Shownotes Transcript
The American economy is starting to shake under the weight of President Trump's tariff chaos. So your answer to the concern about the tariffs is everything's going to be hunky-dory? Everything's going to be just fine. And it's not just the stock market anymore. The national economy, we learned today, shrank in the first quarter of this year. Down three-tenths of a percent. We haven't had a negative number since first quarter of 22. If it shrinks in the second, that's the dictionary definition of a recession, folks.
Chinese exports to the U.S. are plunging. Keep your third eye open for shortages. And around the country, tariff layoffs are underway. Major layoffs for UPS. By next month, 20,000 workers will lose their job. And that's on top of several facilities set to close. All of this, says the press, to bring manufacturing back to the U.S. Except, as we're going to hear, the tariff layoffs are hitting manufacturing now, too. Coming up on Today Explained, we take a trip. Everything's going to be just fine.
Support for this show comes from Smartsheet.
Whether you work in an office, in your home, or on a far-flung mountaintop, where you do your work matters. Smartsheet is the one place where your team can seamlessly work together, no matter where they sign on from. From team processes to enterprise portfolios, Smartsheet is the work management platform built to handle all of your team's work. At any scale, from anywhere, it's where work flows. See how Smartsheet can transform the way you work at smartsheet.com.
Whatever you look for in a getaway, you can find it at Virginia Beach. When you're there, you'll be able to enjoy some of the best cultural attractions, activities, and culinary experiences the world has to offer. You could take a stroll on the world's longest pleasure beach that travels for miles and miles. Or you could take part in their annual festivals, concerts, and waterfront dining. And if you're in the mood for dinner, make sure to check out their fresh local seafood with farm-to-table ingredients.
It's a trip that everyone in the family will remember for a lifetime. Go to visitvirginiabeach.com to learn more.
It's Today Explained. Miles Bryan is a senior producer and reporter on the show. And Miles, you live in Pennsylvania. I do. President Trump's tariffs were supposed to bring manufacturing back to the United States. They're supposed to create jobs. But in Pennsylvania, some people are losing jobs as a result of the tariffs. What's happening? Yeah, the job cuts I'm here to talk about are at Mack Trucks Production Facility in a part of the state called the Lehigh Valley.
The Valley is a politically swingy part of a famously swingy state. It's also exactly the kind of place that Trump says his tariff policies will help.
You know, after World War II, it was this prosperous manufacturing community anchored by the massive Bethlehem Steel Plant. At the coke oven division of the steel plant, many varieties of coal arrived from different mines to be blended. The home plant here in Bethlehem, Pennsylvania, operated for nearly a century and at one time employed more than 30,000 people. Today's blast furnace.
But, you know, that plant started struggling in the late 70s and ended up bankrupt by 2001, by which point the whole area had been really hollowed out by deindustrialization. There's even a famous Billy Joel song about it. Well, we're living here, closing all the boxes.
I've always loved it. All this history made me do a double take when I saw a local news story out of the valley about how Mack Truck was planning to cut around 10% of its unionized shop floor jobs there. And the company was citing tariffs specifically as the reason for the cuts. So last week, I drove up to the area to check it out. All right. Who did you get to talk to? Well, I started in Allentown at the Union Hall. Hello. I forgot how to turn the alarm off because I haven't been coming here by myself in a long time.
With Dan Hand. My name is Dan Hand, and I'm a District 1 committee man. Dan's originally from the Chicago area. I can still hear it in his accent. He moved out here for his now ex-wife about three decades ago and got hired on at Mack. No college degree. Mack makes the big semi-trucks you see on the highway. Makes dump trucks, garbage trucks, plow trucks. Mack is a very ingrained company within the Lehigh Valley. So right now,
This union hall sits on Mack Boulevard. Mack World headquarters used to be across the street from us. It's a very iconic American brand. Like, it feels very American. Yes, it does. You hear about it on TV all the time. There's a lot of different sayings, like, built like a Mack.
You also hear that when somebody gets hit by something, it feels like you're getting hit by a Mack truck. All true. This is a very well-known brand. So is this a good job? In Dan's telling, it was an excellent job when he started. You know, he told me this story of applying with literally thousands of other applicants back in 1998. And out of that, I think it was 40 people were hired. Jeez, that's more elite than, you know, an Ivy League school.
