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Here’s the real Rust Belt jobs problem — and it’s not offshoring or automation

President Trump will sign an executive order on March 28 to wipe away former president Barack Obama's environmental record. (Video: Jenny Starrs/The Washington Post)

With his announcement last week that he was lifting regulations on coal use, President Trump promised that he was bringing back good blue-collar jobs — an extension of his campaign promise that an “America First” policy will do that in large numbers. Presumably, this promise will rely not only on lifting environmental regulations but also on some combination of tariffs, arguments with China over monetary policy and one-off deals with everyone from Whirlpool to Boeing.

Critics of this policy note that many jobs have been lost not to regulations, China and Mexico, but to automation — and will never return.

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But that’s not the biggest problem. Many struggling U.S. cities and states compete fiercely with one another to attract and keep firms that offer jobs. Unfortunately, these are not the “good” jobs that Americans are looking for, jobs with middle-class pay, benefits and security. This race to the bottom drains public coffers, preoccupies local leaders and fuels voter cynicism. “America First” sidesteps the problem.

Cities and states compete over mediocre jobs

In a community study of several Rust Belt cities, I found that local leaders generally believe that communities don’t die from a sledgehammer, they die from a thousand paper cuts. Large factories still occasionally leave for other shores, devastating Rust Belt communities.

But that’s no longer the most common challenge. Since the corporate mergers and restructurings in the 1980s, most cities depend not on one or two large factories but on many small subsidiary operations — light manufacturing, food processing, professional service firms, call centers, hotels and retail. These smaller subsidiaries mostly move between struggling cities and towns rather than leaving for other countries.

But they offer few “good” unionized jobs. For instance, in the 1970s, the local meat packing plant hired thousands and paid $15 an hour. But the Tyson Foods or John Morrell plant that replaced it employs hundreds and may pay about $10.

Much of the blame for that falls on federal policy. Unions have been hobbled by a changing legal environment. A corporate merger wave unleashed by financial deregulation eliminated local owners who paid workers living wages and contributed generously to their towns. Tax code changes led to ballooning senior managers’ earnings at the expense of line-workers’ wages. Without changing the federal policies that led to these trends, bringing manufacturing back will not create good, safe jobs.

Cities and states invest time, money and people in luring and keeping jobs

Right now, local leaders are forced to negotiate hard even for jobs offering little upward mobility — lest relocations result in a Detroit-like downward economic spiral. Economic development gets top billing. The highest-paid municipal employees work on bringing in business. Municipal workers convert public land to business parks, construct incubator buildings and redevelop eye-popping amenities to prepare for these new job creators. Many cities fund development corporations, where nonprofit leaders, union representatives, and political and cultural leaders discuss how to reach out for these new jobs. Staff members fan out daily from these organizations, interviewing area executives to identify threats and opportunities.

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One such employee told us:

If [we hear about] an opportunity, why, then we jump on it like a big dog. If their [corporate headquarters] is looking at consolidating … you make a strategy for reaching out to corporate, do whatever you can to make everything better, and bigger, and quicker. [We ask,] how can we help you build that building this year instead of next? Or have 20 employees instead of 10? Or do it here instead of Timbuktu?

To win this race, city leaders provide incentive payments, tax abatements, no-interest loans and discounted public land. They create training programs, lobby state legislatures for additional incentives and assist firms with logistics. They even remake cultural institutions to suit corporate executives’ tastes — hence the Rust Belt’s budding art walks, farmers markets and music festivals.

“The perception around here was, ‘You bring in a corporate executive, but then his wife has nothing to do,’ ” one music festival planner told me (presuming, as commonly happens, that the problem is entertaining an imagined male executive’s female spouse). “And there is a disconnect between reality and perception [with cultural amenities,] because nobody uses them. But when they are talking with their friends from out of town, they can say, ‘Yeah, we’ve got all this stuff.’ ”

But who benefits — except the big corporations? 

The fiscal benefits of this game are dubious, even for winners. Many corporations run national searches before investing in new locations, culling hundreds of cities to progressively shorter lists. Through rounds of interviews and site visits, promised incentives become astronomical.

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One city recently created an incentive of $20 million to keep 475 low-skilled manufacturing jobs while another leveraged $92.3 million to attract a plant employing 1,700 — a cost of, respectively, $43,800 and $53,429 apiece for jobs that pay $9 to $17 an hour (annually, $18,500 to $35,300). In some cases, firms receive over $1 million per job.

This game also has political costs. Consider the view from a Midwestern slaughterhouse town, where most residents are among the 50 percent of Americans who saw real declines in income since 1978. Local elites have nevertheless been rolling out incentives, and ceaselessly touting cafes, jogging trails and a riverfront convention center. None of this helps the aging, blue-collar residents who suffer sky-high rates of carpal tunnel syndrome, common among workers who spent years wielding a meat hook and carving knife.

Here’s the real problem

The Rust Belt’s real problem isn’t jobs fleeing the country; it’s jobs that do not pay well or offer the benefits they once did, and a lack of urban policies to prevent corporations from pitting cities against one another. Only national policy solutions to these problems will help.

Failing that, cities and towns will keep racing to the bottom, spending nonexistent funds to bring in uncertain, low-paying jobs that do not result in a healthy tax base.

Josh Pacewicz is an assistant professor of sociology at Brown University and author of Partisans and Partners: The Politics of the Post-Keynesian Society (University of Chicago Press, 2016).

Stephanie Lee Mudge is an assistant professor of sociology at the University of California at Davis.