Donald Trump’s success in the US elections came as a surprise to both pollsters and political pundits. And since November, both have peddled numerous theories to explain their mistakes. Yet, one aspect of his electoral victory remains underappreciated: labour mobility. Labour mobility across regions is much higher in the United States compared to many other countries in the world, including the European Union members, allocating individuals into the jobs where they are the most productive. As such, mobility is an important factor for upward social mobility for middle class Americans, where they can increase their earnings and their life standards by moving to higher-earning jobs in dynamic regions. [1]
But economic mobility has been declining over the last two decades.[2] And as immobile workers become trapped in their jobs and regions, they increasingly oppose those forces credited (rightly or wrongly) for their stagnation. Support for free trade and immigration drops among immobile voting groups. And, protectionist rhetoric becomes increasingly appealing. Donald Trump capitalised on this dynamic. One of his main election promises was to prevent jobs from moving abroad. In Trump’s America, free trade agreements like TTIP were dead on arrival.
For voters, mobility politics is particular to industries and regions. A study by Michael Hiscox suggests that localised interests in particular industries shape trade preferences.[3] Hiscox shows that less mobile industries form anti-trade coalitions due to the increased risk of dislocation in the face of competition from abroad.[4] Conversely, his research shows that mobile groups are more willing supporters of free trade.
This “dislocation thesis” can be extended to a more general understanding of risk insurance in the labour market. Mobility fulfils two functions against rising risks. First, it prevents dramatic declines in employment levels at times of economic crisis. When certain sectors shrink during a crisis, mobility enables the relocation of workers to sectors that are growing. For example, when there is an asymmetrical shock to a particular sector, it is easier for workers to switch to a different job on similar income under conditions of high labour mobility. Therefore, the duration of unemployment is shorter compared to circumstances in an immobile market. Mobility, in other words, functions as a quasi-unemployment and wage protection tool. Secondly, it ensures that there is a close match between skills and jobs and gives individuals more varied opportunities for employment.
But since the 2008 financial crisis, this is a declining possibility for many. While recovery seems to be well under way, labour mobility did not follow suit in the US. Mike Konczal and Marshall Steinbaum argue that slow economic recovery and weak labour demand caused the decline in labour mobility.[5] But much of this is also due to long term trends. David Schleicher points blame at rising housing prices in dynamic regions (entry costs) and public benefit differences across regions (exit costs).[6] This has serious consequences for labour mobility. Either way, as Konczal and Steinbaum argue, ‘when it is hard to find another job, employed workers stay at the jobs they have, impairing their ascent up the job ladder and the accompanying wage growth over careers that historically led to the middle class.’[7] It is this group of people that, faced with declining job prospects, increasingly adopted an anti-trade stance, and became wary of the risk that increasing trade would further reduce the available jobs, would lead to job loss and decreasing income.
Donald Trump was able to tap into this exact pulse. He offered to lower the trade and ‘to bring the jobs back home’. His message resonated with large number of voters especially in deindustrialising regions in America. Declining mobility accompanied with jobs flying abroad made the future prospects grim for those workers.
This is not to argue that increasing anti-immigrant and xenophobic sentiments did not play a role.[8] Similarly, much has been written of misinformation and post-truth politics, disseminated through social media sources. Nevertheless, this should not shield us from also considering economic reality and the crucial role it played in this election. Declining labour mobility is a strong predictor of support for open trade. It made increasing levels of international trade undesirable for large groups of American workers, which prompted them to vote for Donald Trump. In other words, “it’s the economy, stupid.”
References
[1] Michael J. Hiscox. 2002. International Trade and Political Conflict: Commerce, Coalitions, and Mobility. Princeton: Princeton University Press.
[2] See for instance a recent analysis from the Economist and the World Economic Forum analysis ‘Why declining US labour mobility is about more than geography’.
[3] Michael J. Hiscox. 2002. International Trade and Political Conflict: Commerce, Coalitions, and Mobility. Princeton: Princeton University Press.
[4] Ibid.
[5] Mike Konczal and Marshall Steinbaum. (2016). Declining Entrepreneurship, Labor Mobility, and
Business Dynamism: A Demand-Side Approach.
[6] David Schleicher. (2016). ‘Getting people where the jobs are’, Democracy.
[7] Ibid.
[8] See for example, Michael Tessler (2016) ‘The education gap among whites this year wasn’t about education: it was about race’.
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