Trump’s claims of bringing back American manufacturing jobs is boastful with some truth. Since the manufacturing halcyon days of the 1970’s, the US Dollar was allowed to depreciate and cheap labor abroad sent US factory jobs into a multi-decade tailspin. Manufacturing output rose, but 8 Million jobs were lost. In his first 20 months, Trump has added about 400,000 Factory jobs with a record unmet demand for more workers in a strong capacity starved growth phase since he was elected.
Measuring factory employment growth rate, we are witnessing the fastest employment rate since 1984. More impressive is that employment growth always slows toward the end of an economic expansion cycle, yet this time after 9 years we see acceleration. With record low Jobless claims, the current worker additions in manufacturing and throughout this economy are impressive. With virtually full employment we rely on new young adults entering the labor pool along with converting those not seeking work to return from the sidelines.
We would speculate a significant boost to the current above normal GDP growth rate if we could fill a few million of the almost 7 Million job openings. With Boomers retiring in record numbers for years to come, it’s unlikely these openings will shrink much until the economy contracts. The avenues for increasing employment are challenging, yet obvious: more skilled immigration, job training, and automation.
It’s not just the US in need of more labor. The Western world needs help shrinking the large worker deficit. Germany’s Merkel has already compromised in limiting illegal immigrants but has smartly pivoted to pushing for skilled German-speaking immigrants from around the world to ameliorate the record job openings. German companies are moving abroad to locate factories where more skilled labor exists – a great opportunity for aggressive countries to hold out a neon welcome sign.
