Lets’ NOT Bring Back Furniture Manufacturing
Here’s a note to a long-time correspondent:
D__:
Thanks for your e-mail and sharing the recent report that President Trump wants to bring furniture manufacturing back to the U.S. (“Trump says new tariffs will bring furniture making back to the US; experts are skeptical”). In your view, success on this front “would indicate his tariffs may do regular workers some good.”
I disagree. Americans can’t produce more furniture without producing less of other things. Do you or Pres. Trump know which U.S. industries will shrink if the production of furniture here expands? Unless you have a good, detailed idea of which industries his tariffs will cause to shrink – and have also solid information that the wages to be paid in these furniture-manufacturing plants will be higher than the wages paid in industries that shrink because of the tariffs – you have no basis for supposing that tariffs that ‘bring back’ furniture manufacturing to our shores will improve the lot of ordinary American workers. After all, protective tariffs override prices and other market signals that, it is wise to presume, direct workers and other resources to be used in their most-productive employments.
Available here are data on average hourly earnings in 2018 for 40 different categories of private-sector production and nonsupervisory workers, including those employed to manufacture “furniture and related products.” Not only is the average hourly pay for production and nonsupervisory workers in furniture-manufacturing plants 22 percent below the average hourly wage for all private-sector production and nonsupervisory workers, in 32 of the 40 categories workers earn on average more per hour than is earned on average by workers in furniture-manufacturing facilities.
Because worker pay is positively correlated with worker productivity, it’s fair to ask: How would ordinary workers in general be helped by a policy that brings back relatively low-paying jobs in a relatively low-productivity industry? Some particular furniture-factory workers might benefit from the protection of tariffs, but because much of the capital and resources that the tariffs draw into this additional furniture production will be drawn away from more-productive industries, the tariffs will reduce America’s overall economic output as it destroys higher-paying jobs for many other workers.
A final thought: You wrote to me a few weeks ago pleading that I “recognize President Trump’s tariffs as aiming at strengthening America’s national defense.” Can you explain how using tariffs to artificially stimulate furniture production in America strengthens our national defense?
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
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