Things were a lot different back then, as far as like with our medical. We didn't have any co-pays or anything like that. These days, it's not quite as competitive, but the jobs are still really good for this area. And recently, Dan said Mac seemed to be on an upswing. It was preparing for the launch of a new flagship model, and as recently as January was hiring a lot.
What happens between then and last week that led to the company announcing layoffs? Well, all of a sudden we find out that the company decided to have a meeting with us and said that things aren't going very well. They're blaming the tariffs.
That was fast. Yeah, Dan said it was a total shock. And, you know, I reached out to Mac's corporate spokesperson. They wouldn't do an interview, but they sent me a statement blaming possible regulatory changes and quote unquote market uncertainty and those tariffs. And these layoffs are supposed to come sometime in the next couple of months. OK, so you were at the union hall. Are Dan and the other men and women in the union, are they mad about the tariffs?
Well, they're uniformly pissed about the layoffs, but they have mixed feelings about the tariffs because they know that the point of the tariffs, at least in theory, is to protect them, to protect this kind of work. And these workers in the Lehigh Valley, they might need that protection. So last year, we got notification from the company that they decided that they're going to build a plant in Mexico.
Yeah, this is a whole other part of the story I hadn't told you about yet. Last year, Volvo, which owns Mack Truck, announced it was building a big new truck plant in Mexico. The company says it's meant to supplement American workers, not replace them. But Dan and the rest of his union chapter are really freaked out. You know, they're worried that their jobs are going to end up down in Mexico, like so many other autoworker jobs have moved over the years.
And last month, the local put out a press release with this sort of dramatic video that condemned Mack's decision. The policies that reflect trade have not been on the worker's side for many years. And argued tariffs are a good tool to fight it. Those are good jobs that we need to fight for.
All right. So you have a union that is facing layoffs because of the tariffs, making the argument for tariffs. Why do they say tariffs are a good tool? Well, they make it more expensive to import vehicles from Mexico, and that mitigates the cost savings companies get from moving production to Mexico, where wages are way lower than they are here in the U.S.,
But, you know, the union put out that press release in March before Trump's tariff liberation day, before we saw how this was going to play out and before Mac announced layoffs because of those tariffs. What did Dan and the others that you spoke to think of Trump now? That's a complicated question. Take our union guy, Dan Hand. He's a registered Republican, big Second Amendment guy. He voted for Trump in 2016, but then soured on him because of how he treated organized labor in his first term.
And, you know, he was in that video in March. He's not against tariffs in general, but he's not thrilled about how Trump's been rolling them out so far. It's it doesn't seem very well thought out. OK, we're putting this tariff on. Oh, we're going to pull this back. Oh, we're taking a pause. It's it doesn't seem to be targeted at all. One thing I did find out that's not really true.
widely published is the fact that for any steel coming into the United States or aluminum, that's at a 25% tariff. And what's that mean for you guys? Well, our frame rails are made out of steel. We have a lot of different parts of our trucks that are made out of steel and aluminum. So that's going to drive up the cost that the company has to pay for those parts, which is going to in turn probably wind up having to be passed on to the buyer.
Well, I guess the counter argument would be that Mac could buy American steel, right? American aluminum. Well, you would think that, but a lot of the infrastructure that we have has gone away.
If you just look over in Bethlehem, Bethlehem Steel's no longer here. Dan's identifying a chicken or the egg problem that's like true across manufacturing right now. Lots of American companies that make stuff here rely on foreign inputs. And making that stuff more expensive hasn't immediately created new steel plants or whatever. Bethlehem Steel is still closed. It's actually a casino now. But it does immediately make it more expensive to build stuff here that relies on foreign material.
And on top of all this, President Trump announced Tuesday that he's watering down some tariffs for automakers who import parts. So all this is still up in the air, and we're not sure how it's going to play out.
