So let’s presume for the moment that President Trump will cause firms operating overseas to re-establish themselves, or their operations, in the United States.  And let’s suppose, as well, that he mitigates the problem of companies moving to other countries.  He’s apparently going to do this via a combination of lower taxes, tariffs imposed on domestic companies on goods shipped back to America, and finally using moral suasion.  Indeed, we’ve witnessed most of these already during his first two weeks of office (excluding lower taxes).

So, rewind to a smaller level: you were working for one of this companies, they moved overseas, and you lost your job.  You’ll get it back, right?  Let’s look at the facts, thanks to the MIT Technology Review of November 18,2016.  Since 1980,1/3 of manufacturing jobs have been lost.  The employment base has gone from 18 million to 12 million.  So, one might incorrectly assume that if ALL the companies re-located here, we’d get that base near to where it was before.  However, the article points out that for every 25 jobs it took in 1980 to manufacture goods, it now takes 5 jobs.  And, it costs $25 an hour to hire a worker, whereas it only costs $8 an hour to use a robot.

Thus, while bringing back companies is a good thing, it’s not going to help so much to restore lost jobs.  Especially since the loss of jobs due to automation is accelerating, and moving into sectors other than industrial.

Michael Emerald, CFA
Owner Performance Business Design and Wall Street Analyst

Categories: Thoughts on Politics

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