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County's unemployment rate up in December

By Howard B. Owens

Genesee County's unemployment rate grew to 5.3 percent from 4.9 percent in December of last year.

The increase fits the trends for Western New York. Rochester's rate went from 4.7 percent to 5.0 percent. Buffalo rose from 5.1 percent to 5.5 percent.

The rate for the GLOW region went from 5.4 percent to 5.5 percent.

There are 600 more people in Genesee County's labor force than a year ago.

The state's rate decreased from 4.7 percent to 4.6 percent.

The nation's unemployment rate is 4.1 percent.

County's labor force participation rate up for November

By Howard B. Owens

More people in Genesee County now have jobs or want jobs than the same period a year ago, and this has actually meant the county's unemployment rate grew from November 2016 to November 2017, according to the latest statistics from the Department of Labor.

The November labor force is an estimated 29,600, up from 29,000 a year ago and while the number of people with jobs grew, the number did not grow as much as total labor force participation.

Labor force participation is the measure of how many people either have jobs or who report they are under-employed and looking for full-time work or are unemployed and looking for work.

The county's labor force participation rate has been at or below the previous year's number for more than a year.

While the pool of eligible workers grew, so did the total number of employed people. In all, 400 more people in the county are reported to have a job in November than the previous year. The total grew from 27,700 to 28,100.

Even with that growth, the bigger jump in total participation meant that county's unemployment rate grew from 4.5 percent to 5.1 percent year-over-year.

The GLOW-area unemployment rate rose at the same pace, hitting 5.3 percent, up from 4.7 percent a year ago. Buffalo's rate rose from 4.9 percent to 5.3 percent and Rochester, from 4.5 percent to 5.1 percent.

The state's rate was 4.5 percent.

Earlier this month, the Department of Labor reported 22,600 non-farm jobs in Genesee County, down from 22,500 a year earlier. There were 16,700 private sector jobs in Genesee County for November 2017, the same as 2016.

County's total number of employed and counted as unemployed declines

By Howard B. Owens

Both the total number of Genesee County residents with jobs and the total number looking for jobs declined in September compared to the year before, according to data released by the State Department of Labor.

There were 28,800 residents with jobs, according to the release, and 1,200 people designated as unemployed.

The total size of the labor force is 30,000 compared to 30,200 a year ago.

That makes the unemployment rate 4.1 percent, compared to 4.2 a year ago.

According to Scott Gage, director of the county's job bureau, there are more than 580 job openings being advertised in the county.

The 4.1 rate is the lowest for any month since May 2016 when it was 3.8 percent.

The GLOW area rate is 4.5 percent compared to 4.5 percent a year ago.

Rochester has dropped from 4.8 to 4.7 and Buffalo 4.9 from 5.1.

The state's rate is 4.7.

Nationally, the rate has fallen from 4.8 percent to 4.1 percent.

Private sector jobs in county hold steady, but overall jobs drops by 100

By Howard B. Owens

Genesee County has lost 100 jobs over the past 12 months, according to data released today by the Department of Labor.

For September 2017, there were 23,600 jobs in the county. The previous September, there were 23,500.

The total number of private sector jobs held steady at 17,800 year-over-year, which is also the same total as September 2015. The lowest number of private sector jobs locally over the past two decades was 16,800 in 2012. There haven't been as many as 18,000 private sector jobs in September since 2004 (18,100).

Labor is reporting 89,100 new jobs in the state since last year, but Western New York's two metropolitan areas reported job losses year-over-year. The Buffalo region has dropped from 564,900 to 561,400 and Rochester has dropped from 532,300 to 529,000.

There are 5,700 government jobs in the county, compared to 5,800 a year ago.

Number of unemployed in county remains steady in July

By Howard B. Owens

Genesee County's unemployment rate ticked up a percentage point, even though the number of people reported as unemployed in the county remained steady at 1,300.

The rate rose year-over-year from 4.1 percent for July to 4.2.

There are 29,000 people in the county with jobs.

The total labor force -- the number of people working or looking for work -- is 30,300, down from 30,600.

Nationally, the unemployment rate is 4.6 percent. That's what's known as the U-3 number. The number that accounts for people who have stopped looking for jobs out of discouragement and part-time workers who would like full-time employment for the nation is 10.4 percent. That rate has been falling steadily since 2009 from a high of nearly 18 percent. (source, The Wall Street Journal)

That kind of detail is not available for job markets as small as Genesee County.

