Jobs and the wall

In his first two years of Presidency, Donald Trump has created 4.7 million jobs. This represents 3.1 per cent increase over the 152.3 million people working at the end of Barack Obama’s term as President.

Trump has pledged to create 25 million jobs during the next five years. If he were to achieve this target within eight years, presuming he gets the second term in office, he would beat the current record held by President Bill Clinton who had created 18.6 million jobs during his tenure as the President for two terms. Trump has to create more than 18.6 million jobs in order to deserve the title as the Greatest job-creating President, notes Kimberly Amadeo in a recent article.

The most major accomplishment of President Franklin D Roosevelt (1933-1945) was the reduction of unemployment from 25 per cent to 2 per cent. He increased jobs by 21.5 per cent, the largest jump ever achieved.

Providing relief to the massive unemployment problem constituted the quintessence of Roosevelt’s New Deal initiative launched during 1933-35. While the Federal Emergency Relief Administration provided cash relief to localities, the Civil Works Administration under the auspices of the Public Works Administration hired four million people, built or repaired 200 swimming pools, 3,700 playgrounds, 40,000 schools, 12 million feet of sewer pipes and laid 2,50,000 miles of road though this programme was suspended a year later. The Civilian Conservation Corps recruited 2,50,000 unemployed youth to work on rural development projects for a wage of $1 per day.

Boosting economic growth to 4 per cent per annum is the key element of Trump’s employment generation programme. The strategy comprises an “America First” trade policy on the one hand and thrust on infrastructure development envisaged in the “Rebuild America” plan on the other, coupled with fiscal stimulus in the form of tax cuts. Trump’s “America First” trade policy aims at giving domestic industries a comparative advantage with tariffs, duties and other forms of protectionism. Since 1998, the US had lost 34 per cent of its manufacturing jobs.

On an average, manufacturing jobs have a compensation package of $79,000 a year. While many jobs were outsourced by US companies to cut costs, others were wiped out by new technology like robotics, artificial intelligence and bio-engineering.

Trump’s ambitious “Rebuild America” programme envisages spending $1 trillion, and Amadeo notes that the construction industry is the most efficient in using federal dollars to create jobs. A study by the University of Massachusetts at Amherst found that $1 billion spent on public works created 19,795 jobs, which was better than defence spending that created 8,555 jobs for the same cost. In this context, the proposed construction of the wall along the Mexican border can be seen as a close parallel to the public works programme that was part of Roosevelt’s New Deal. The 1,900-mile wall, bordering four states, California, Arizona, New Mexico and Texas, is estimated to cost $15-25 billion while the cost of the existing security fence was $2.5 billion.

According to Michael Montgomery, the wall construction would provide jobs for 21,200 to 25,600 people, apart from checking illegal immigrants from Mexico. If Trump could secure timely approval from the Congress, he may have no difficulty in breaking Clinton’s record. He also has to accomplish his job within an eight-year framework unlike Roosevelt who remained in office for more than 12 years.

The author was a Staff Member of the IMF, Washington DC.

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