Many worried workers at the Carrier air conditioning assembly plant in Indiana breathed a sigh of relief when the company appeared to back down from it’s intentions to move assembly to Mexico. On the surface, it appeared to be a great victory by President-Elect Donald Trump. But, the details of the claimed deal let some of the air out of the deal as being less than it appears. Vice President-Elect Mike Pence is also still the Governor of Indiana, giving him powers he would not have in the other 49 states to offer a $7 million dollar tax break to Carrier to keep the local plant open here.
A lot of other states have also proven that to offer companies tax breaks when they threaten to leave or to set up shop works. In Oregon, a Honda office site set up shop because they were offered a “no property taxes” promise from the county government at the same time small businesses, homeowners and others pay plenty in local county property taxes to help support local schools, police, fire protection, Food Stamp, health care for the poor and other county services, yet one business doesn’t have to contribute directly to these services, only the indirect taxes from the workers help to support these services. At some point, does offering free taxes to businesses really benefit a community a great deal other than providing jobs?
Carrier was also promised that the corporate taxes will be cut by the Trump Administration as well. So, while 800 to 1,000 persons are no doubt happy that their jobs are being saved, the company’s tax cuts to support local services will have to be made up by other taxpayers.
The Trump victory in the “Rust Belt” states was based off a somewhat inaccurate knowledge that many have about the “loss” of manufacturing jobs since 2000. While it might be factually true that the U.S. had 17,284,000 manufacturing jobs in 2000, but the country only has 12,338,000 in 2016, that 2016 number is actually an 8% improvement over the low of just 11,460,000 in 2010, where there has been a steady improvement in domestic manufacturing numbers in the Obama Administration years. The task for the new Trump Administration will be to prove that they can actually improve this 8% gain, or just take credit for job growth numbers that would normally take place anyway.
Trump also was able to sell himself well to Indiana voters despite other statistics which proved the much improved jobs climate during the Obama years for the state. Manufacturing jobs might have declined from 665,000 in 2000 to 435,000 in 2010, but the picture improved to 518,000 manufacturing jobs in 2016, or a 19% improvement in the last six years. A 19% improvement in six years might be a difficult number to match for the incoming Trump Administration.
Indiana’s private sector employment numbers also followed a similar trend of a peak of 2,493,000 jobs in 2000, but falling to 2,221,000 in 2010, but now improving to 2,523,000 in 2016, or a 14% improvement in just six years. With jobs with government for some employed, private sector employment and the improvement in manufacturing job numbers, the total numbers probably show only a very marginal job loss from the 2000 numbers and a steady improvement in the economy since the end of the recession that peaked around 2007-2009.
To a point, Donald Trump’s salesman skills will actually have to deliver at least as good as economic numbers as the improvement over the last six years by the Obama Administration, or at some point voters will once again be disappointed. The Carrier “jobs deal” looked impressive enough on the surface, but was like shooting fish in a barrel to manufacture with tax incentives, a governor who is the Vice President-Elect, and a company sensitive to not losing other big government contracts to competitors. In other cases, where the Trump Administration cannot bring so many “sweets” to the table for other companies pondering moving production to a foreign land, the question is whether the “magic” can work again and again.