Sen. Bernie Sanders (I-Vt.) has made American economic inequality a major focus of the Democratic presidential nominating contest. If you watch a Democratic debate before bed, you very well might dream about “millionaires and billionaires” he says have rigged the economy and politics.
On Sunday night, during the party’s debate in Flint, Mich., Sanders claimed free trade deals, like the North American Free Trade Agreement and the Trans-Pacific Partnership, have cost the U.S. manufacturing industry millions of jobs and hurt manufacturing wages by a staggering margin.
Here’s the full quote:
“Those trade policies, as much as any other set of policies, has resulted in the shrinking of the American middle class. And, I’ll tell you what else it did. It’s not only job loss by the millions, it is the race to the bottom so that new jobs in manufacturing, in some cases today, pay 50 percent less than they did 20 years ago. How stupid is that trade policy?”
But that’s not really in the aggregate.
Manufacturing wages are up 60 percent since 1996. The average manufacturing worker in 1996 earned $12.75 an hour. In January 2016, the average worker made $20.14 an hour, according to data gathered by the Bureau of Labor Statistics and the St. Louis Federal Reserve. In fact, year-over-year since 1996, wages have never declined.
Adjusted for inflation, wages from 20 years ago are still up 6 percent, from $19.20 in 1996 to $20.14 this year.
Sanders’s campaign did not respond to requests for comment nor provide the data Sanders referenced in the debate.
“Yeah, a 50 percent cut could have happened to a particular plant or potentially some small, very disaggregated sub-industry, I guess, but the story of overall wages in manufacturing … is just pretty flat,” Josh Bivens, director of research and policy at the Economic Policy Institute, wrote in an email.
More bluntly: “The sentiment is correct. The numbers are not,” said Robert Scott, director of trade and manufacturing research at the institute.
By all accounts, the American manufacturing industry isn’t as healthy as it was in 1996 and economists attribute those declines to trade agreements — specifically with China and Mexico — and the hits American firms too during the Great Recession.
“As you see wages increasing more slowly in real terms [inflation-adjusted] in the last decade, a lot of workers have fallen out of the middle class or they’ve accumulated debt,” said Scott Paul, president of the Alliance for American Manufacturing.
Union membership has declined 37 percent since 2000, according to the Bureau of Labor Statistics, and those lacking numbers undercut organized labor’s ability to bargain collectively for higher wages and better benefits.
After China was admitted to the World Trade Organization in 2000, the American manufacturing industry lost 5 million jobs by 2010, according to federal government estimates. Part of that is due to the trade agreement, economists say. Another part of that is due to the Great Recession, which caused massive job losses.
But now, as the economy’s recovery is well underway, wages — especially in the manufacturing sector— are rising slowly as businesses pivot away from manufacturing and toward services.
To cut costs, manufacturers have hired more part-time workers and are paying new hires lower wages as the economy creeps toward stability, Paul said. And Bivens estimates in a 2013 paper that wages for all workers without college degrees are down $1,800 since 2011, because of trade deals.
That’s not 50 percent, as Sanders claimed, but it’s still a lot of money. And one-third of that loss is attributed to growing trade with China.
“I think this is hard for people to understand inside the Beltway or on Wall Street,” said Paul, from the Alliance for American Manufacturing. “But there’s a lot of angry workers out there who have been pummeled around in the last two decades who were promised something in their economic futures and have gotten something else.”