Wage growth nationally remains stagnant. 

The state's unemployment rate is 4.9 percent.

The GLOW unemployment rate is 4.9 percent, a tick higher than a year ago. The region's labor force has dropped from 98,300 to 96,900.

Labor report says 100 more jobs in county in July

By Howard B. Owens

Genesee County added 100 more jobs in July, in a year-over-year comparison, according to data released today by the NYS Department of Labor.

In July 2017, there were 23,700 jobs in the county, compared with 23,600 a year ago.

Over the past decade, the highest job count for July was in 2014, with 23,800 jobs. 

The state added 18,800 jobs in July, according to the report.

Local unemployment remains low, even with slight increase year over year

By Howard B. Owens

While Genesee County's unemployment rate remains lower than state and national averages, it still was slightly higher in this past June than it was 12 months before.

The June rate was 4.2 percent, up from 3.9 percent a year ago.

The rate for the state and nation is 4.5 percent, which in both cases is an improvement over a year ago when the rates were 4.7 and 5.1.

Genesee County also didn't add any new jobs year over year, with 24,000 jobs reported in the county for June 2016 and June 2017.

The Rochester-area unemployment rate is 4.8 and in the Buffalo area it is 5.1.

There are 29,000 people with jobs in Genesee County. A year ago, there was 29,500. There are 1,300 people without jobs who are considered part of the labor force. Last year, that number was 1,200.

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County's economy gains 400 workers from March to April, with slight uptick in unemployment rate

By Howard B. Owens

At least 400 people entered the labor force in Genesee County from March to April, according to the latest data released by the New York State Department of Labor.

That puts the total size of the labor force at 29,400, with 1,300 people classified as unemployment, which puts the unemployment rate at 4.6 percent.

A year ago in April, the unemployment rate was 4.5 percent in the county.

Over the past year, the county's labor force has declined by approximately 500 people. It's difficult to pinpoint the reason for the decline, but Baby Boomers reaching retirement age could be a factor.

The total number of employed residents 28,100. A year ago in April, it was 28,600 and in March it was 27,500.

The unemployment rate in the GLOW region is 5.0, the same as a year ago. 

In Rochester, it's 4.6 percent. In Buffalo, it's 5.0. For the state, it's 4.2. For the nation, it's 4.1 percent.

BOCES automotive program gets a good deal on a used car

By Howard B. Owens

Automotive techs are in demand and the demand is growing, according to Peter DeLacy, owner of DeLacy Ford in East Aurora, which is why the WNY Ford Dealers started a program three years ago to donate cars with "real world" experience to local high schools.

The goal is to help and encourage high school students with an interest in auto repair to stick with it as a career choice and gain valuable experience working on cars with some of the last technological advancements.

"They're often working on 15-year-old cars and there isn't much interest in working on cars that don't have the latest technology," DeLacy said.

Yesterday, the dealers donated at 2014 Ford Fusion to the automotive shop at BOCES.

"We rely on donations like this in order for our kids to get the best training possible so that when they leave school, they can go right out to the workforce and do the best they can," said BOCES in Batavia Principal Jon Sanfratello (speaking at the podium in the photo above).

The dealers pool their resources to acquire cars from Ford Credit that have come out of the lease program. Delacy said auto teachers want cars with some mileage on them and in need of some maintenance, not brand-new cars, for their students to work on. Once the dealers have ensured all auto shop programs in the region have cars, they will start a three- or four-year rotation process of providing newer slightly used vehicles to the schools so students always have close to the latest technology at their fingertips.

There isn't much about a Ford or a GM or a Toyota that is so proprietary that a student can't learn a broad range of applicable skills, regardless of which car it is, Delacy said. Many car components, and the technology today that enables and manages them, are built to government-mandated specifications, so when a tech hooks up a diagnostic computer to a car, the readout is the same regardless of the make or model.

"The diagnostic codes, how you access the primary powertrain control module, how you do all of these things is pretty much the same for all manufacturers," Delacy said.

The goal for the Ford dealers, of course, is to ensure as many young techs come out of high school and two years of college with an interest in working at Ford dealerships, but as long as there are more techs in the market, it's better for everybody.

