Book Review: “Janesville” holds lessons for both parties going into midterms
“Janesville: An American Story” is a captivating account of the impact of the economic crisis and local auto plant closure on a whole community. Despite Trump’s promises, these are problems the current administration is nowhere near addressing – but do the Democrats know what needs to be done either?
The plant closure and its repercussions
Janesville, Rock County, is an old United Auto Workers town in southern Wisconsin. Until the recession ten years ago, the city was also home to General Motors’ oldest plant in the US. In June 2008, GM announced that it would end production on December 23, 2008.
The plant closure had an economic ripple effect on the entire economic community, costing 2,800 workers at the Janesville plant their jobs. Unemployment rose from 5% to 13%. The shutdown was far reaching, as it forced other companies in the community to either lay off workers or to shut down as well. Lear Corp, GM’s seat supplier, had huge layoffs, while LSI, which used to sequence parts into the plant, had to stop production completely.
The GM plant closure was part of a much larger crisis that engulfed the United States at the time. The federal government responded with a relief effort, including the American Job Act, a massive stimulus programme passed by Barack Obama. Overall, Janesville received $1.8 million in National Emergency Grant and almost $1.1 million from the economic stimulus law. Additionally, the U.S. Labor Department Workforce Investment Act provided $1.1 million for training workers.
The book discusses a wider variety of themes in addition to the economic meltdown in Rock County. The election of Governor Scott Walker, the recall vote, and his Budget Repair Bill are equally important, as is Paul Ryan’s unsuccessful bid for Vice Presidency in 2012. A native of Janesville, Ryan was opposed to the Obama administration’s’ spending and praised the many community efforts, fuelled by the American conviction of self-help. In Janesville, such initiatives included private donations such as the food and clothes for high school students and the holiday food drive, a local initiative to continue the General Motors’ holiday food drive.
Economic recovery and “Making America Great Again”
Ten years after the recession engulfed in the U.S., the country’s economy has recovered. According to the IMF, the U.S. growth forecast has been raised from 2.3% to 2.7% in 2018, primarily attributed to “higher projected external demand, and the expected macroeconomic impact from the tax reform.” Meanwhile, the industrial landscape, both in the US and globally, is undergoing a major transformation. Automation, artificial intelligence, digitalisation, and the quest for cleaner energy produces challenges, especially for traditional industries. On the other hand, the current administration’s campaign is primarily built on the promise to bring back jobs lost in the more traditional industries.
Running with the promise to “Make America Great Again”, President Trump targeted voters who did not feel the economic recovery. “Over the next 10 years, our economic team estimates that under our plan the economy will average 3-5 percent growth and great a total of 25 million new jobs”, Trump assured voters two months before the election.
One and a half years after the election, the unemployment rate is close to its pre-recession level, at 4.1%. On average, the economy has continued to add 170,000 jobs per month. During the State of the Union earlier this year, Trump announced that manufacturing added nearly 200,000 jobs in 2017. “Many car companies are now building and expanding plants in the United States – something we have not seen for decades”. Noteworthy is the fact that Fiat-Chrysler has announced that it will invest $1 billion in a factory in Warren, Michigan, which will come with the creation of 2,500 jobs. Contrary to the President’s State of the Union, the manufacturer’s plant in Mexico will not close, but instead be repurposed.
Trump’s administration: unfulfilled promises
What appears to be missing from Trump’s political agenda is an economic policy that addresses the changing landscape of industries worldwide. President Obama embraced modern technologies in industry, such as 3D printing, artificial intelligence, and robotics; his administration put forward The National Artificial Intelligence Research and Development Strategic Plan in October 2016. China unveiled plans last year to become the world leader in artificial intelligence and created an industry worth $150 billion for its economy by 2030. Meanwhile, the White House touts job growth in the coal industry – mostly attributed to a strong demand for energy.
“As tax cuts create new jobs, let us invest in workforce development and job training…Let us open great vocational schools so our future workers can learn a craft and realize their full potential”.
– President Trump during his State of the Union address in January.
The Department of Labor has set up a Task Force in an effort to expand apprenticeships. However, looking closer at the Department’s budget shows that the budget for apprenticeships did not increase from 2016. While the Department spent 90,000,000 in 2016, it only requested 89,829,000 for 2018, the same amount spent in 2017. And special funding for women in apprenticeships will now be covered by the overall apprenticeship grants.
Lessons for the midterms
In 2016, Janesville did not vote for Trump. The city’s roots as a union town were still deep.
However, many workers in what used to be Midwest blue states, and who had voted for Obama, did find in Trump someone who they felt understood them. The last time Michigan voted Republican was in 1988. Trump’s declaration of war against unfair trade practices reverberated with blue-collar workers.
Trump’s overall popularity remains low at 40%. His administration’s only major legislation thus far is the tax reform. Meanwhile, companies continue to lay off workers or to temporarily suspend production. It remains to be seen whether Trump will be able to tap into the same message he used two years ago and keep up the promises he made to workers like those in Janesville – and whether the Democrats are able to step into the void.
