2018-05-13 03:49:43 UTC
says. From what I see, the only money his followers earn is for
attending his rallies. They don't seem like the industrious or
One year in: Has Trump been good for US workers?
Harry J. HolzerWednesday, January 17, 2018
rump was elected President in 2016, at least partly due to the
anger of less-educated white workers, particularly against
immigrants and international trade policies. He very skillfully
exploited that anger, promising that, if elected, he would fight
for better trade deals and limited immigration, as well as a range
of other policies to help these workers
After one year in office, is Trump making good on these promises?
In this essay, I argue that Trumps policy actions to date provide
meager help to those who so enthusiastically supported him, and
mostly in the short termwhile, over the longer term, these
policies will likely cause them more harm than good.
Trumps impact on the overall health of the job market, for which
he takes a great deal of credit, as well as the impacts of the
recently signed tax bill on workers, have been well-discussed
elsewhere. Very simply, there is little evidence that Trumps
policies have raised the pace of growth in the job market beyond
what was happening in 2015 and 2016; and it appears as though
the fairly meager benefits of the tax cuts for non-college
educated U.S. workers will be outweighed by the costs over time of
paying for them with lower government benefits or higher taxes.
I therefore focus on other important Trump policies affecting
labornamely, regulatory cuts, trade and immigration, education
and workforce development, and policies to make work pay for the
Donald Trump has already made his mark as a deregulator, cutting
several Obama-era regulations that directly affect workersfor
example, rules raising the numbers of workers with earnings
covered by overtime pay or requiring financial advisers to act
more clearly in the fiduciary interests of their clients. He has
also limited or cancelled others that indirectly affect workers,
like climate regulations or those covering the financial markets
in the Dodd-Frank legislation.
There is little doubt that limiting regulation can reduce employer
costs and improve production, employment and earnings of workers,
in manufacturing and other sectors. But the economic benefits of
lower regulation must be balanced against the benefits workers
will forego and the higher risks of financial and climate
disasters over time, and our knowledge of the exact magnitudes of
these benefits and costs is limited. Still, given what we know,
its quite unlikely that workers interests will be served in the
long run by Trumps regulatory changes.
Very simply, there is little evidence that Trumps policies have
raised the pace of growth in the job market beyond what was
happening in 2015 and 2016.
Trade and Immigration
To-date, Trumps primary policy change in this area has been to
withdraw the U.S. from the Trans-Pacific Partnership (TPP) and to
demand some renegotiation of terms on the North American Free
Trade Agreement (NAFTA) with Canada and Mexico. It is too soon
to tell what changes, if any, will be made to NAFTA, but we can
render some judgments on the likely effects of American TPP
withdrawal on our workers.
Though the effects of withdrawal in the next decade may not be
large, they seem likely negative. As many analysts have pointed
out, the reductions in tariffs protecting the markets of our Asian
partners would have been greater than our own tariffs, leading our
exports to rise more than imports. In addition, wages in exporting
industries tend to mostly be higher than those in import-sensitive
sectors like nondurable manufacturing. Thus, overall GDP under
TPP would likely have risen.
Additionally, higher federal budget deficits will almost certainly
raise the value of the dollar relative to foreign currencies and
cause further damage to our trade balance. This will make our
exports more expensive and our imports cheaper, leading to less of
the former and more of the latter. Indeed, the negative effects of
federal deficits on our current account balance might be the most
significant effect of Trump on international trade outcomes in the
US during his time in office, and it will likely be negative.
But perhaps more importantly, our withdrawal from TPP leaves a
large vacuum in economic and geopolitical leadership in Asia,
which will almost certainly be filled by China. It is hard to
imagine any circumstances under which this development, over time,
will benefit U.S. workers.