"The technicians we have now, they’ve put their time in and they want to retire," Delacy said. "There’s not a big pool of talent to choose from, so knowing that the Ford dealers of Western New York, including myself, decided to ask, ‘where do we get technicians? How do we get them interested?’ Because a lot of people don’t want to get into that. They want to be other things and this is a very good pay program when you get into the dealership level."

It's a good career choice, Delacy said, because it's stable, it pays well and dealership jobs are good jobs, and since the only college required is couple of years at a community college, so the career makes sense financially.

"The great part is it's not a huge investment," Delacy said. "They don't have student loans to pay for five or 10 years. They’re out in the real world, earning real money, keeping their money and investing it, so we’re on the ground floor of great opportunity, allowing students to get a good education and they’re ready to go when they get out of college and they don’t have a huge debt load, so it’s a win-win-win for everybody."

Signs point to tighter labor market in Genesee County

By Howard B. Owens

The number of people in Genesee County who are part of the labor force dropped by 800, from 29,800 in March 2016 to 29,000 this March.

That's not necessarily a bad thing.

It could be a sign of a tightening labor market.

In fact, the county's unemployment rate year-over-year fell from 5.4 percent to 5.1 percent even as the total number of county residents fell from 28,200 to 27,500.

At the county level, not all employment statistics are available, but on a national level, the number of prime-age workers in the labor force has been steadily increasing since 2011, when the percentage of 25-54-year-olds in the national labor market was 75.1 percent. This march, the number it 78.5 percent, which still isn't as high as the pre-recession level of 80.2, but a marked improvement.

Tammy Morino, an economist with the Department of Labor in Rochester, said the two trends -- growing number of prime-age workers in the labor market and declining labor force participation could mean we are at or near full employment.

The 800 labor force drop in Genesee County could be explained mostly by more Baby Boomers aging out of the workforce, and whereas those retiring workers were replaced in recent years by prime-age workers re-entering the workforce, there just aren't as many workers sitting on the sidelines these days.

"It's not a phenomenon unique to the county," Morino said. "We're seeing it across the nation, the aging out of the labor force."

More than 30 percent of Genesee County's workers commute to either Rochester or Buffalo, and Morino said Monroe County has added 30,000 new jobs since the end of the recession.

The number of non-farm jobs in Genesee County held steady year-over-year at 21,900, still below the pre-recession peak of 22,900.

The idea of a tight labor market in Genesee County also fits with what Scott Gage, director of the Job Development Bureau, is seeing at his agency. The year started off with about 400 people locally re-entering the labor force, he noted, and in March, 100 people who had been drawing unemployment found work, he said.

"We’ve got a lot of jobs," he said. "We just ran the list yesterday, there are 760 jobs just in Genesee County. Some of those are seasonal jobs, but that's a lot of jobs."

According to state data, there are 1,500 people in Genesee County who are part of the labor force but do not have jobs.

To an economist, the concept of "full employment" doesn't mean at any given moment every single working-age person has a job -- because there is always some flux involved in changing jobs, changing job circumstances, changing seasonal jobs or other factors, such as workers holding out for better jobs or better pay, that put people temporarily out of work -- but that enough jobs are available to employ all those who want jobs.

"The biggest problem we're having is finding people who are willing work," Gage said. "Most of the people who were able to come back into the labor force are finding job opportunities and now there are more opportunities than available workers."

Wage data for the county is available only on a quarterly basis and the third quarter of 2016 is the most recent available data. Total quarterly wages in:

  • Q3, 2016, $227,365,299
  • Q3, 2015: $217,005,273
  • Q3, 2014: $213,124,736
  • Q3, 2013: $203,875,721
  • Q3, 2012: $193,643,054
  • Q3, 2011: $203,179,005
  • Q3, 2010: $192,917,830
  • Q3, 2008: $182,668,038
  • Q3, 2007: $191,733,289

Part 8: Trump, trade and the local economy

By Howard B. Owens

Local Economic Development

This is part eight of an eight-part series on trade and how changes in policy might affect the local economy.

There's been a lot of talk about trade from President Donald J. Trump, but so far, no real action -- no new trade deals, no concrete action on tariffs or border adjustments. But just the idea that there might be some future advantage to manufacturing in the United States is already having an impact locally, said Steve Hyde, CEO of the Genesee County Economic Development Center.

