Trade War or None, the Battle For Jobs is Domestic

A Flagler College professor offers a different economic perspective

If there is to be a trade war with China, as some experts fear and the administration has warned about, Florida will be on the front lines of it. Shortly after President Trump imposed tariffs on Chinese steel, China responded by putting duties on fruit and nuts among other things. As oranges and other citrus are a vital part of the Floridian economy, this is certain to have an impact on the Sunshine State that will only get worse.

A professor at Flagler College in St. Augustine thinks that there is another way. Doctor John O’Brien has lobbied before Congress and the Cato Institute to fill employment gaps through transitioning workers into an economy that went away from manufacturing and into different sectors. Filling what Dr. O’Brien refers to as a “skills gap” between underemployed people and more desirable jobs may be a more holistic approach to improving the American economy.

“The majority of manufacturing job losses have come from automation,” says Dr. O’Brien, likening it to what happened to the agricultural industry after the industrial revolution.

“We are imposing these tariffs on China for something that already happened and isn’t happening now.” The days of the Chinese government manipulating their currency have passed.

For Florida, the outloook on a coming trade war would be bleak, as one of the early targets of Chinese tariffs was the citrus agricultural industry of Florida, with fruits one of the first items on which those tariffs are to be levied. “With 40% of our agricultural products being exported, we really need to make sure that we have free markets to export those products to.”

Dr. O’Brien is concerned with the impact of these tariffs on the price of goods Americans use every day and often need to replace. These increased costs put a particular strain on the displaced worker.

“My principal concern, and the reason I did go to Washington, is that we should be doing something for the displaced workers now, not doing something to hurt China to persuade them to change some of their trade practices by hurting the workers that are already displaced.” Increased tariffs on foreign goods will make many of the things we buy more expensive, which ultimately takes money out of those workers’ pockets. “We derive about a trillion and a half dollars each year by not buying goods that are made domestically that are more expensive than those that are imported. Now that trillion and a half dollars goes back in your pocket and you can spend it elsewhere.”

These displaced workers would need to learn an entirely new set of skills in order to occupy open jobs in the new economy. There are programs out there to help them, but they are not entirely well-publicized and more could be done. “These new jobs require skills that the manufacturing jobs of the past did not. So, in order to address that problem, we need a system in this country … that will align job seekers with open jobs.” Massive Open Online Courses, or MOOCs, are often free and can help to train potential workers.

On the educational level, Dr. O’Brien suggests that pushing students into the pursuit of a bachelor’s degree might not be helpful, as many good jobs do not require them. “The gold standard has always been a bachelor’s degree, and a bachelor’s degree first of all is difficult and expensive to get…what you need is training in business writing, or perhaps Microsoft programs such as Excel.”

To Dr. O’Brien, relocation is a critical part of bridging that qualification gap. “We need a system that will also assist in the actual physical relocation of people from one city to another.” The fact is that some cities that have lost jobs will likely never see those jobs return in any form. As uncomfortable as it may be and as callous as it may come across at first, many of those Americans underserved by the job market would be in a better position if they only could move.

Of course, getting somebody to pack up and leave one place for another is difficult under any circumstances. Dr. O’Brien cites studies and experts when he suggests that the two primary reasons people are reluctant to relocate are real estate (that is, selling one’s home) and economics. In short, moving costs money, and somebody who is in need of a job or a better job than the one they have might not have the money they need to pick up and go.

While relocation sounds expensive, the cost of not helping workers relocate builds every day. That’s critical to the plea Dr. O’Brien made to the Cato Institute, a libertarian thinktank always cautious of public spending. “If you look at what’s going on where that individual lives, first of all they’re probably unemployed, probably—hopefully—getting unemployment benefits. They may have rent subsidies. There are other social services they may be taking advantage of. They may be on medicaid. They may have children on CHIPS. There are a number of social services which are being paid for in that current location that would be eliminated if that person were to get the $10,000 or $15,000 they would need to move.”

In all, it has been estimated that this market of displaced workers comprises about six million people. There is hope with that, as the amount of open jobs that currently have nobody to fill them is somewhere around six million. The displaced worker who believes that the work has dried up can indeed find a place to earn a paycheck. The economic challenge is getting those workers to where those jobs are located.

Tariffs and trade wars will not bridge that gap. Nor, suggests Dr. O’Brien, will it help for states or political parties to compete against one another.

“I think is has to be a more or less agnostic approach, where you’re not taking a Democratic or a Republican position on this. What you’re taking is, I want to have a program that improves the labor participation rate in this country. There are very few ways to create national economic growth, and increasing the size of the workforce that is employed is one of them.”

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