President-elect Donald Trump has already kept one campaign promise, announcing Tuesday evening that he had struck a much-hyped deal to keep Carrier, which makes air conditioning and refrigeration products, from moving 1,000 manufacturing jobs from Indiana to Mexico.
The news, which Trump revealed on Twitter, is a great success for the workers who will now get to keep their jobs, and for the surrounding community. Importantly, it’s also a victory for Trump’s marketing machine. What it’s not, though, is any indication that Trump has a sustainable and replicable plan to bring back American manufacturing jobs. The Carrier plant is a welcome change of pace, but it’s also an outlier that offers little promise for the broader economic outlook.
“This is a huge win and the perfect example of the type of leadership the Trump administration is going to provide when it comes to fighting for the American workers,” Republican National Committee communications director Sean Spicer said on a call with reporters Wednesday.
The terms of the deal are still unknown, and Carrier didn’t respond to WIRED’s request for comment. But there are already plenty of clues that this announcement—while commendable—does not foretell similar success stories going forward.
For starters, Carrier is not staying out of the goodness of its heart. The state of Indiana is reportedly providing economic incentives to the company to keep these jobs in-state. Securing those enticements is easier given that not only is Vice President-elect Mike Pence still the governor of Indiana, he’s also the chairman of the Indiana Economic Development Corporation, a state agency charged with, among other things, creating incentive packages to attract businesses, or in this case, to keep them.
That’s likely why Trump picked this fight in the first place. Of all the businesses currently sending jobs overseas, Carrier happens to be moving those jobs from a state where, let’s just say, Trump knows a guy. Trump hyped his ongoing negotiations with Carrier last week, likely knowing he was all but guaranteed to succeed. On a call with reporters, Trump transition team spokesman Jason Miller acknowledged the Vice President-elect has “spent a considerable about of time on this.”
It’s also worth noting that Carrier itself is a subsidiary of United Technologies, a company which just this past July secured an $873 million defense contract through its Pratt and Whitney aerospace division. Whatever the opportunity cost of keeping Carrier in Indiana, it pales next to any potential future Pentagon windfalls.
Trump won’t have the luxury of pulling those same strings in every state, or with every company. Even if he could, those tax breaks for a company like Carrier will have to be balanced out somewhere else. Taxpayers can’t subsidize every factory. What’s more, Trump could be setting up a system where businesses feel they can threaten such a move in order to win favors in the form of tax credits and other incentives. After all, it worked for Carrier. As University of Michigan economics professor Justin Wolfers said on Twitter:
Every savvy CEO will now threaten to ship jobs to Mexico, and demand a payment to stay. Great economic policy. https://t.co/t2WAJOgh8F
— Justin Wolfers (@JustinWolfers) November 30, 2016
Carrier aside, the much larger issue here is that Trump claiming a victory for saving 1,000 jobs doesn’t mean much in a country that has lost nearly 5 million manufacturing jobs in the last two decades. Over the past 25 years, American-made exports have quadrupled, according to the National Association of Manufacturers. It’s just that all that productivity doesn’t require quite as many workers as it used to. At least, not the same type of worker, Chad Moutray, chief economist of NAM recently told WIRED.
“Really rote tasks you might have assumed were there in the past aren’t there now,” Moutray says. “We have highly skilled, highly paid workers with strong technical skills.”
To the extent that the manufacturing industry is hiring, it’s hiring people with these skills, and yet, according to NAM, of the more than three million manufacturing jobs that will open up over the next decade, about two million are expected to go unfilled because not enough workers are trained for these highly skilled roles.
Really rote tasks you might have assumed were there in the past aren’t there now. Chad Moutray, National Association of Manufacturers
And yet, here we have a President-elect who—for all his talk of how trade deals have decimated manufacturing—has never spoken about the unstoppable march toward automation and how he plans to prepare American workers for an increasingly tech-centered economy. Instead of developing a plan to figure out how today’s children can found or help run the next Apple, he’s condemned companies like Apple for sending low-wage, low-skilled labor overseas.
Trump’s deal with Carrier is an inarguable victory for an administration that hasn’t yet officially begun. It’s not repeatable, though. It doesn’t scale. And unless the President-elect develops a more thorough plan to help Americans adapt to the changing economy, it will be a victory in image only.