Dear Indiana: You’re Not Getting Killed On Trade
There may be no state in the country that, at least on paper, should be less amenable to Donald Trump’s doomsday message about trade and American manufacturing.
Next week’s Indiana primary looms large as one of the two remaining contests that will decide whether Donald “Presumptive” Trump really will be the GOP nominee for president in 2016. Given the state’s importance, Trump will spend the next several days cruising around the Hoosier State reciting his usual stump speech about the devastating effects of free trade on the state’s manufacturing sector and economy more broadly—a problem Trump alone (of course) can fix through tariffs and “better trade deals.”
Proof of this devastation once again comes from Trump’s angry references to the now-infamous video showing Carrier management informing some Indiana employees they were moving some production, and production jobs, to Mexico. A simple glance at the facts, however, reveals the Carrier anecdote to utterly unrepresentative of the economic situation in Indiana. Indeed, there may be no state in the country that, at least on paper, should be less amenable to Trump’s doomsday message about trade and American manufacturing.
Indiana’s Manufacturing Sector Is Healthy
Perhaps the most important fact about Indiana’s economy—and one you won’t be hearing from Trump or his media buddies—is that the state’s manufacturing sector is thriving. According to government data compiled by the National Association of Manufacturers (NAM), Indiana leads the nation in manufacturing’s share of state gross domestic product (a whopping 29.45 percent, while most states are in the low teens) and jobs (17.06 percent).
Meanwhile, Indiana’s annual manufacturing output has soared since 2000 (coincidentally when everyone’s favorite trade punching bag China joined the World Trade Organization, or WTO) from a little more than $60 billion in 2000 to well more than $93 billion in 2014 (the last year of data available).
Unlike many other states, Indiana also has experienced significant gains in manufacturing employment since the end of the Great Recession, adding more than 90,000 manufacturing jobs between late 2009 and early 2016:
The long-term trend for Indiana manufacturing jobs is, as with the rest of the United States and the world, downward, but—as the aforementioned output stats and reams of academic research demonstrate—that’s mainly due to changing consumer tastes and productivity gains like robots and computers, not trade. (The state has also gained around 375,000 total non-farm jobs since the North American Free Trade Association and WTO came into effect in the mid-1990s.)
There is also little sign of a “race to the bottom” to keep these factory jobs in the state. NAM estimates that average annual compensation for Indiana manufacturing workers in 2014 was $72,256 (versus $44,806 per year overall), and data from the St. Louis Federal Reserve show relatively impressive wage gains for these employees over the last several years:
Meanwhile, Indiana has reaped tremendous benefits from its participation in the global economy. Outside of the immense consumer gains that free trade provides (about 90 percent of which accrue to poor and middle-class consumers), the Business Roundtable (BR) estimates that more than 1 in 5 Indiana jobs (more than 812,000) are supported by international trade (including exports and imports), and that these trade-related jobs “grew 7.2 times faster than total Indiana employment from 2004 to 2014.”
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