America’s “left-behind” are doing better than ever But manufacturing jobs are still in decline

Republicans and Democrats may not see eye to eye on many issues, but both parties are committed to supporting America's "left-behind" populations. Presidents Donald Trump and Joe Biden have both actively implemented policies aimed at enhancing the economic status of those who have faced challenges due to globalization and deindustrialization. Both Mr. Trump and Kamala Harris, the Democratic nominee, have pledged to continue these efforts if elected. The outcomes of their initiatives appear positive, with the left-behind experiencing significant improvements not seen in years. Yet, a challenge remains as manufacturing jobs, once a mainstay for these communities, continue to decline. Before Mr. Trump's election in 2016, few demographics suffered more than men lacking a high school education—often considered part of the left-behind. The decline in America's manufacturing industry significantly limited economic opportunities for workers with limited skills. In 1979, a man with a college degree earned approximately 60% more weekly than a high school dropout. By 2016, this "college wage premium" rose to 170%. The risk of unemployment for the less-educated increased, and many left the labor force altogether. 

This economic distress was prevalent in less visible areas, particularly in parts of rustbelt states like Michigan and Ohio, often overlooked by politicians and the media. This situation shifted in 2016 when Mr. Trump campaigned and governed on promises to support the left-behind, including raising tariffs to bolster manufacturing employment. Centrists and liberals in America also decided to address the plight of globalization's casualties, with many turning to J.D. Vance's "Hillbilly Elegy" to understand these communities. The results of this introspection are evident in Mr. Biden's policies designed to create manufacturing jobs, with his administration investing hundreds of billions in grants and subsidies to stimulate job creation in the rustbelt and beyond. Fortunately, the economic status of the left behind has significantly improved. 

Since Mr. Trump's presidency, the college wage premium has gradually decreased, and wage growth among poorer Americans has outpaced that of wealthier individuals. Currently, a man without a high school diploma working full-time earns an average of $40,000 annually. Furthermore, more are employed, with just 5.1% of men without a high school education unemployed in 2022 and 2023—a rate that matches record lows from the 1990s. Labor-force participation is nearing historic highs. Although America's left behind remains relatively impoverished, progress is evident.  

Chart: The Economist

Several factors explain why this is so. Under both Mr Trump and Mr Biden the labour market has been unusually tight, driving up the demand for people with poor qualifications. Both presidents implemented large amounts of fiscal stimulus, while the COVID-19 pandemic created labor shortages. Men without high-school diplomas have found work in all sorts of industries, from driving trucks to working in hotels. A raising of minimum wages, especially at the state level, has consolidated these gains. Since 2016 Ohio’s minimum wage has risen from $8.10 an hour to $10.45, for instance. Analysis by Goldman Sachs, a bank, suggests that, in effect, the national minimum wage has risen by more than $3 since 2016.

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The industrial policies favored by former President Trump and current President Biden have not made much of a difference in reviving manufacturing jobs in the United States. The share of Americans employed in manufacturing has steadily declined since 2016, even as the number of manufacturing jobs has risen in competitor countries like Germany, Canada, and Italy. Wages in the U.S. manufacturing sector have also fallen relative to the overall average.

The manufacturing industry in the U.S. is struggling, despite the efforts of politicians to restrict imports and channel money to favored industries. Even as manufacturing has declined, the jobs it offers have become less accessible to people without high school diplomas. Companies have automated many jobs that once suited those with poor qualifications, and some jobs have been outsourced to cheaper countries. The growth in manufacturing jobs now largely benefits people with advanced degrees, as the sector has become more focused on technology and computer-based work rather than traditional manufacturing.

There are some success stories, such as the growth in manufacturing employment in Harris County, Georgia, driven by the arrival of Korean car companies. However, these prosperous areas were never truly "left behind" in the first place. When looking at the specific places that Trump and Biden have targeted, the data suggests that manufacturing employment in these "left-behind" areas has actually fallen slightly since 2016, even as it has risen in better-off parts of the country.

