Foreign competition's role in the loss of Rust Belt jobs has been overstated in the political debate over US manufacturing, according to professor Gary Winslett, who instead pointed to interstate competition, namely the rise of Southern states as favorable places for companies to put factories.
Politicians from both sides of the aisle have ignored some "uncomfortable truths" as the Rust Belt has hemorrhaged manufacturing jobs over the years, according to Middlebury College professor Wnslett, in a guest volume in The Washington Post.
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| Winsett attributes that in part to a natural shift to being a services economy and significant growth in US factory automation. |
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The South is doing well in manufacturing and neither party wants to talk about it, Winslett says, noting that top auto exporting state isn’t Michigan, it’s Alabama.
How did that happen? In that guest column published a few days ago, Winslett tries to set the record straight.
The key factors include the strength of the “right-to-work movement in the South, cheap electricity, fast permitting, more housing construction and therefore relatively lower housing costs, immigration, and globalization, Winslett posits.
For example, Winslett says research suggests that labor conflict drove much of the decline of the Rust Belt. Right-to-work laws in the South, by contrast, created more operational flexibility and attracted capital. He notes the average unionization rate in the Rust Belt is 13.3%, versus an average of 4.3% in Southern states.
Winsett adds that “Despite the economic growth, Southern states have built so much housing that they kept costs from becoming unaffordable.”
He notes that in 2024, both North Carolina and South Carolina each built more than four times as much new housing per capita as Massachusetts, according to US census data. And remarkedly, there is this: Florida, Georgia, Texas, Tennessee, South Carolina and North Carolina, all built more housing per capita than all of Illinois, Ohio, Michigan, Pennsylvania, California, New York and Massachusetts.
“That is not just a 2024 dynamic.,” Winslett adds, noting that it is true for each year going all the way back to 1993.
As usual, a picture tells the story. The graphic below shows the top 5 states (4 out of the 5 Southern states) and bottom 5 states (4 out of 5 Rust Belt states) for manufacturing job growth from 2019-2023:
That said, it’s hard not to look at the grim big picture. Overall US manufacturing employment has been in decline for decades. After peaking at nearly 20 million in 1979, it was at 12.8 million last month, according to Labor Department data.
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Similarly, research from the Economic Policy Institute finds that the US lost more than 5 million manufacturing jobs from 1998 to 2021 as the trade deficit in manufactured goods with China, Japan, Mexico, the European Union, and other countries grew deeper.
Winslett attributes that in part to a natural shift to being a services economy and significant growth in US factory automation.
Importantly, Winslett is adamant that the Rust Belt’s manufacturing woes have not come from bad US trade deal with China, Mexico and countries.
"It’s a politically convenient tale for courting voters in key swing states, pining for the way things once were," Winslett wrote. "The problem is that it’s not true - and it is leading to some terrible policy decisions."
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