"At least in the short term, this push, this effort to try and balance the trade profiles and make sure the U.S. is on an equal footing with the rest of the world, honestly, we're seeing an uptick in interest in manufacturers looking for U.S. sites, including direct foreign investment," Hyde said.

It's almost like all the work of GCEDC since Hyde became the CEO 14 years ago aligns with this potential new direction for the country. During those 14 years, GCEDC has been aggressive about creating build-ready industrial parks, from Gateway II, Apple Tree Acres, Buffalo East Tech Park, the Genesee Valley Agri-Business Park and WNY STAMP.

"I think there is still a wave of optimism going on about whatever relative changes may be coming," Hyde said. "The president is very focused on trying to beef up manufacturing in America and that's certainly helped our focus here on Genesee County to bring back manufacturing in both food and ag and in advanced manufacturing." 

The president's potential policies just enhance GCEDC's efforts, Hyde said.

"There's a bit of a bubble and ramp up of interest in manufacturing products of late and siting new facilities and trying to bring back growth and manufacturing to the state."

Hyde said he's recently had specific inquiries from foreign investors in sites at Gateway II and STAMP, with a lot of activity around STAMP.

The plan is still to break ground on STAMP this spring, though there seems to be an air of uncertainty about the company expected to be STAMP's first tenant -- 1366 Technologies.

While 1366 has raised tens of millions of dollars in venture capital backing, has already signed contracts with foreign firms to buy its solar wafers, there is still a potential issue with the company receiving funding assistance from the Department of Energy.

The Trump Administration has taken steps that alarm some environmentalists concerned with climate science, but that has been mostly directed at the Environmental Protection Agency. Rick Perry, Trump's selection to head the Department of Energy, testified during his Senate confirmation hearing that he's had a change of heart on climate science and has come to accept climate change as a real concern.

"I believe the climate is changing. I believe some of it is naturally occurring, but some of it is also caused by man-made activity," Perry said. "The question is, how do we address it in a thoughtful way that doesn't compromise economic growth, the affordability of energy, or American jobs."

On the manufacturing front, as 1366 officials point out, if the Trump Administration goal is to increase U.S. manufacturing and U.S. exports, 1366 will be exactly that kind of company. At least initially, 1366 expects to export all of its solar wafers.

We asked Laureen Sanderson, a spokesperson for 1366, about the status of the project in light of the new administration and when we can expect 1366 to break ground on its local factory. Here's her response:

Yes, we’re factoring in the change in administration into our business plans. We expect the new administration will support U.S. manufacturing jobs and we’re looking forward to working with the team to do just that. At this time, I don’t have any additional details or timing to share but I will be sure to let you know as soon as we do.

Your trade questions are all excellent but we don’t want to speculate. We obviously support policies that support the global industry and its growth. We do not need clarity to move forward. One of the great things about the Direct Wafer technology is just how competitive it is, the cost reductions we allow for are unmatched and that positions us really well.  

One of the possible trade policy changes is the Border Adjustment Tax. That would put a 20-percent tax on imports but make revenue derived from exports completely tax free.

"That would be a huge benefit for 1366," Hyde said.

One of the criticisms economists have leveled at a potentially more protectionistic regime from the Trump Administration is that the United States simply doesn't have the supply chain any longer to support increased domestic manufacturing.

Trump's trade policy advisor, Peter Navarro, doesn't think that will be a problem.

“We need to manufacture those components in a robust domestic supply chain that will spur job and wage growth," Navarro said.

Hyde said with Genesee County sitting half way between Rochester and Buffalo -- the second and third largest population centers in the state and the second and largest export areas in New York -- along with all of the build-ready sites, the county is well positioned for any repatriating of a manufacturing supply chain.

"A lot of manufacturers want supply chain partners within an hour of their manufacturing site," Hyde said. "Some of the things going on at the Federal level has us well positioned to attract some of that supply chain, depending on how things unfold."

Like a good entrepreneur, Hyde is always optimistic. He never lets go of the big vision he has for creating jobs in Genesee County and he's excited by the activity he is seeing around not just STAMP but Gateway II and the other sites GCEDC has ready for new factories.

"About 5.6 percent of New York's private sector jobs come from employment at foreign-owned companies," Hyde said. "Foreign direct investment is a prominent part of New York's economy. With a focused policy at the federal level, advanced manufacturing is something we could see go up and that means good-paying jobs. Advanced manufacturing is the best way to build wealth in a community."

