Factory Job

The Trump Administration is racing to discharge tens of thousands of federal workers in order to do away with government activities it dislikes. And what are those displaced workers to do? Treasury Secretary Scott Bessent offered an answer on April 7. “[W]e are shedding excess labor in the federal government,” he said, adding, “That will give us the labor that we need for the new manufacturing” which, he asserts, the Trump Administration’s higher tariffs will bring to the United States.

This advice fits neatly with persistent claims that manufacturers can’t find workers. Last year, the head of the National Association of Manufacturers claimed that there were 800,000 unfilled manufacturing jobs. That number is likely to grow if the Administration succeeds in reducing the number of immigrants in the United States.

This purported labor shortage is usually attributed to spoiled workers who avoid jobs that can be dirty and physically taxing. As one economist insists, “Young people, especially, are not interested in jobs in manufacturing.”

Count me as skeptical. In general, I think, workers are good at sniffing out the best opportunities. The reason many shun manufacturing jobs is that, on average, they are no longer good jobs. Manufacturing workers used to earn a premium relative to workers in other industries. Due in part to foreign competition, that premium has vanished. Many of the fringe benefits that union factory workers used to enjoy have vanished as well.

If theory, higher tariffs should help manufacturers earn greater profits from U.S. operations. But will higher profits mean better pay? It hasn’t worked out that way in the past: in primary metals, where steep tariffs protect the steel and aluminum industries, inflation-adjusted wages for production workers are five percent below their level in 2005. Does Mr. Bessent have a plan to ensure that any benefits of disrupting global supply chains are spread widely? If not, persuading displaced federal workers to staff newly built factories may be a hard sell.