What’s Driving Job Growth in Industrial America?
Mr. Trump has called for expanding drilling on federal lands, while loosening regulations to help manufacturers. And since he took office, hiring has indeed ticked upward in these sectors — but is there any connection?
Manufacturing and mining jobs are up this year after having fallen in 2016
After a tough 2016 that saw the loss of more than 100,000 jobs, employment in manufacturing and mining (which includes oil and gas drilling) is rebounding. Still, there is plenty of catching up to do — both sectors are well below peak employment levels in recent years.
Higher commodity prices are having an impact
Mr. Trump has claimed credit for overall employment gains in recent months, but in the mining sector, the jump in hiring has had much more to do with rising commodity prices than any policy shift in Washington. After plunging in late 2014 and throughout 2015, energy prices have somewhat recovered. That has helped stabilize employment in the oil industry. Meanwhile, surging prices for metals like gold and copper are spurring activity in the mining sector.
In April, Mr. Trump lifted the hiring freeze he had imposed soon after taking office in January, but federal payrolls remain under pressure. The White House has proposed budget cuts at many federal agencies, and federal employment declined in 2017 compared with gains in past years. On the other hand, hiring has been stable on the state level while local governments have been adding workers.
As major exporters who are dependent on overseas customers for a big part of their sales, manufacturers often find themselves at the mercy of the dollar. When the dollar surged in 2016, American-made equipment was effectively more expensive for foreign buyers. This year’s drop, on the other hand, is a boon for manufacturers as well as for big American companies who draw a big portion of their sales from overseas, like Caterpillar and McDonald’s.
Why is the dollar down? Some of it has to do with the relative strength of other economies in Europe and Asia, which has the effect of drawing investment away from the United States. But political gridlock in Washington — and the fear that efforts to cut taxes or spend more on infrastructure will fail — has also cut expectations for future growth, and in turn pushed the dollar lower.