Regarding immigration, a collection of small and large actions
will likely have the cumulative effect of discouraging immigration
to the U.S. of both highly- and less highly-educated workers from
abroad, even if no further legislative reforms to immigration are
undertaken. Trumps most important action to date has arguably
been his cancellation of the Deferred Action for Child Arrivals
(DACA) program (though this currently is being address during
budget negotiations between the President and Congress), but the
Administration has also pursued the controversial travel ban, the
cancellation of Temporary Protected Status (TPS) for Salvadoran
refugees, heightened deportations of undocumented workers, and
ongoing talk of ending chain immigration across family members.
Will the reduction in immigration improve the job prospects of
native-born U.S. workers? The high rate of business startups and
patents secured by such immigrants suggests any reduction in
immigration from highly-educated workers only harms the U.S.
economy. At a time when the U.S. labor market has become more
sluggish, discouraging the entry of international graduate
students or highly-skilled immigrants seems very ill-advised.
The net economic effects of discouraging immigration among less-
educated workers is more mixed. Prominent labor economists, such
as George Borjas and David Card, have generated quite different
estimates of the impacts of such immigration on native-born, less-
educated Americans. A reasonable average of their estimates
implies that immigration has reduced their earnings by maybe 3-4
percent since 1980, though the estimated loss should also decline
over time as foreign capital responds to lower wages by entering
the U.S. at greater rates and raising worker wages.
How the tax bill will penalize wage earners, in one chart
Adam LooneyWednesday, December 20, 2017
President Trump and Congressional Republicans celebrate after
Congress passed sweeping tax overhaul legislation.
Winners and losers in the Tax Cuts and Jobs Act
Fred Dews and Adam LooneyFriday, December 22, 2017
At the same time, these immigrants reduce consumer prices in some
key sectors, like housing, food, shelter, and medical/elder care
thereby contributing to the real incomes of U.S. workers. They
also contribute to labor force and revenue growth in the U.S. just
when native-born Baby Boomers are retiring in great numbers and
putting downward pressure on overall economic growth and federal
Overall, the positive contributions of low-skilled immigrants to
real income, labor force activity and federal revenues (and
therefore to the solvency of programs like Social Security and
Medicare) are perhaps large enough to outweigh their modest
downward pressure on the wages of less-educated, native born
workersleading me to believe we should reject proposals that
would drastically curtail such immigration. Overall, the net
effects of Trumps actions on trade and immigration will likely be
negative to the U.S. economy and to native-born workers over time.
Worker Skills: Education and Training
While issues like trade and immigration are highly emotional ones
for many U.S. workers, the ability of U.S. workers to gain
education and skills that the labor market values is arguably much
more important to their economic well-being over time.
One year into the Trump administration, the most important effects
in this area might derive not from any explicit policies, but from
the unanticipated consequences of the tax cuts passed in early
2018. These tax cuts will likely discourage important education
and training initiatives at all levels in the coming years
federal, state and local.
On the federal level, the growth of budget deficits caused by the
tax bill will almost certainly preclude major new investment
initiatives, like expanding high-quality pre-kindergarten programs
or community college job training efforts. Important existing
programs, like Pell grants for low-income college students, face
major risks as well.
But even before the tax cuts were enacted, the Trump
Administration had proposed large cuts in funding to already-
shrinking federal training programs run by the Department of
Labor, on top of the very large reductions that have already
occurred over time. I expect to see these cuts implemented and
growing over time.
But public education in the U.S. at the K-12 and postsecondary
levels is overwhelmingly funded at the state and local levels. The
decision of Congress to impose $10,000 caps on the deductability
of state and local taxes will almost certainly put pressure on
many states to cut such funding. To some extent, this has already
been occurring. Overall state revenues for higher education have
been declining over the past decade in real value, and the tax cut
will likely accelerate that trend.
Furthermore, recent state-funded innovations in both red and
blue states, to train workers for high-demand jobs might also be
at risk as public spending becomes costlier.
In the summer of 2017, the Administration announced an initiative
to double the federal expenditures on apprenticeships from $100 to
$200 million (carved out of existing Labor Department funding).
The initiative seeks to spread new apprenticeship models that
might have more employer uptake because they are less regulated
than the current model of registered apprenticeship. This idea
merits some experimentation and careful evaluation to measure its
effects. But since we have strong evidence of the positive impacts
of registered apprenticeship on worker earnings, and none for
unregistered models, we should move cautiously in this area before
changing existing policy.
