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The 89% Pay Cut That Brought Trump-Mania to America's Heartland
Understanding the Republican candidate's anti-free trade, working-class appeal
Bloomberg
By Thomas Black and Isabella Cota
—With assistance from Brendan Greeley and Anne Reifenberg.
3/28/2016
Excerpt:
Amid the rugged cattle farms that dot the hills of southern Kentucky, in a clearing just beyond the Smoke Shack BBQ joint and the Faith Baptist Church, lie the remains of the A.O. Smith electric-motor factory.
It’s been eight years since the doors were shuttered. The building’s blue-metal facade has faded to a dull hue, rust is eating away at scaffolding piled up in the back lot and crabgrass is taking over the lawn. At its zenith, the plant employed 1,100 people, an economic juggernaut in the tiny town of Scottsville, population 4,226.
Randall Williams and his wife, Brenda, were two of those workers. For three decades, they helped assemble the hermetically sealed motors that power air conditioners sold all across America. At the end, they were each making $16.10 an hour. That kind of money’s just a dream now: Randall fills orders at a local farm supply store; Brenda works in the high school cafeteria. For a while, he said, their combined income didn’t even add up to one of their old factory wages.
Just as the Williamses were being informed by A.O. Smith that they’d be let go, a young Mexican woman named Zoraida Gonzalez was hired some 1,200 miles away in the hardscrabble town of Acuna, just over the Rio Grande from Texas. To replace its Kentucky output, A.O. Smith was ramping up production in lower-cost Mexico, a move facilitated by the signing a decade earlier of the North American Free Trade Agreement. Gonzalez was brought in to help handle phone calls.
Now 30 years old and in charge of payroll, she makes about $1.75 an hour, on par with wages earned on the plant’s assembly line. It may not seem like much by U.S. standards. (Or, for that matter, to some of the workers toiling in the heat of Acuna’s factories.) To Gonzalez, though, the money has been life-changing. It’s given her things she says her mother never had: a washing machine, cable TV, a Ford Freestar minivan that she shares with her boyfriend, daily zumba classes at a nearby gym and the hope that her 11-year-old son, Angel, will be the first member of her family to attend college.
Gonzalez doesn’t know much about Nafta and she knows even less about Donald Trump or the way he blames U.S. trade deficits with Mexico and China for the loss of jobs in America. But Williams sure does. He voted for the billionaire in Kentucky’s Republican caucus this month. So did many of his neighbors. In Allen County, a collection of eight towns strewn along the Tennessee border, Trump dominated his rivals, racking up 42 percent of the vote on his way to a narrow victory that night in Kentucky.
It was one of those kinds of results—in the heart of southern Baptist country that was supposed to vote for the conservative Ted Cruz—that revealed the extent to which Trump’s anti-free trade tack has touched a nerve with the millions of working-class Americans who feel financially squeezed. Of course, there are other parts of his unconventional platform that have made him the Republican front runner, such as his proposal to build a giant wall along the border, but his appeal in old factory towns has been stark. In three particularly hard-hit counties north of Detroit, for example, he took almost 50 percent of this month’s primary vote, more than double the tally for his nearest rival.
“Nafta is the worst thing that’s ever happened to the U.S.,” said Beverly Anderson, a Scottsville councilwoman who worked at the electric-motor plant for 28 years.
Prior to Nafta, trade between the U.S. and Mexico was a relatively tame affair. The two sides alternated between deficits and surpluses—small figures, typically no bigger than a few billion dollars. U.S. exports quickly jumped after the accord went into effect in 1994, but the imports pouring in from Mexico climbed faster, and by 2015, the U.S. was posting a deficit of almost $60 billion. (With China, the U.S.’s largest trading partner, the gap has ballooned to over $360 billion a year.)
Robert E. Scott of the Economic Policy Institute, a think tank critical of free-trade deals, estimates these deficits with Mexico alone have cost 850,000 Americans their jobs. This, in turn, has a “chilling effect,” Scott said. “It actually causes wage losses for everybody who doesn’t have a college degree.” After accounting for inflation, hourly pay at U.S. factories has been stagnant since the early 1970s.
Trump—and to a lesser extent, Democratic candidate Bernie Sanders—has found so much success in expressing the working-man's anger that just about no candidate, not even Hillary Clinton, whose husband signed the Nafta deal, is now willing to fully embrace free trade. Trump’s proposed solution has been to impose restrictions on imports, a strategy that almost two-thirds of Americans backed in a Bloomberg Politics national poll last week. Little if any talk on the campaign trail is dedicated to the benefits of the surge in cheap imports, primarily subdued inflation that preserves consumers’ purchasing power.
.................................................. .....