Does everyone in the union come down on the same side as Dan in this? No, absolutely not. They're really split on politics and on the tariffs. And I want you to meet one guy who really gets at this, John Tanizer. We met in the parking lot of a grocery store across the street from Mac's plant right after he finished his shift. I worked for Mac Trucks for just short of 27 years. It was a bit windy, so we climbed into the back of John's Cadillac to chat. John,
John grew up here in the Lehigh Valley. He voted for Trump, and he likes what Trump's doing with the tariffs. Currently here, we assemble trucks. We don't manufacture them. We don't make the parts that go into them. We put them together, and most of those parts are made somewhere else in the world. They used to be made here. It's worth noting that he has seniority. He's not as worried about losing his job.
But he says his job has gotten a little bit worse every year. You know, the pay doesn't go as far, the benefits aren't as good. And he's watched manufacturing jobs in this area, his home, dry up over the years. So he told me he's willing to tolerate a fair amount of pain in service of turning things around. It could be a year. It could be two years. But what we're looking for is a path forward to thrive and not just sustain and exist.
In this economy that we're in currently, there's no going forward. The only way forward is to level the field with the rest of the world and allow Americans to compete. I hear constantly that the jobs they're talking about, Americans don't want to do. Maybe garbage picking or food picking or...
We did it all. We built this nation. We built this country. Right now, if we were tasked with trying to build the road system that we currently have, how did we do it? We can't even fix the roads that are already here. We built the entire country. The United States of America was nothing, and it became the global shining castle on the hill.
And then something changed, and we've been on a steady decline ever since that point. We did it before. We certainly can do it again. But it's going to take change. Do you know what these guys sound like to me? What?
Like people who might vote Republican or might vote Democrat based on whoever they think is doing the best job for them. You said this is a swing area. How do you hear local politicians trying to capitalize on what's going on with the tariffs? Yeah, it's already resonating politically. I met up with one local politician, a Democratic state representative named Josh Siegel, who's been all over this story. He sounded like every other Democrat in that he condemned Trump's tariffs as stupid and self-defeating. But
But he said something interesting to me, which is he pointed out that this fixation on the fate of manufacturing jobs like at Mack Truck, it kind of misses the bigger economic picture. The biggest employers here now are hospitals and Amazon fulfillment centers. They're not factories. And he was like, if we care about the working class, those are the jobs we should focus on improving, getting them to pay more and have more dignity and stature.
This is the argument of the last 20 or 30 years, that the American economy is moving on to other types of jobs, and we got to make sure that those jobs are good jobs and not spend so much political capital on people like the guys who work at Mac. What do the guys who work at Mac think about this argument? Well, I ran it by a few of them, and surprise, surprise, they weren't very moved. Here's what John had to say. We are a service economy currently, but...
Things are still made everywhere. There may be more AI involved. There may be more robotics, but people are still a huge part of the process. It is what built the middle class in this country. And you see what happens when it leaves. We're living it right now. Look at a gear with that used to be and lucent and Western technology. They're all gone. All of them, all those great jobs. It built the Valley. You know, you used to say a name like, you know,
There are 4,000, 5,000 people working there making good money. They are the ones who bought all these homes, who shopped at all these stores. It's not there anymore. And we want to bring it back. I want it back. John Tanizer there in the Lehigh Valley brought to us by Miles Bryan. Thanks so much, Miles. My pleasure.
Coming up, we know that what replaced the manufacturing economy was the service economy. Can that ever be as good? We're going to ask. Support for this show comes from another show. That show is called Democracy Works. The world certainly seems a bit alarming at the moment, Democracy Works says. That might be putting it lightly, Democracy Works says. And sometimes it can feel scary.
as if no one is really doing anything to fix it. Democracy Works says, now, a lot of podcasts focus on that, the doom and gloom of it all and how democracy can feel like it's failing. But the people over at Democracy Works podcast take a different approach. They're turning their mics to those who are working to make democracy stronger, from scholars to journalists to...
to activists. They examine a different aspect of democratic life each week, from elections to the rule of law to the free press and everything in between. They interview experts who study democracy as well as people who are out there on the ground doing the hard work to keep our democracy functioning. Listen to Democracy Works wherever you listen to podcasts and check out their website, democracyworkspodcast.com to learn more. The Democracy Works podcast is a production of the McCourtney Institute for Democracy at Penn State.