Lastly, the strong convictions of Education Secretary Betsy DeVos
around school choice mean we can expect an expansion in the
support of private and for-profit schools. While expanding student
choice through publicly funded charter schools is warranted by
research evidence, this is much less true of private schools and
vouchers. Furthermore, the research on for-profit higher
education is quite negative, showing much higher costs than public
two-year and four-year colleges, much higher rates of student
default on loans, and lower value among employers in the labor
market. We should therefore proceed very cautiously in this area,
and continue to demand appropriate regulation of the for-profit
Policies to Make Work Pay
Policies at the federal, state and local levels to increase
compensation take many forms besides just education and training.
These efforts include raising the statutory minimum wage and
expanding publicly funded benefits like health insurance (as done
through the Affordable Care Act) or paid family leave. They can
also entail expansions in tax credits for workers like the Earned
Income Tax Credit (EITC) or the Child Tax Credit (CTC).
In a very different realm, federal and state governments can also
undertake policies to more actively support or restrict collective
bargaining, in either the private or public sectors, or to protect
workers from wage theft, noncompete clauses in their employment
contracts (which deny workers the right to take jobs with company
competitors, thus restricting their bargaining power and wage
growth opportunities), or very unstable work schedules.
It was never likely that a Republican administration would support
expanding collective bargaining or additional regulation of
private employer decisions over wage and hours, and the
determination of President Trump and congressional Republicans to
kill the ACA is not surprising.
But the failure of the Trump Administration and Congress to even
consider expanding the EITC in a tax bill that throws trillions of
dollars at high-income individuals and corporations, is quite
shocking and disturbing.
But the failure of the Trump Administration and Congress to even
consider expanding the EITC in a tax bill that throws trillions of
dollars at high-income individuals and corporations, is quite
shocking and disturbing. For many years, conservative policy
analysts or politicians (including House Speaker Paul Ryan) have
signaled their support for an EITC expansion; it was commonly
believed that this would occur as part of any larger tax reform
While the Child Tax Credit was doubled in size (from a maximum of
$1000 to $2000 per child), its refundability for low-income
families was increased by just $300, after Sen. Rubio threatened
to withhold his support for the bill. This a very small
consolation prize for the working poor, relative to the huge gains
that will be reaped by the affluent from this bill.
Furthermore, in the absence of sensible federal legislation to
moderately increase the minimum wage (President Trump supported a
$10 minimum wage on the campaign trail) or provide paid leave
(which both Trump and his daughter Ivanka have endorsed), many
states are moving ahead on their own. Over 30 have already enacted
statutory minimum wages above the federal level (now at $7.25),
some going as high as $15 an hour in the process. About a half
dozen states (including Washington DC) are enacting paid worker
Of course, it is not necessarily negative for states to enact such
policies with different levels of generosity. Some cities or
states (like Seattle or San Francisco) have higher costs of living
and higher concentrations of skilled workers than do many others,
it is sensible for these localities to enact higher minimum wages
or more generous paid leave than do others.
But I fear that an absence of federal policies has created too
much variance across states in minimum wage levels, benefits like
paid leave, and regulation of employer hiring behavior (through
initiatives like Ban the Box that limit employer ability to ask
their workers about having criminal records in their past).
Indeed, some jurisdictions like Washington DC are embracing the
$15 minimum wage, generous paid leave, and a range of limits on
employer permission to screen their job applicants; others, like
Arlington VA located right across the river from DC and easily
accessible through public transit has adopted none of these.
These enormous differences could induce employers to relocate
geographically from higher- to lower-cost jurisdictions, or to
economize on their hiring of low-skill labor in high-wage
locations by implementing labor-saving automation more rapidly.
What Will Happen in 2018 and Beyond?
It is possible that President Trump and his congressional allies,
moving into an election year, will try harder to find common
ground with Democrats on issues to benefit less-educated workers.
