What Trump’s Deal With Carrier Means for the U.S.

US President-elect Donald Trump boards his plane at New York's LaGuardia Airport on December 1, 2016. [AFP / Bryan R. Smith]
US President-elect Donald Trump boards his plane at New York’s LaGuardia Airport on December 1, 2016 [AFP / Bryan R. Smith]

 

During Donald Trump’s campaign, he vowed to stop companies from offshoring and promised to bring jobs back to the US. It seems as if Trump is doing well with his promise even before stepping foot in the White House. Earlier today, Trump made an appearance with Mike Pence to celebrate a deal struck with Carrier, which prevented the company from relocating  an Indiana plant to Mexico, saving 1,000 manufacturing jobs for American employees.

How was Trump able to do this?

Apparently Donald Trump called Carrier CEO Greg Hayes to ask him to reconsider moving the Indiana plant to Mexico, as Fortune reported. 

Hayes stated offshoring the company would save $65 million a year. Carrier would only need to pay Mexican workers $3 an hour, $23 dollars less per hour than the American salary.

Eventually, they were able to reach a deal where Hayes agreed to keep 1,000 manufacturing jobs in the Indiana plant. 

1,000 jobs are important but it’s just a drip in bucket according to Matthew Yglesias at Vox: 

In Indiana alone, there were 672,000 manufacturing jobs at the 1999 peak, falling to 425,000 in the summer of 2009 and bouncing back to 513,000 as of this fall. Which is just to say that broad Obama-era policies aimed at overall economic recovery have “brought back” almost 90 times as many jobs as are at stake in the Carrier deal. Getting all the way back to the Clinton-era peak would require Trump to pull off about 160 Carrier-scale moves in Indiana alone, to say nothing of the millions of manufacturing jobs in other states.

In exchange for the deal, Trump will be offering state tax breaks to the parent company, United Technologies. They would also be receiving $700,000 a year in tax incentives.

Originally, Carrier planned to close two Indiana plants and move the manufacturing jobs to Mexico. Although they will keep their plants, Carrier will still be moving 1,300 jobs to Mexico.

Although this may be a victory for American workers now, this also sends a message to American businesses. They can threaten to close their plants to gain more monetary incentives and tax cuts from the government.

Trump has also promised to scale back the corporate taxes by cutting it down from 35 percent to 15, which ultimately will result in less money for the public’s social services.

 

12/02/2016 2:30 PM by Joyce Chu

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