Did Unemployment Predict Trump’s Win?

According to the Bureau of Labor Statistics, unemployment reached a nine-year low last month. Most economists agree that we’re approaching full employment. Still, wages haven’t grown as quickly as it seems like they should, given the shrinking pool of candidates available to hiring managers. There are a variety of reasons why this is the case — declining union membership, for one, and therefore diminished bargaining power for workers. But, some have pointed out that the official employment numbers do not include every person in the country who doesn’t have a job.

President-elect Donald Trump is one of them. At various points in his campaign, Trump made reference to the fact that official unemployment numbers don’t account for workers who drop out of the workforce entirely.

“The number isn’t reflective,” Trump said at a media event in September, 2015. “I’ve seen numbers of 24 percent — I actually saw a number of 42 percent unemployment. Forty-two percent. …The unemployment rate is probably 20 percent, but I will tell you, you have some great economists that will tell you it’s a 30, 32. And the highest I’ve heard so far is 42 percent.”

No economist has gone on the record as saying that employment is 42 percent. However, it is true that the unemployment rate doesn’t account for what the Economic Policy Institute refers to as missing workers – “potential workers who, because of weak job opportunities, are neither employed nor actively seeking a job.” Currently, the unemployment rate is 4.6 percent; if missing workers were counted in the tally, the EPI says it would be 6 percent.

But there’s more to the effect of unemployment than discouraged workers. To understand the full impact of joblessness, we have to look at declining industries like manufacturing and coal.

Trump Won Areas That Have Lost Jobs

The president-elect’s upset was due in large part to the Rust Belt states, where manufacturing jobs have been on the decline for decades. These areas also have not seen the same recovery from the Great Recession as the rest of the country. In fact, rural areas in general — many of which went for Trump — have recovered more slowly than metropolitan areas.

“There are almost nine million more jobs than there were at the previous peak in November 2007, just before the economy tumbled into recession,” writes Eduardo Porter at The New York Times. “But the gains have not been evenly distributed.”

Porter writes:

…many of the jobs created since the economy started recovering from recession were in service industries, located primarily in large metropolitan areas — not in small towns and rural areas where the factories that once provided steady good jobs were either shuttered or were retooled to replace workers with machines.

Even as the typical American household experienced the fastest income growth on record last year, median household income outside of metropolitan areas fell 2 percent, according to the Census Bureau. By last summer employment in nonmetropolitan areas was still 2 percent lower than in the first quarter of 2008.

Metropolitan areas, by contrast, had 5 percent more jobs than they did eight years earlier.

In other words, Trump’s electoral gains align with areas that have experienced sustained job losses — and little recovery post-recession.

Can Trump Bring Back Jobs?

The Carrier jobs deal notwithstanding, Trump has a hard road ahead of him if he wants to bring back manufacturing jobs on a large scale. That’s because globalization is only one factor in their decline. Automation is arguably a more serious threat to manufacturing; companies won’t pay humans a living wage to do what robots can do for pennies.

With regards to the coal industry, market forces will prove to be a bigger obstacle than environmental regulations.

“Just a decade ago coal provided half of the energy used for power generation in the U.S., but fracking has driven a boom in the country’s supply of natural gas and made it a cheaper alternative in most cases,” writes Justin Worland at Time. “And, with cost in mind, utility companies have made the switch even in places without regulation pushing them to do so.”

Wind and solar power have also encroached on coal’s territory. Bottom line: it’s cheaper to use non-coal energy sources, so consumers will do so. And the jobs that disappeared during the transition are almost certainly gone for good.

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