Some regions, like Roscommon County in Michigan, have seen significant declines in manufacturing employment, and the losses continue. While it may be too soon to expect a manufacturing renaissance as a result of Biden's policies, the more immediate and durable returns are likely to come from sensible macroeconomic policies. Both Republicans and Democrats will likely continue to push for industrial policies, but the public should be skeptical of their ability to achieve significant, lasting results. 

America's job market is in a bind.

That's probably no surprise to current job-seekers, who are having an increasingly tough time landing a new gig as hiring slows and job boards run dry.

The stagnation has resulted in a rise in "stuck" workers — frustrated employees who say they want to quit a job, but are staying put as the fear of a potential recession looms in the backs of their minds.

A 24-year-old employee working in histology named Amanda, who spoke with Business Insider, is one such worker who feels that way. She's choosing to stay in her current role as there are limited offerings in her field, and switching employers would likely lead to her pay being cut by at least a third.

"I feel trapped here," Amanda said. "I'm financially screwed if I leave, and that's why I don't, or can't leave."

Americans have long grumbled about their feelings of being stuck in an unsatisfying role, but the feeling appears to be growing: Americans are quitting their jobs at the slowest pace since the pandemic, with the quits falling to just 2.1% in July, according to the Bureau of Labor Statistics.

Yet, job satisfaction fell across 26 measures in the past year, per an annual survey from the Conference Board.

Google search interest for the search phrase "quitting job" is down 11% over the last year, according to data accessed from the search analytics tool Glimpse.

Search interest for the phrase "quitting job" is down 11% over the past year. Google Trends/Glimpse

"Stuck at work," meanwhile, is becoming a more common search term, with interest rising 9% in the past year.

Google searches for "stuck at work," meanwhile, have climbed 9% over the past year. Google Trends/Glimpse

Membership on the subreddit r/hatemyjob has more than doubled over the past two years, with users on the community growing 30,000-strong as of August, up from 14,7000 in 2022, according to historical data from the analytics site SubredditStats.

"Stuck at a job," one user on the subreddit posted. "I'm no longer fond of the work I do. I feel stuck because of the money. It's a good problem to have, I suppose."

"I'm just so done with this job. I've tried everything to stick it out but now I just can't do it anymore," another user wrote, adding that they had been looking for a job related to their degree for over a year. The search hasn't been successful, they said, citing "tough" conditions in the job market.

"I want to quit this job so badly but I can't afford it."

Workers have typically hunkered down when the economy slows, with recessions often tied to plunges in the quits rate, historical data from the Fed shows.

The economy hasn't fallen into a recession but fears of a coming downturn are growing. In markets, investors panicked last week, sparking a huge sell-off after July payrolls were lower than expected, with the unemployment rate ticking up to 4.3%.

Most Americans now believe the economy is in a recession, a recent Affirm survey found, despite GDP continuing to grow over the second quarter.

Google search interest in the term "recession" has exploded 230% over the past month, Glimpse data shows.

Google search interest in "recession" has more than doubled in the past month. Google Trends/Glimpse

"I wouldn't say that we're in a recession or anything," Raymond Lee, the CEO of the career outplacement firm Careerminds told BI. "I would say, though, that, just from my perspective, I think a lot of people are staying put in their jobs because I think that there is a lot of uncertainty … People are trying to stay where they are and not make any big moves."

Korn Ferry, a consultancy that offers career transitioning and outplacement services, said it had seen an increase in inbound calls from job seekers. That's the opposite of what the firm saw during the post-pandemic hiring boom — and it's a solid sign the "engine is slowing down," according to Radhika Papandreou, the president of the Korn Ferry's North American arm.

In general, clients are taking longer to secure new roles and appear to be prioritizing job security, Papandreou said.

"People are also hesitant to leave their jobs to look at other jobs unless they feel like they're going to get something that's secure and for a long time," she added. "There's a little bit of, 'I don't want to be last in, first out.'"

Job market forecasters say the slowdown in hiring looks poised to continue, even if the Fed begins to loosen monetary policy. Only 15% of small businesses said they were planning on adding new jobs in July, according to the latest survey from the National Federation of Independent Businesses, down from a peak of over 30% recorded several years ago.