It's been reported that one in four people experience sensory sensitivities, making everyday experiences like a trip to the dentist especially difficult. In fact, 26% of sensory-sensitive individuals avoid dental visits entirely.
In Sensory Overload, a new documentary produced as part of Sensodyne's Sensory Inclusion Initiative, we follow individuals navigating a world not built for them, where bright lights, loud sounds, and unexpected touches can turn routine moments into overwhelming challenges.
Burnett Grant, for example, has spent their life masking discomfort in workplaces that don't accommodate neurodivergence. "I've only had two full-time jobs where I felt safe," they share. This is why they're advocating for change. Through deeply personal stories like Burnett's, sensory overload highlights the urgent need for spaces — dental offices and beyond — that embrace sensory inclusion. Because true inclusion requires action with environments where everyone feels safe.
Watch Sensory Overload now, streaming on Hulu. Whether you're a startup founder navigating your first audit or a seasoned security professional scaling your GRC program, proving your commitment to security has never been more critical or more complex. That's where Vanta comes in.
Businesses use Vanta to build trust by automating compliance for in-demand frameworks like SOC 2, ISO 27001, HIPAA, GDPR, and more. And with automation and AI throughout the platform, you can proactively manage vendor risk and complete security questionnaires up to five times faster, getting valuable time back.
Vanta not only saves you time, it can also save you money. A new IDC whitepaper found that Vanta customers achieve $535,000 per year in benefits, and the platform pays for itself in just three months. For any business, establishing trust is essential. Vanta can help your business with exactly that.
Go to vanta.com slash vox to meet with a Vanta expert about your business needs. That's vanta.com slash vox. Yeah, Patty, back it up, back it up. It's today explained.
Can manufacturing jobs be brought back to places like the Lehigh Valley as the people there would like? Vox's Dylan Matthews has been trying to answer this question, and we're going to start with what has been happening. The share of Americans working in manufacturing has fallen steadily for decades and decades. It's fallen steadily in every rich country. And I think even if we have plants building a lot of things, we're
The facts on the ground suggest to me that jobs are going away and will continue going away. So I don't have great news for the folks at that plant. Why is the share of manufacturing jobs falling? So the main cause here, when you look into the data, is productivity is going up.
Manufacturing is incredibly intense in equipment. You rely a lot on machinery. That machinery can get better. In a lot of plants now, it's robotics. It's literal robot arms coming and helping assembling products on the floor. That process of improving that technology and organizing it better leads to big productivity improvements.
That in turn means that you can make more goods with less labor. That makes the goods that you're producing cheaper and
One thing that could happen is that it gets cheaper and then everyone buys a ton more of it because it's cheap. That's not really what happens. What happens is that as people get richer, they spend less on most manufactured goods. And so the end result of this process is the share of manufacturing in the economy falls and the number of people working in it falls as well.
If you go back to, say, 1950, there were a lot of manufactured goods that the average American didn't have. A lot of people didn't have cars yet. Most people didn't have TVs, washing machines, dryers, dishwashers. Lent was an everyday problem to Mrs. Chester O'Donnell of Oakland, New Jersey. But not now, with her new 1957 General Electric Filter Flow Washer.
Oh, here's something I want in my home, a dishwasher. Well, I don't blame you, lady. The U.S. has gotten rich enough, and a lot of countries have gotten rich enough, that demand for manufactured products is kind of peaking. We're nearing that saturation point. Another dishwasher? We already have four. One for each member of the family.
And so this combination of really fast productivity growth and people substituting what they spend away from manufactured goods because they've reached some point of saturation combines to a pretty bleak picture for the state of manufacturing jobs. Because our spending drives the kinds of jobs that make up our economy. Okay, so what replaces manufacturing? So the standard model economists use is three sectors. So there's agriculture, agriculture,
There's manufacturing. And then finally, there's services. And services, I find when I talk about services jobs, people think of like
being a greeter at Walmart, and that is a services job. But there are a lot of different services jobs, and it's so heterogeneous that it almost feels misleading. Doctors are service workers. Lawyers are service workers. The most common kind of service worker is a home health aide. That's the most common job in America right now. Anything that is not directly making a durable finished product counts as services.