GRAPHIC: A rendering of what WNY STAMP might look like some day.

Part 7: Trump, trade and the local economy

By Howard B. Owens

Trade Wars

This is part seven of an eight-part series on trade and how changes in policy might affect the local economy.

If the Trump Administration upsets the trade relationship with Mexico, our southern neighbors are already threatening retaliation with tariffs of their own on corn, and turning to South America for one of the country's food staples in what is already dubbed a "tortilla war."

Craig Yunker, CEO of CY Farms, said such a move, especially at a time of a strong U.S. dollar, would certainly hurt local farmers. 

"The GLOW region's economy is highly dependent on agriculture," Yunker said. "Agriculture is highly dependent on exports. A trade war coming out of anti-trade comments and tweets will put our regional economy at risk."

Rep. Chris Collins said he isn't worried about a trade war. If there is one, he said, it would be short-lived because other countries need us more than we need them.

"No one wants to use the word war in any sentence," Collins said. "What I would remind people is that if there is a war, we'll win the war."

The calculation Collins looks at, he said, is "four and 25," meaning the United State has 4 percent of the world's population and accounts for 25 percent of the world's economy (Collins and I had some discussion about this number. I told him it was 15.8 percent, but that turns out to be a number adjusted for something called purchasing power parity, which adjusts for exchange rates; the current nominal rate is just over 25 percent.

While on the campaign trail, Trump spoke frequently about the $346 billion trade deficit with China; there are some factors that raw number leaves out. 

First, much of the $115 billion the U.S. exports to China goes over as raw goods and comes back as more expensive, manufactured goods.  

Second, the U.S. GDP per person is $51,638. That is higher than any other major nation and much higher than China, at $6,497, (and much higher than our other major global rival, Russia, at $11,615. That means U.S. consumers have more money to spend on products, meaning more demand for products. Of course, it also means the cost of labor in China is much lower than in the United States.

While the GDP per person is low in China, it has grown substantially over the past two decades. The number of people living below the poverty line in China has fallen from 750 million in 1990 to less than two million today. Free trade has been good for China, which is probably why the communist president Xi Jinping has become a champion of open markets.

“Pursuing protectionism is like locking oneself in a dark room,” Jinping said. “Wind and rain may be kept outside, but so is light and air.”

These are among the reasons, Collins argues, that China needs the United States, which makes a trade war unlikely.

"What happens if China loses access to U.S. consumers?" Collins said. "It's going to be anarchy over there. On the agricultural front, I would hate to see that happen, but that also begs the question of supply and demand. We're a big supplier. What's going to happen to the price of corn if all that corn comes out of the market? They're going to start raising prices."

What's known of Trump's trade plans is that he plans to focus heavily on deficits with each trading partner even though trade deals usually lower barriers with trade partners more than they lower our own already low duties. There's also some concern that Trump might want to pull the nation out of the WTO, a move many economists believe will only weaken the United States as the rest of the world moves on with free trade without us.

While Jim Campbell, CEO of Chapin, supports new trade deals that help U.S. manufacturing, he doesn't think the United States should turn to a more protectionist stance.

"The one thing we can all agree on is protectionism doesn't work," Campbell said. 

It didn't work for America, or the world, during the Great Depression, when Congress passed the Smoot-Hawley Smoot–Hawley Tariff Act, a contributing factor to making a bad recession worse.

"We still need some free trade," Campbell said. "We need fair trade."

Fair trade: Most business leaders we spoke to for this series, even most of the strong free-trade advocates, have some complaint about how seemingly unfair trade practices of other countries hurt their businesses. Dean Norton, former president of the NY State Farm Bureau, acknowledged the provincial dairy protections of Canada. Local farmer Maureen Torrey noted there are some crops her farm ships to Canada only rarely. 

John DeLuca, sales manager for Liberty Pumps, said he just returned from Indonesia, which charges a duty on U.S.-manufactured pumps entering their country, but there is no duty on pumps entering the United States.

Jeff Glajch, VP of finance at Graham Manufacturing, thinks addressing these kinds of issues will bolster U.S. manufacturing, and even bring more manufacturing back to Batavia, so anything the Trump Administration can do to "level the playing field" would be good for America.

"If there’s a trade policy that favors U.S. manufacturing that is a positive to us," Glajch said.

