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 |

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 has played up the Carrier deal, which will keep some jobs destined for Mexico in Indiana. He’s also been on the phone with other CEOs who are evidently willing to rethink their strategies. That’s good news. But in the long term? Probably not a sustainable strategy.

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.

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 new 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.

Should we expect change?

President-elect Donald Trump steps outside

President-elect Donald 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.

Again, there’s no easy or obvious solution. Trump has floated the idea to build a wall to keep out illegal workers, but that’s not really the problem. It won’t solve anything. It will probably take a large-scale philosophical overhaul at every societal level to get this sorted out, and that might mean going to a basic income. Or, if Trump has his way, moving toward a more closed economy.

While that is likely to preserve jobs, it does, however, have downsides.

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.

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