More Manufacturing Jobs Are Coming to the US – Don’t Get Too Excited

President-elect Donald Trump built his campaign on the promise that he could bring manufacturing jobs back to the United States. It’s a lofty, worthwhile goal that could potentially improve the U.S. economy by giving more people access to well-paying jobs. That’s the argument, at least.

Unfortunately, there are plenty of signs that Trump’s approach to bringing more manufacturing jobs to the U.S. won’t benefit workers or the economy as much as some believe.

Extensive Corporate Tax Cuts Are Expensive

When Republicans don’t hold much power, they argue that the U.S. spends too much money. If you assume that Republicans are correct, then you must also assume that lowering the national debt and budget deficit are good things.

Unfortunately, Republicans change their tune when they regain power, as they have now. Trump’s proposed tax plan would cost the country between $6 trillion and $7 trillion, which is pretty close to how much the country will spend on the entire war in Iraq (including costs that will accumulate over the next four decades).

By cutting corporate taxes to bring more manufacturing jobs to the U.S., Trump and his colleagues will draw cash away from the public services that citizens rely on.

Tax Incentives Set a Dangerous Precedent

The Carrier deal Trump and Vice President-Elect Mike Pence made with an Indianapolis Carrier facility promises to give the company $5 million in tax cuts as long as it keeps 1,069 that pay an average $30.91 per hour (about $64,300 per year). Even after Carrier receives an additional $1 million in training grants and $1 million in tax credits, the state will recoup much of its investment through income taxes.

This arrangement sounds pretty good until you learn that Carrier still plans to send about 1,300 jobs to Mexico.

Still, Indianapolis’s blue collar workers are better off after the deal than before. That’s not the end of the story, though, because Trump and Pence have set a dangerous precedent by, according to a writer at Vanity Fair, giving in to economic blackmail. With the deal done, more companies will demand similar incentives.

Individual states and the U.S. only have a certain amount of incentives that they can offer before they bankrupt themselves. At best, excessive tax breaks are an ineffective way to improve the economy. At worst, they’re a sure-fire way to increase the country’s deficit and debt.

Right to Work Makes The Problem Even Worse

More than half of the country’s states now have so-called Right to Work laws that let employees choose whether they want to pay union dues. Some research shows that employment in Right to Work states has grown faster than those in states that haven’t adopted the laws.

Again, that’s not as good as it sounds since defanging unions leads to lower incomes and fewer benefits, like health insurance, for workers. Instead of creating a thriving middle class, Right to Work creates more working poor.

If the country tries to attract more manufacturing jobs by handing out tax incentives and slashing wages, then it won’t have the money needed to improve its infrastructure and educational system, which is what high-paying companies look for when choosing locations. In the long run, Trump’s approach to saving the manufacturing industry won’t bolster the U.S. economy. It will make the economy look more like those of India and Mexico.

Image via Flickr by goodiesfirst