View the complete article, including images and links, at:
http://www.bloomberg.com/news/featur...ca-s-heartland
Understanding the Republican candidate's anti-free trade, working-class appeal
Bloomberg
By Thomas Black and Isabella Cota
—With assistance from Brendan Greeley and Anne Reifenberg.
3/28/2016
Excerpt:
Amid the rugged cattle farms that dot the hills of southern Kentucky, in a clearing just beyond the Smoke Shack BBQ joint and the Faith Baptist Church, lie the remains of the A.O. Smith electric-motor factory.
It’s been eight years since the doors were shuttered. The building’s blue-metal facade has faded to a dull hue, rust is eating away at scaffolding piled up in the back lot and crabgrass is taking over the lawn. At its zenith, the plant employed 1,100 people, an economic juggernaut in the tiny town of Scottsville, population 4,226.
Randall Williams and his wife, Brenda, were two of those workers. For three decades, they helped assemble the hermetically sealed motors that power air conditioners sold all across America. At the end, they were each making $16.10 an hour. That kind of money’s just a dream now: Randall fills orders at a local farm supply store; Brenda works in the high school cafeteria. For a while, he said, their combined income didn’t even add up to one of their old factory wages.
Just as the Williamses were being informed by A.O. Smith that they’d be let go, a young Mexican woman named Zoraida Gonzalez was hired some 1,200 miles away in the hardscrabble town of Acuna, just over the Rio Grande from Texas. To replace its Kentucky output, A.O. Smith was ramping up production in lower-cost Mexico, a move facilitated by the signing a decade earlier of the North American Free Trade Agreement. Gonzalez was brought in to help handle phone calls.
Now 30 years old and in charge of payroll, she makes about $1.75 an hour, on par with wages earned on the plant’s assembly line. It may not seem like much by U.S. standards. (Or, for that matter, to some of the workers toiling in the heat of Acuna’s factories.) To Gonzalez, though, the money has been life-changing. It’s given her things she says her mother never had: a washing machine, cable TV, a Ford Freestar minivan that she shares with her boyfriend, daily zumba classes at a nearby gym and the hope that her 11-year-old son, Angel, will be the first member of her family to attend college.
Gonzalez doesn’t know much about Nafta and she knows even less about Donald Trump or the way he blames U.S. trade deficits with Mexico and China for the loss of jobs in America. But Williams sure does. He voted for the billionaire in Kentucky’s Republican caucus this month. So did many of his neighbors. In Allen County, a collection of eight towns strewn along the Tennessee border, Trump dominated his rivals, racking up 42 percent of the vote on his way to a narrow victory that night in Kentucky.
It was one of those kinds of results—in the heart of southern Baptist country that was supposed to vote for the conservative Ted Cruz—that revealed the extent to which Trump’s anti-free trade tack has touched a nerve with the millions of working-class Americans who feel financially squeezed. Of course, there are other parts of his unconventional platform that have made him the Republican front runner, such as his proposal to build a giant wall along the border, but his appeal in old factory towns has been stark. In three particularly hard-hit counties north of Detroit, for example, he took almost 50 percent of this month’s primary vote, more than double the tally for his nearest rival.
“Nafta is the worst thing that’s ever happened to the U.S.,” said Beverly Anderson, a Scottsville councilwoman who worked at the electric-motor plant for 28 years.
Prior to Nafta, trade between the U.S. and Mexico was a relatively tame affair. The two sides alternated between deficits and surpluses—small figures, typically no bigger than a few billion dollars. U.S. exports quickly jumped after the accord went into effect in 1994, but the imports pouring in from Mexico climbed faster, and by 2015, the U.S. was posting a deficit of almost $60 billion. (With China, the U.S.’s largest trading partner, the gap has ballooned to over $360 billion a year.)
Robert E. Scott of the Economic Policy Institute, a think tank critical of free-trade deals, estimates these deficits with Mexico alone have cost 850,000 Americans their jobs. This, in turn, has a “chilling effect,” Scott said. “It actually causes wage losses for everybody who doesn’t have a college degree.” After accounting for inflation, hourly pay at U.S. factories has been stagnant since the early 1970s.
Trump—and to a lesser extent, Democratic candidate Bernie Sanders—has found so much success in expressing the working-man's anger that just about no candidate, not even Hillary Clinton, whose husband signed the Nafta deal, is now willing to fully embrace free trade. Trump’s proposed solution has been to impose restrictions on imports, a strategy that almost two-thirds of Americans backed in a Bloomberg Politics national poll last week. Little if any talk on the campaign trail is dedicated to the benefits of the surge in cheap imports, primarily subdued inflation that preserves consumers’ purchasing power.
.................................................. .....
View the complete article, including images and links, at:
http://www.bloomberg.com/news/featur...ca-s-heartland