Inside Out

Trump talked the talk at Davos, but working-class Janesville is where he’ll have to walk the walk

This proud, middle-class community was respectable, but over years of safe and unionised employment in the huge domestically focused motor industry, it became used to salaries and living standards that could not be justified by relatively low skills, and lack of global competitiveness.

PUBLISHED : Sunday, 28 January, 2018, 12:46pm
UPDATED : Sunday, 28 January, 2018, 9:16pm

It was an uncharacteristically well-behaved Donald Trump who flew out of snowy Davos at the weekend, after assuring the world’s business elite that “America First did not mean America Alone”, committing to free trade “as long as it was fair and reciprocal”, and providing a strong sales and marketing pitch for global business to invest in the United States.

“After years of stagnation, the United States is once again experiencing strong economic growth,” he said. “Consumer confidence, business confidence and manufacturing confidence are the highest they have ever been in many decades.”

While Trump was talking, I was reading Janesville: An American Story, by Amy Goldstein at The Washington Post – a sobering story of a 100-year General Motors town in Wisconsin near Chicago that imploded in 2008, when the American motor industry collapsed across the country during the great financial crash in the US.

Her story was powerfully at odds with Trump’s Davos marketing pitch, and I know which story had the ring of truth.

Asking directly how the 63,000 population of Janesville had fared since 2008, Goldstein was clear: “Surprisingly well – or not – depending on how you measure.”

Unemployment that peaked at almost 14 per cent after GM and its network of local suppliers went belly-up is now back at 4 per cent – its lowest level in almost two decades. Up to 2,000 new jobs have been created, but employment is today 4,500 lower than in 2008.

Home values are sharply down, as are household savings. Most importantly, 56 per cent of the community are earning less than when GM crashed, and average wages have toppled from US$28 an hour, to between US$15-16 per hour today.

A survey of the community, hometown of Paul Ryan, Republican Speaker of the House of Representatives and architect of the tax reform plan just put through Congress, says that 76 per cent of the population still believe the town is in recession. Up to 75 per cent say they are worse off than in 2008.

Looking forward, over 90 per cent of survey respondents say that the local economy will never recover, or will take many years to recover. Up to 94 per cent say their sense of job security has gone, with 93 per cent saying they have had to take jobs below their skills level. A full 90 per cent say they can’t afford to send their kids to college.

This is not the boisterous story Trump took to Davos, and it is sobering, because this is not just the story of a small white town in Wisconsin. Even Barack Obama, when as a senator campaigning for presidency he addressed workers at GM’s Janesville plant, recognised this: “The promise of Janesville is the promise of America.”

As the title of Goldstein’s book says, this is “An American Story”. This is confirmed by the Brookings Institution’s Global Metromonitor, which when reviewing the extent of recovery in the world’s 300 biggest cities, found most US cities still “not recovered” (the exceptions were cities like Austin and Houston, reliant on the oil industry).

The crash that Janesville suffered was felt country wide after the 2008 crisis, and it is the deep and protracted impact of this crash that has traumatised US politics, created the angry “core” that brought Trump to power just over a year ago, and raised existential questions for a country that has for most of the past century regarded itself as the world’s leader. What greatness is there in Trump bringing jobs home, if those jobs offer just US$15 an hour, or less?

Janesville was not part of the US rust-belt that has stagnated for the past three decades. It’s a proud and unionised working-class town, mostly white, with most of the men working at GM, and most of the nimbler women working at the equally famous Parker Pen company; it is emblematic of Trump’s “core”. It was significant that in 2016 the state of Wisconsin voted Republican for the first time in 32 years.

This community was proud and respectable and middle class, but over years of safe and unionised employment in the US’s huge domestically focused motor industry, it had become used to salaries and living standards that could not be justified by their relatively low skills, and lack of global competitiveness.

Even today, it must be an open question whether Obama’s US$80 billion auto-industry bailout was money well spent, and whether Trump’s “Make America Great Again” mantra is being built on sand.

Billions of dollars spent on retraining have delivered sparse returns, if Janesville’s story is typical. Of the thousands of ex-GM workers who went back to school in Janesville’s Blackhawk College for vocational training, new skills “were not the path to more work or better pay”, Goldstein reported. On average, their incomes are 36 per cent below what they earned in 2008 – compared with income falls averaging 7.5 per cent for people who opted not to reskill.

As I read the traumatic story of Janesville, I could not help being reminded of the implosion in the UK in the 1980s that coincided with Margaret Thatcher’s closure of Britain’s mining industry, where whole communities were left marooned.

In my own little hometown of Grantham – home to Thatcher, like Janesville is home to Ryan – the town’s three biggest employers – construction equipment company Aveling Barford, crane-maker Coles Cranes, and BMARC that made armaments for the British military – all folded during Thatcher’s decade in power.

Along with around half the town’s proud and unionised labour force, my father in his early 50s lost his job and never worked again. The painful reality that had to be faced was that in the world’s open and increasingly competitive markets, the modest quality and productivity of Britain’s workforces could not justify the salaries families had come to expect.

I think Goldstein’s book could have been tweaked with comparatively little effort: “Grantham: A British Story”. I also suspect that many towns across Europe have been facing the same unrelenting realities.

If Britain offers any lessons, it is that even three decades after their implosion, a confident sense of recovery remains elusive.

So Trump’s challenge to “make America great again” may be much more protracted than he has the patience for. It will certainly take more than a marketing pitch in Davos.

David Dodwell researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view