What we don't know yet from the Trump Administration is what fair trade looks like and how we move from where we are now to where President Donald Trump thinks we should be.

GRAPHIC: Reproduction of the front page of The New York Times from 1930 carrying the warning of economists that the Smoot-Hawley Tariffs would start trade wars.

Previously:

Part 6: Trump, trade and the local economy

By Howard B. Owens

The GOP Plan: Border Adjustment Tax

This is part six of an eight-part series on trade and how changes in policy might affect the local economy.

Editorial cartoon from 1912 illustrating the dilemma of tariffs: protect profits for producers, harm consumers.

President Donald J. Trump, as he did as candidate Trump, talks trade deals and the need for creating a series of bilateral agreements. He also threatens tariffs against countries he thinks are taking advantage of the United States such as Mexico and China.

But congressional Republicans have their own plan, though it's not one it's at all clear Trump supports.

The proposal, called a Border Adjustment Tax (BAT), is part of a broader push by the GOP to reform the tax code and lower corporate taxes.

The BAT changes how companies pay taxes on their profits. Effectively, imports would be taxed and any profits from exports would be tax free.

The goal is to encourage more U.S. manufacturing and protect domestic companies from lower-priced imports.

Rep. Chris Collins supports the Border Adjustment Tax, which is part of a bill pending in the House now.  The bill is a massive overall of the tax code that would eliminate almost all itemized deductions for corporations and individuals, except the home mortgage interest deduction and charitable contributions.

The corporate tax rate would fall from 35 percent to 20 percent.

The BAT has many critics and raises many concerns for U.S. businesses, particularly retailers, who are dependent on imports. And though Trump made comments during his campaign that indicated he might look favorably on it, he's made comments since taking office that express concern about the proposal.

“Under the border adjustment concept, if somebody is making a motorcycle or a plane in our country, they’re getting a credit for the plane they make before they send it over to wherever it’s going,” he said. “And you don’t need that plus lower taxes and everything else.

"And it's too complicated. They get credit on some parts and not other parts. Where was the part made? I don’t want that. I just want it nice and simple.”

As you might expect, import-dependent businesses, such as large retailers, are fearful of the BAT. They argue they make nothing themselves to export to offset the expense of the tax on the goods they import to sell to their customers. JCPenney CEO Marvin Ellison said the BAT would make profitability nearly impossible for his company, at least in the near term.

"It takes our tax structure, as an example, from roughly a 34-percent corporate tax to over 170 percent," Ellison said.

Consumer prices, he said, would go up 20 percent.

"That's simple math."

Some economists think it's not that simple.

It's possible, some say, that the rise in the value of the dollar will balance the cost adjustment on imports and exports, or wages and prices rise together and consumers don't feel the pinch.

That's what Collins said he believes.

Pete Zeliff, owner of p.w. minor, when talking more generally about tariffs, said he believes things will work out in America's favor because of the strength of our economy.

"Tariffs may drive up prices, they may not drive up prices," Zeliff said. "What they will do is get more people to work where labor rates will go up and more people will be able to afford to buy everything. We will start manufacturing more and more here and prices will go down because our efficiency will be higher. Instead of 80 percent of our products made overseas, 80 percent will be made in America, so you will see prices go down."

Where a BAT makes sense -- if your goal is to tax all imports and exempt all exports, the BAT makes that easier to do. There's no car on the road today that was all made in Japan or in Mexico or the United States. Parts and supplies come from all over the world. A car assembled in Mexico contains many parts, up to 40 percent in some cases, that were manufactured in the United States. A BAT makes it easier to track which pieces get taxed and which don't instead of trying to figure out what portion of a finished product counts as imported and which should be considered American made.

A potential problem with the BAT is that would make things more expensive that simply can't be produced in the United States. You will pay more for chocolate and coffee, and since U.S. waters don't produce all the seafood Americans consume, we rely on imports, therefore seafood prices will rise.

Tequila comes from Mexico and while some avocados are grown in California, not enough to meet customer demand. Without margaritas and guacamole, a lot of Super Bowl parties could be ruined.

Collins said he understands Constellation Brands, based in Victor, is concerned about importing Corona from Mexico if the BAT goes through.

