Under Trump, the jobs boom has finally reached blue-collar workers. Will it last? Growth in this sector is occurring at the fastest rate since 1984. By Heather Long and Andrew Van Dam
https://www.washingtonpost.com/business/2018/09/09/under-trump-jobs-boom-has-finally-reached-blue-collar-workers-will-it-last/?noredirect=on&utm_term=.9eec4aebe000
Blue-collar jobs are growing at their fastest rate in more than 30 years, helping fuel a hiring boom in many small towns and rural areas that are strong supporters of President Trump ahead of November’s midterm elections.
Jobs in goods-producing industries — mining, construction and manufacturing — grew 3.3 percent in the year preceding July, the best rate since 1984, according to a Washington Post analysis.
Blue-collar jobs, long a small and shrinking part of the U.S. economy, are now growing at a faster clip than those in the nation’s much larger service economy. Many factors collided to produce the blue-collar boom. Some are linked to short-term boom-and-bust cycles, but others may endure.
The rapid hiring in blue-collar sectors is delivering benefits to areas that turned out heavily for Trump in the 2016 election, according to the Brookings Institution, a shift from earlier in this expansion, when large and midsize cities experienced most of the gains.
The biggest drivers of the blue-collar hiring surge are the rebound in oil prices, the need to rebuild after disasters such as Hurricanes Irma and Harvey, and rising demand generated by a growing economy.
“I could work from sunup to sundown seven days a week,” said Steve Klebenow, 30, who owns and operates Gallatin Valley Welding in Churchill, Mont., a town of fewer than 900 people that had only two roads, one of them dirt, when he was growing up.
As wealthy families from California, Oregon and Washington flood into the area looking for mountain views and a lower cost of living, the region is transforming, and Klebenow is helping to build it.
He started welding at the tail end of the housing boom, while he was still in high school. After the recession hit, he went to North Dakota to weld pipes and build bridges in the oil fields. He figures his part of the country is a few years behind the economic cycle on the East Coast.
“All I know right now is that we’re all busy. It’s going to stay that way for a couple years, and then it’s going to go back down,” he said at the end of another 12-hour day.
Job gains in smaller towns and rural areas accelerated last year, and continued to build in early 2018.
Rural employment grew at an annualized rate of 5.1 percent in the first quarter. Smaller metro areas grew 5 percent. That’s significantly larger than the 4.1 percent growth seen in large urban areas that recovered earlier from the Great Recession, according to an analysis by the Brookings Institution’s Metropolitan Policy Program of a separate set of Labor Department data released Wednesday.
In the past year, the economy has added 656,000 blue-collar jobs, compared with 1.7 million added in the services sector. But the rate of growth in blue-collar jobs is speeding up, while service-sector job growth has hovered around 1.3 percent over the past year.
“Small towns and rural America are finally winning a little,” said Mark Muro, a senior fellow at Brookings, but he added: “Very little of the favorable economic shift likely owes to President Trump’s erratic flailing and bluster.”
The president and his advisers have said recent economic growth proves the success of the administration’s economic agenda, which has been headlined by tax cuts, deregulation and protectionist trade policies.
The Trump administration and many business leaders point to a jump in optimism about the economy, especially among manufacturers and blue-collar workers, and robust business investment as concrete signs of improvement.
But Muro says that “the present surge is a continuation of gradual economic improvement that not only began during the Obama years but directly continues trends in the last year of the previous administration.” The economy has added fewer jobs per month, on average, than it did during President Barack Obama’s second term.
Among the industries Trump has targeted most for revival, evidence is mixed that his policies have helped. Coal mining added about a thousand jobs in the year ending in July, according to the Labor Department. Steel and aluminum production have gained only a couple thousand, while businesses that use these metals are warning of heavy layoffs if Trump’s tariffs stay in place.
The real drivers of the blue-collar boom are construction and manufacturing, which have added hundreds of thousands of jobs in the Trump era. These industries benefit most from a strong global economy.
In a sign of revitalization in an area previously hit hard by the decline of coal and steel production, the Appalachian town of Ashland, Ky., recently broke ground on a new aluminum mill. Owned by Braidy Industries, the mill will eventually employ more than 500 people.
Hiring has already started for construction positions, and the local community college is training people for the high-tech manufacturing jobs.
“I had 24 cities and towns bid for this project. Ashland was by far the poorest of them all,” said Craig Bouchard, the chief executive of Braidy Industries. “I chose Appalachia for one reason: They have eight times more available metalworking families than any other place in the country. I’ve already got 7,000 job applications.”
For Michael Tackett, who has lived in eastern Kentucky all his life, the factory offers an unexpected second chance.
“This is massive for us. We’ve been in an economic downturn for years, actually decades, but this could bring an economic boom to the area,” said Tackett, who is program coordinator of the Advanced Integrated Technology program at Ashland Community and Technical College.
The good times may not last. Some economists warn that the long-term trends still favor big cities and digitally focused industries. There are signs that growth may be tapering off in some blue-collar sectors: Home sales have cooled this summer, and manufacturers fear that Trump’s trade war will erase their competitive edge.
Still, the gains in goods-producing industries over the past year are wide-ranging, with a strong increase in oil and gas extraction, machinery manufacturing, transportation equipment manufacturing, electrical equipment manufacturing and construction.
Manufacturing output is near a record level and optimism is at an all-time high, with more than 95 percent of manufacturers reporting a “positive outlook” for their business, according to the latest survey by the National Association of Manufacturers.
“In 2016, manufacturing was close to a recession. We’ve come out of that with a lot of enthusiasm,” said Chad Moutray, chief economist at NAM. He thinks there’s a good chance this turnaround will last, largely because manufacturers held onto cash during the recession and global head winds of 2015 and 2016. But now the “floodgates are open and you’re seeing a lot more activity,” he said.
An uptick in once-struggling areas could make a significant difference in voters’ perceptions of the economy, because people tend to view growth relative to their own recent pasts, and their neighbors’ situations, Muro said.
Trump frequently touts manufacturing job growth since he took office as a sign that he is delivering on his promises to grow good-paying jobs.
“This election is about jobs, it’s about safety and jobs,” he said at a rally Thursday in Montana. On Friday, he dubbed it the “rocket ship” economy.
Trump’s escalating trade war with China could zap momentum. Parts are often imported from China for final assembly in the United States.
And despite the recent gains for blue-collar workers, there are more than a million fewer goods-producing jobs than there were before the recession, a reminder that these industries can be very cyclical and fall fast when the economy sours.
Only 13.9 percent of workers are employed in blue-collar professions, vs, 15 percent in government and 71.1 percent in the service sector. But “muscle jobs” still play an outsize role in some communities.
“In places like Ohio and Wisconsin, manufacturing is part of the DNA. Voters there know what was lost and they see who is hiring now,” said Scott Paul, president the Alliance for American Manufacturing, which has held recent focus groups with manufacturing workers.
It’s an ongoing debate among pollsters about whether voters are giving Trump credit for the improving economy. According to the latest Washington Post-ABC News poll out last week, 58 percent of adults rate the economy as “excellent” or “good,” but Trump’s approval rating on the economy is 45 percent.
Paul describes a big generational divide in how people view the importance of a vital manufacturing sector in their community. Although some might cheer the revival of blue-collar jobs, others are trying to chart a different future.
“There are manufacturing jobs available right now, but young people have moved on. An entire generation of Americans has forgotten about manufacturing as a career path,” Paul said.
Correction: About a thousand coal-mining jobs were added in the year ending in July. An earlier version of this story gave the wrong number.
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