In this edition of our Race, Jobs, and the Economy series decoding each month’s Bureau of Labor Statistics (BLS) monthly jobs report, we overview the current state of the labor market and discuss the economic plans of the incoming Trump administration.
Analysis of Topline Figures in the October BLS Report
The October jobs report was abysmal with only 12,000 jobs added. The low figures were due mainly to Hurricane Milton and ongoing labor strikes. The unemployment rate remained unchanged at 4.1%.
The biggest job gains were in healthcare (+52,000) and government (+40,000) accounting for the vast majority of gross gains. Most sectors declined including professional and business services shedding almost 50,000 temporary jobs. The government sector accounted for all net jobs growth with the private sector shedding over 28,000 jobs overall.
The lackluster job figures highlight other weaknesses that can be seen throughout the economy. The BLS revised August and September’s job gains downward by over 100,000. This is particularly concerning as August’s downward revision of 81,000 jobs was larger than the 78,000 jobs gain in the final count. Additionally, household debt and debt delinquencies continue to rise, putting pressure on family finances.
While the government created nearly all jobs last month and has consistently added them over the year, that public-sector well may soon dry up. Local and state governments rushed to spend down COVID-related federal funding before the fiscal year ended at the end of September. Going forward, with federal stimulus unlikely given the incoming administration’s promises to gut federal agencies, the government sector may be unable to keep the labor market afloat.
On November 7, the Federal Reserve cut interest rates by 25 basis points, continuing their bid to fight inflation while stimulating the economy. The Fed is seen as a politically independent actor. However, Donald Trump believes the Fed should be subject to more political oversight. In response to whether he was worried about being fired by incoming President Trump, Fed Chairman Jerome Powell said “No,” citing the illegality of firing a Fed chairman. Powell may be correct on the legal question regarding his sacking but the incoming president has a knack for violating the law.
The Return of President Trump: Austerity, Antagonism & Erratic Policymaking
The election of Donald Trump for another term as president has sent a shockwave across domestic and international politics. Known for being unpredictable, Trump campaigned on promises to round up and deport immigrants, enact sweeping import tariffs and make deep cuts to social services and federal government employment.
Perhaps the most controversial Trump proposal is the large-scale deportation of undocumented immigrants, something he has promised will commence on the first day of his presidency. There are an estimated 11 million persons residing in the United States without ‘proper authorization.’ Many have fled dire economic straits, particularly from Venezuela, where over a quarter of the population has left over the last decade.
Immigrants, documented or not, play a vital role in the economy. They have largely kept the labor force growing while many baby boomers are retiring. Undocumented immigrants perform some of the most backbreaking and least desirable jobs in the economy. They watch the privileged children of upper-class households, tend suburban lawns, collect the nation’s trash and work the fields where America grows its food.
The large-scale deportation of this population will cause labor costs to rise and the labor pool to shrink. The construction, food service and farming industries will be most impacted. Beyond economic costs, the social effects of the deportation plan would be devastating. Latinos will be significantly harmed by the deportation scheme as 1 out of every 4 Latino children has at least one parent who is an undocumented immigrant. Black immigrants likely will be specifically targeted. This fear has already caused many Haitian migrants to leave Springfield, Ohio, where candidate Trump falsely accused them of eating residents’ pets. In a sign of the rising Sinophobia gripping the country, one of the first groups the Trump administration plans to deport is undocumented Chinese immigrants, specifically young men.
Those who believe that the potential economic costs of the deportation plan will discourage the Trump administration from executing the deportations misunderstand the logic of white supremacy. Believe it or not, the deportation plan has been described as a solution to the housing crisis. The right wing has argued that illegal immigrants are to blame for the shortage of housing in the United States and that removing them would “free up” housing for “deserving Americans.”
Housing scholars say the impact of immigration is complex but marginal. Most undocumented immigrants are renters rather than owners. They tend to live in overcrowded conditions where families frequently double up under one roof – conditions few other Americans would envy.
Most of the blame for the shortage of 4.5 million homes in fact lies with restrictive zoning laws that benefit existing wealthier and Whiter householders. Those same restrictive policies and the artificial housing scarcity they create also happen to be the conditions that allowed the next president to build an international brand in real estate.
The second major plank of President-elect’s economic plan is across-the-board import tariffs. Additionally, in response to the loss of the United States manufacturing advantage to China (and other competitors), a specific 60% tariff would be placed on Chinese imports.
There is a consensus among economists that tariffs are not an effective way of reviving US industry. The Econ 101 argument for them is to protect strategic infant industries so that they can gain experience and market share to become competitive with imports over time. However, Trump’s tariffs are not limited to key strategic sectors but are applied to all goods coming into the country.
Trump’s tariffs would almost certainly raise prices at all levels of the country’s supply chain leading to inflation for consumer goods. Most analyses estimate a .5% to 1.5% reduction in GDP throughout Trump’s presidency from the tariffs alone – before stacking on the above-referenced economic harms of mass deportation.
Import-dependent companies have been sounding the alarm about the detrimental effects of the tariffs on their operations. Some companies are looking for legal loopholes to bypass the tariffs. Some are increasing inventory and building up stockpiles now in anticipation of heightened costs in the future.
There are several contradictions inherent in Trump’s economic plan. The deportation scheme may appease the large segment of White voters weary of losing their demographic majority. But it would face severe backlash from key business sectors that historically trend conservative. Farmers and construction companies have expressed apprehension about the plan. Both the deportation plan and the tariffs would likely raise prices, which goes against his voters’ expectations that Trump would lower the cost of living.
There are geopolitical contradictions as well. Left-leaning governments such as Mexico, Colombia and Brazil may be unwilling to cooperate with the Trump administration on his deportation scheme. The tariff plan would include a special tariff on goods imported from Mexico. Mexico could retaliate with its own tariffs, creating a cascade of economic warfare measures between the US and its second-largest trading partner.
The tariff and the deportation plans of the incoming Trump administration are a tall order with complex legal, logistical and geostrategic problems. Opponents of the mass deportation roundup scheme are preparing for the courtroom equivalent of a guerilla war. Others are preparing to demonstrate in the streets. If the incoming Trump administration chooses to pursue mass deportations and tariffs, it will face major resistance on multiple fronts.
Joseph Dean is NCRC’s Junior Racial Economic Research Specialist.
Photo by Renee Silverman via Flickr.