Cooperation on infrastructure, for example, would be popular
politically and perhaps more likely to occur. Such a bill would
create an opportunity to spread skill-formation and good jobs to
many unskilled workers who now lack them. And, given the
difficulties construction contractors are having recruiting and
training workers as their Baby Boomer workers retire,
incentivizing employers to train more such workers for lucrative
constructions jobs would be a win-win.
At the same time, the budget deficits generated by the tax bill,
along with conservative ideology (and the fact that the Norquist
No Tax pledge has been signed by almost all congressional
Republicans), might make it impossible to generate sufficient
funding for new infrastructure development with any serious scale.
And, considering the fact that an increase in federal dollars for
workers training will face near certain opposition in the
Republican Congress, its not at all clear that a major
infrastructure initiative will be beneficial to many currently
Its also likely that, in 2018, House Republicans will push to
reduce benefits and require more work from low-income benefit
recipients in programs like the Supplemental Nutrition Assistance
Program (SNAP, or Food Stamps) or Medicaid. Indeed, the Trump
Administration has already allowed states to require Medicaid
able-bodied recipients to work as a condition for remaining in the
But, to ensure that these changes do not harm low-income
recipients who desperately need these benefits, and to really
provide positive effects on their work experience, the work rules
would have to be accompanied by a broad range of fairly expensive
additional services, such as: careful assessment of worker
employability, work supports like transportation and child care
for those who need them, clear exemptions for parents of small
children and those who are disabled or opioid-dependent, increased
access to community college or employer-based training for those
who can benefit from it, access to subsidized private sector jobs,
and a guarantee of public sector work or service activities if
none can be found by the recipients.
It seems highly unlikely that states which adopt the Medicaid work
rules will agree to such an expansion of their obligations to
After one year in office, President Trump has provided feel-good
rhetoric to the white non-college workers who enthusiastically
supported him, and policy actions that will deliver modest short-
term benefits for them but larger long-term costs.
The labor market overall is improving, but at roughly the same
pace as it did under President Obama. The tax and regulation cuts
enacted by the Administration offer modest and mostly short-term
rewards with much greater costs and risks over the longer term.
Much the same can be said about his trade and immigration
policies, which may be pleasing to his supporters but ultimately
will raise consumer prices, lower innovation and growth in the
U.S., and hurt our fiscal balance domestically and our influence
On education and training, the deficits generated by tax cuts will
put great pressure on existing investments in human capital (like
Pell grants for the poor and Labor Department training programs),
and preclude important new federal investments in everything from
pre-K to community colleges. Perhaps more importantly, the
pressure put on state and local public spending from the cap on
deductions for state and local taxes will likely inhibit both K-12
and higher education investments, as well as important workforce
Finally, efforts to make work pay for low-income workers have
grown too modestly (in the case of the Child Tax Credit) or not at
all (in the case of the EITC). Efforts to eliminate the Affordable
Care Act have mostly failed, but the elimination of the individual
insurance mandate in the tax bill could weaken it considerably and
reduce coverage for millions of less-educated workers.
And while the Trump Administration does nothing to moderately
raise the federal minimum wage or provide paid family leave to
workers, an enormous divide is opening between states implementing
these policies on their ownsometimes at very high levels, like
the $15 minimum wageand those that dont. Potential negative
impacts on low-wage worker employment prospects in very blue
states might well result, as employers relocate away from or
accelerate their automation of low-skill jobs.
Over time, Im afraid those workers who have enthusiastically
supported Donald Trump in the 2016 election and beyond will be
very disappointed by the lack of progress or harm his policies
inflict on them.
1 While payroll job creation and employment growth in the
population are strong, their pace of improvement during 2017 was
no greater than in 2014-16. For instance, total payroll job
creation was approximately 2.6, 2.2 and 2.1 million in 2015, 2016
and 2017 respectively; and the employment-to-population ratio rose
from 59.3 percent in 2014 to 59.6, 59.8, and 60.1 percent
respectively in the years 2015-17, showing fairly constant rates
2 Henry Aaron. Tax Cut Proponents Ignore That Theres No Free
Lunch. Economic Studies, Brookings Brief, 2017; and William Gale
et al. Who Will Pay for the Tax Cuts and Jobs Act? Economic
Studies, Brookings Brief, 2017.
