “These trends are consistent with our finding that more-exposed counties experience relative declines in manufacturing employment, a sector in which whites and males are disproportionately employed.”

In some communities, at least, you could say that Trump was right. Our trade policies, for those losing their livelihood, have been disastrous.

Next: Should we expect change?

Should we expect change?

President-elect Donald Trump steps outside

President Trump steps outside | Drew Angerer/Getty Images

Of course, these policies were the fulcrum point of the election. It was a relatively small group of voters in Rust Belt states that gave Trump the White House. Those voters? They’re concentrated in the areas identified by this paper — in Ohio, Pennsylvania, Wisconsin, and Michigan.

Unfortunately, it’s unlikely Trump will be able to solve the problem.

Globalization and more liberal trade policies have played a role. The data shows that. But workers are increasingly losing their jobs to automation. Technology is taking over, and making it so that a few number of workers can produce more and more. Productivity is up, and yet the workforce is smaller. How do you persuade a company to hire more people when they don’t need to?

That’s the issue we’re up against. And if we don’t figure out something, we could see suicide rates continue to climb. Chronic unemployment will continue to fester, and millions of people will suffer.

We’re facing an important decision in regards to how we handle trade policy. Trump is probably going to be the one to make the call, and unfortunately, we don’t have a good idea as to what he’ll do.

Next: Let’s take a look at which jobs probably won’t benefit from the recent tax reform.

10. Administrative assistant

receptionist

Some could end up paying more. | Carl Court/Getty Images

Warren Buffett famously questioned why his secretary paid a higher tax rate than he did. (Buffett’s net worth topped $81.5 billion in October 2017.) Assuming an average salary of $35,000 for secretaries, this profession sits in the tax group that has little to gain and something to lose. The luckiest would pocket an extra $460 a year; the rest would pay over $500 more to Uncle Sam.

Next: This profession seems unrepresented during the drafting of the tax plan.

9. Accountant

Female hand typing on a calculator

Accountants might not be so happy once they crunch the numbers. | Dutko/Getty Images

With a national average salary just over $57,000, accountants earn right about the median (middle-point) salary. In other words, this profession is as close as we’ll get to an idea of “the middle class.” So it’s no surprise most accountants sit in the middle quintile of taxpayers. However, there appears to be little relief in sight for anyone working this job. A best-scenario adds just $940 to a CPA’s pockets in 2018. In the worst cases, accountants would pay an extra $1,000.

Next: Steve Mnuchin didn’t draft the tax bill for these workers.

8. Fast food worker

The interior of Chick-Fil-A

Some could see small tax breaks, while others might have to pay more. | Andrew Renneisen/Getty Images

Depending on seniority, fast food chain employee earnings fall between the lowest and second block of taxpayers. Despite what Treasury Secretary Steve Mnuchin told CNBC after the election, this group of workers will not see many benefits from the tax reform proposal. Lucky taxpayers would see breaks of $370 per year in 2018. On the other hand, those who fell through the cracks would see taxes rise an average of $530.

Next: These workers will wonder who is supervising the tax plan architects.

7. Office supervisor

woman checking files

This is another moderate-income position that could have to pay more. | iStock/Getty Images

Another distinctly middle-class position is office supervisor. This job offers an annual salary just above $56,000, landing the position in the “moderate-income” bracket in the Tax Policy Center analysis. According to Howard Gleckman, the center’s senior fellow, about one in seven people in this profession would pay $1,000 more in 2018. The other six would have to content themselves with a $660 tax break.

Next: The diverse group of people in this profession may get passed over by tax reform.

6. Wait staff

woman ordering food

This job spans multiple tax brackets. | Ridofranz/iStock/Getty Images

Is there a more diverse workforce than restaurant wait staff employees? Across America, you will find single mothers, struggling artists, high school graduates, and immigrants working this gig. Average salaries range from $15,000 on the low end to over $35,000 and up in high-end restaurants. These salaries represent multiple tax brackets, but none will win much at all with the plan for tax reform.

Next: Amazon hasn’t taken over this profession yet.

5. Retail salesperson

shopping for shoes

Some might see an extra $160 per year. | Spencer Platt/Getty Images

According to Department of Labor statistics, there were 4.6 million people working retail sales in 2015. That number made it the most common job in America. Surely, the most populated profession would be a beneficiary of Congress’s tax reform bill? Unfortunately, that won’t be the case. A retail sales associate might see an extra $160 per year once this plan runs its course. Those who don’t qualify will actually see taxes go up by $500 per year.

Next: There may be more work in this profession, but the tax situation will still need fixing.

4. Repair/maintenance worker

repairman fixing stove hood

Some would have to pay $1,000 more in taxes per year. | AndreyPopov/iStock/Getty Images

So many American households have multiple refrigerators, washing machines, and air conditioners these days. Looking at potential client pools, you might say it’s the peak time to be a maintenance and repair worker. Likewise, the average salary of $40,000 makes them viable for heads of household across the country. However, this profession stands to benefit very little from Trump’s tax plan. In at least 10% of cases, maintenance technicians would pay $1,000 more in taxes, according to the Tax Policy Center analysis.

Next: This type of stock does not go up every year.

3. Stock clerk

Woman stacking shelves in supermarket

The tax plan only would benefit some of these workers. | Jochen Sand/Getty Images

Amazon orders may be through the roof, but there seems to be little lag at drug stores and small markets around the country. Nearly 2 million people work these jobs in the U.S., and average salaries sit near $26,000 per year. As is the case for retail employees, tax relief will be limited for those working this profession. In some cases, it will be worse. Theoretically, employees of large companies like CVS would see wage growth once the corporation counted up its massive tax break. However, the trickle-down concept never really worked for Americans in the past.

Next: There will be no clean sweep for workers in this profession.

2. Janitor

Plastic bucket with cleaning supplies on wood background

This is one of the lower-paying jobs. | logoff/iStock/Getty Images

Cleaning equipment may be more advanced now, but the grind of sanitation work is largely the same. It’s physical labor that wears on the body, and over 2 million workers dedicate themselves to it every day in America. As profitable ventures go, it’s also one of the lower-paying jobs, with average salaries around $26,000. The situation is unlikely to improve under the GOP tax plan. By the next decade, janitors may pay hundreds more in taxes every year.

Next: Nearly 3.5 million people working this job won’t win.

1. Cashier

cashier taking a credit card

Some might receive an extra $100 per year. | Antonio_Diaz/iStock/Getty Images

Among the most common jobs in America, cashier places second only to retail work. Some 3.5 million people toil at a touchscreen or cash register on a daily basis, with average salaries near $23,000. It’s minimum-wage work more often than not, and there might be an extra $100 per year in it for the profession. If your tax filing puts you outside the group that benefits, Tax Policy Center estimated your taxes would go up $200 per year in the next decade.

Additional reporting by Eric Schaal.