And that is what most rich countries are seeing spending shift into, that once people feel somewhat satisfied in the amount of stuff they have, they start to hire a housekeeper or go to a fancier gym and hire a personal trainer. That in turn means that employment shifts into those sectors because it's where people want to spend their money.
And some of those jobs are extremely well-paid. Doctor, lawyer can make a ton of money. Some of those jobs are not as well-paid. Home health aid, for example. So when people talk about manufacturing jobs as good jobs and we say service sector jobs replace them, is manufacturing being replaced by good jobs?
So I think this is one of the things that's been really hard about the past few decades. One thing that's changed is that manufacturing as a job has changed. It used to be that the manufacturing paid above median wages. It was a place where people, predominantly men, who had only a high school degree or even dropped out of high school could get a good wage.
Nearly 700,000 men and women work in the iron and steel industry. And they're among the world's best paid workers, earning around $4 billion a year, or an average of more than $20 a day. Steady work and steady pay constitute one of the biggest goals of the American worker and his employer. Manufacturing now pays slightly worse than the average job in America. So the premium that used to be there has diminished a lot.
More broadly, what's happened is what a lot of researchers call job polarization, that there used to be a middle represented by sort of good manufacturing jobs that would earn you a middle class income. And the middle has been kind of hollowed out.
And what's left are at the bottom sort of fairly routine jobs that don't require a lot of education, like retail clerk, some home health aid jobs, though that can be very skill intensive, stocking, Amazon factories, things like that, which tend to not be highly paid. And then at the other end, jobs like doctors and nurses, software developers, things that require a lot of education and training and command a higher wage.
And so it looks like a U-curve, that it's sort of feast or famine. And I think that's part of what's made this transition so vicious is if you're a 55-year-old working in the Mack truck plant, you get laid off.
The jobs that are available to you aren't probably going to be the higher-end skilled jobs because they require an education that you didn't get and you don't have time to get before you retire. The ones that are available are the lower-wage services jobs. And so that transition is genuinely incredibly hard, and a lot of people have lost out on that. So the trend is, it's not just in the United States, you said. The trend is, as a country gets richer, it moves from...
a manufacturing economy, a lot of manufacturing jobs, to a service economy, more service jobs. They can be great jobs or they can be less well-paid jobs. There are a lot of people still in America like John, the guy we heard from in the first half of the show, who...
have seen this shift and what they have seen is not progress, not getting richer. It is the community is hollowed out. People lose their jobs. How do we square this narrative of broad progress with the facts in a specific place like the Lehigh Valley? The U.S. is a really big place and some places can be prospering at a time when other places are not as much.
The trajectory for a place like Boston or San Francisco or Dallas, sort of big cities that attract big industries and where wages for everyone, not just people in those industries, but service workers around them, people working retail jobs nearby the Google offices or the biotech firm in Boston, they've really gained. So I think part of it is
If you look only at where the costs are concentrated, you're going to see costs. But it's not the whole picture. That being said, it really sucks.
I'm not going to try to sugarcoat what's happened from the point of view of a Mack truck plant worker. Their life has gotten worse because of this transition. They have borne the brunt of this big change. And I think going forward, this is going to be important because this is not going to be the last shock that the U.S. faces.
The labor market could change a lot due to AI. It could change a lot due to other policies from Trump or someone else. It could change a lot if our relationship with China changes. And we need to be able to cope with big shifts like that. I think what you saw at the MackTrek plant is an example of us failing and letting down people during a big transition. And we can't do that again.
Vox's Dylan Matthews. Miles Bryan produced and reported today's episode. Jolie Myers edited. Laura Bullard checked the facts. Andrea Kristen's daughter and Patrick Boyd engineered the show. I'm Noelle King. It's Today Explained. Today Explained.
You're a problem solver. You've never met a recipe that didn't need a tasty substitution or a room that couldn't use some rearranging. When it comes to keeping your floors clean, the solution is simple. The next generation of Roomba Robots.
The Roomba 205 Combo and Roomba Plus 405 Combo use a four-stage cleaning system for thoroughly clean floors. Roomba robots work so that you can think about more important things, like the perfect spot for that new ottoman. Roomba robots were made for this. Learn more at iRobot.com. That's I-R-O-B-O-T dot com. ♪