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Donald Trump's trade policies can't bring back the manufacturing jobs

In a blistering speech whose prepared text Donald Trump's campaign leaked to Politico early Tuesday afternoon, the Republican candidate hammers free trade policies in terms starkly reminiscent of Bernie Sanders' presidential campaign.

"Globalization has made the financial elite who donate to politicians very wealthy," says Trump. "But it has left millions of our workers with nothing but poverty and heartache."

He says he'll bring back manufacturing jobs by renegotiating NAFTA, slapping China with punitive tariffs, and a range of other measures designed to put America First and make the country great again.

American trade policy could certainly be improved upon, but the fact of the matter is that nothing Trump or any other trade skeptic proposes is going to bring back the heyday of American manufacturing jobs, for the simple reason that when you look at the data, the decline of manufacturing employment actually doesn't reflect a broader decline in the state of American manufacturing. In fact, the output — as measured in inflation-adjusted dollars — of the US manufacturing sector is higher than it's ever been, even as manufacturing employment has barely recovered from its recession-era lows:

Two reasons manufacturing jobs are vanishing

One reason for these divergent trends is that as you might expect, the segments of the manufacturing supply chain that tend to migrate to Mexico or Asia are the ones that are the most labor-intensive and have the lowest value added in terms of complexity or intellectual property. So when factories go overseas, they tend to be unusually "jobful" factories relative to the ones that stay.

The other reason is that companies involved in manufacturing are working relentlessly to improve the productivity of their operations and do more with less labor. This is, in some respects, a cause of the relatively high wages we associate with the manufacturing sector — workers can get paid more when their work generates a lot of value. And it's in some respects a consequence of relatively high wages. If you have to pay a lot for your workers, it makes sense to invest in figuring out ways to use less of them.

Either way, the very strong implication is that any steps we take to strengthen the manufacturing sector are going to have a fairly marginal impact on manufacturing employment.

For better or for worse, the bulk of employment growth in the future is going to come from health care and other in-person services — and we're going to have to find a way to make a services-oriented economy work, not waste our time pining for the good old days of factory work.

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