Wolfers on “Trump and Carrier: How a modern economy is like a parking garage.”
Justin Wolfers offers a tutorial on the contempoary labor market in his latest New York Times Upshot column: “Trump and Carrier: How a modern economy is like a parking garage.”
Wolfers’ piece comes after president-elect Donald Trump’s victory lap in Indianapolis on Thursday, during which he celebrated saving 1,000 jobs at Carrier from moving to Mexico. But Trump’s strategy focused on the short term instead of long term, Wolfers argues. Government data shows that over the course of three months, roughly 6.7 million private-sector jobs will be lost, says Wolfers, but will ideally be offset by 7.2 million new jobs.
“Think of the American economy as a 10-level parking structure or garage, where each car represents an active firm, and the seats in the car are the jobs available. A well-managed business like this is usually pretty full. But it’s also in a state of constant flux,” writes Wolfers, as cars are always leaving and entering.
“The deal at Carrier is akin to Mr. Trump’s intercepting a driver on his way to his car, and trying to persuade him to stay parked a little longer,” Wolfers says. But “the long-term strategy … is to create a positive business climate” so that more drivers (entrepreneurs) will enter the garage (labor market) in the first place. In the end, says Wolfers, “A parking garage stays full, and an economy stays healthy, only if it’s constantly refreshed.”
Major media outlets reporting on Trump’s strategy also picked up Wolfers' Tweet on the topic earlier this week: “Every savvy CEO will now threaten to ship jobs to Mexico and demand a payment to stay. Great economic policy.” The tweet was quoted by Politico, NBC, CNBC, the Washington Post, the Christian Science Monitor, and the Detroit News.
Justin Wolfers is a professor of public policy at the Ford School and a professor of economics in the department of economics. Wolfers' research interests include labor economics, macroeconomics, political economy, economics of the family, social policy, law and economics, and behavioral economics.