3 Gotbaum, Joshua. Moving DoLs Fiduciary standards into the 21st
Century: The Case of ERISA Investing. Economic Studies, Brookings
Brief, 2016; Daniel Hamermesh. How Businesses Could Skirt the New
Overtime Law. Time, October 24, 2016; Klein, Aaron et al. The
Impact of the odd-Frank Act on Economic Stability and Growth.
Economic Studies, Brookings Brief, 2017; and the Hamilton Project
and the Energy Policy Institute at the University of Chicago.
Twelve Economic Facts on Energy and Climate Change. Brookings
4 Of course, Trumps Democratic opponent for President, Hillary
Clinton, also pledged during the 2016 campaign to not sign the
current TPP agreement, though she had strongly supported it
5 Peter Petri and Michael Plummer. The Economic Effects of the
Trans-Pacific Partnership: New Estimates. The Peterson Institute
of International Economics, Washington DC, 2015; and David Riker.
Do Jobs in Export Industry Still Pay More? And Why? Office of
Competition and Economic Analysis, US Department of Commerce,
Washington DC, 2010.
6 Jennifer Hunt. How Much Does Immigration Boost Innovation?
American Economic Journal: Macroeconomics. Vol. 2, No. 2, 2010.
7 Malloy, Raven et al. 2016. Understanding Declining Fluidity in
the US Labor Market. Economic Studies, Brookings Brief.
8 The National Academy of Science. The Economic and Fiscal
Consequences of Immigration. Washington DC, National Academy
9 Since the first few generations of immigrant children show
strong improvement over time in economic success, and since low-
income immigrants often need services provided at the state or
local level, the net fiscal benefits of immigration are greater in
the long- than the short-run and greater nationally than locally.
10 For instance, Senators Tom Cotton and David Perdue recently
introduced a bill to shift immigration from less- to more-educated
immigrants, but to also curtail overall immigration numbers. The
proposed bill was supported by Trump and his Administration.
11 Jay Shambaugh et al. Returning to Education: The Hamilton
Project on Human Capital and Wages. The Hamilton Project,
Brookings Institution, forthcoming in 2018.
12 Harry Holzer and Sandy Baum. Making College Work: Pathways to
Success for Disadvantaged Students. Brookings Press. 2017.
13 For instance, Kentuckys FAME program provides apprenticeships
to companies in advanced manufacturing, while Tennessees Drive
to 55 sets an ambitious goal of improving postsecondary
credential completion in the state to 55 percent of the
population. South Carolina also aggressively markets
apprenticeships to its companies and provides a $1000 tax credit
per year for each apprentice.
14 Robert Lerman. Expanding Apprenticeship Opportunities in the
United States. In M. Kearney and B. Harris eds. Policies to
Address Poverty in America. The Hamilton Project, Brookings
Institution, Washington DC. 2014.
15 Mark Dynarski. On Negative Effects of Vouchers. Economic
Studies, Brookings Brief, 2016.
16 Stephanie Cellini et al. The Government is Sanctioning For-
Profit Colleges. What Happens to the Students? Economic Studies,
Brookings Brief 2017.
17 David Weil. Denying Reality: Labor Standards in the Trump
Era. Presentation at the Annual Meeting of the Allied Social
Science Association, January 5, 2018.
18 Michael Strain. Earned Income Tax Credit Does Better Job of
Lifting Workers Out of Poverty. McClatchy News Service, May 1.
19 Isaac Sorkin. Are There Long-Run Effects of the Minimum Wage
on Employment? Review of Economic Dynamics, Vol. 18, No. 2, 2015;
and Jonathan Meer and Jeremy West. Effects of the Minimum Wage on
Employment Dynamics. National Bureau of Economic Research Working