"They say you can't make a Mexican beer in the U.S., therefore it should be exempt," Collins said. "Should there be an exemption? If you put in one exemption, somebody else is saying, 'what about me? what about me?' and then it all falls apart. You don't have a 20-percent tax rate. You have a 34-percent tax rate. Don't count on any exemptions."

The big thing about the BAT is it's a big unknown. It's never been tried before. It's not clear that it will mean higher prices for consumers or if a stronger dollar will offset the adjustment. It's not clear it will raise as much revenue as Republicans hope year-after-year or if it will create more jobs in the United States or if it will even lower the trade deficit. What it is is a giant experiment with the U.S. economy and that excites some economists. They get to see in real time, in a real-world setting, how economic theory works.

Meanwhile, we don't know yet whether the BAT will even become law. The White House has not endorsed the plan and support is far from solid in the Senate. The administration does seem to think it can strong-arm trading partners into buying more U.S. goods, even if the prices are higher than what might be available from other suppliers.

All of this puts a lot of uncertainty around key parts of the U.S. economy, and business managers tend to prefer certainty when planning how they will run their businesses But the local business leaders we spoke to weren't particularly unsettled by the current transition.

 

"At this point, that uncertainty doesn't affect us," said Jeff Glajch, vice president and CFO for Graham Manufacturing in Batavia. "If one of those things were to suddenly result in a 35-percent tariff, that could cause some angst in the short term, but we tend to think that anything like a trade war would be short lived. Both sides would realize how harmful it is to both sides and they will come to the table."

Collins, himself a businessman, said he understands the need for certainty and that there may be some turmoil that goes with changes, but in the long run, local businesses will be better off.

"We're trying to move this fast, this tax reform piece," Collins said. "We want to get it done in 200 days, not three years. I acknowledge that there is some uncertainty and that is unsettling because people don't like uncertainty. In the meantime, you've got your customers and you make your product and you go home and worry a little bit. But it's all good news on the horizon, so maybe you go to bed and dream in multicolor."

Previously:

Part 5: Trump, trade and the local economy

By Howard B. Owens

NAFTA

This is part five of an eight-part series on trade and how changes in policy might affect the local economy.

While farmers worry about the impact of changes to the current world trade regime and the place of the United States in that scheme, even local ag leaders have their complaints about the North American Free Trade Agreement.

During his campaign for president, Donald J. Trump criticized NAFTA repeatedly and zeroed in on trade with Mexico as his chief complaint with the pact. Local farmers, though, are more concerned about NAFTA's impact on trade with Canada.  

For local manufacturers, NAFTA isn't a big worry, though they, too, see some need for reforms.

Trump said renegotiating NAFTA would be a top priority once he took office, calling trade with Mexico one-sided, pointing to the surging trade deficit and his belief that NAFTA has caused job loss in the United States.  

The truth is more complex.

Since the agreement was ratified in 1994 (negotiations began under President George H.W.  Bush, and President Bill Clinton signed it after it was ratified by the Senate), the United States has swung from a $1.7 billion U.S. surplus in 1993 to a $63 billion deficit; however, in that same time, U.S. exports to Mexico have grown from $41 billion to $231 billion. Some five million U.S. jobs depend on exports to Mexico.

By some estimates, more than 800,000 manufacturing jobs in the United States have been lost to Mexico since the passage of NAFTA, mostly in Rust Belt states. It appears jobs created by NAFTA have popped up in more Southern states, where there was a more ready supply of non-union labor.

The pattern of manufacturers fleeing higher cost Northern states for Southern states began decades before NAFTA was ratified. Think of GTE-Sylvania eliminating more than 700 jobs in Batavia in 1976 and shifting production to North Carolina.  

Compare Sylvania leaving, or Massey-Harris Harvester Company, or, more recently, PepsiCo with the Quaker Muller plant -- all companies with no roots in Genesee County -- to p.w. minor, Liberty Pumps, Chapin, and Graham -- all locally grown companies that are still in business, some after more than 100 years.

The leaders of those companies hold a variety of views on NAFTA.

For Bergen-based Liberty Pumps, Canada is one of the prime export markets for the company, said CEO Charlie Cook and he isn't anticipating any trade policy changes that will disrupt the business.

"Not a lot is going to happen with NAFTA as far as our relationship with Canada," Cook said. "It might change our relationship with Mexico, but that is not a big market for us. There is a lot of potential for us in Mexico, but it's not currently a big market."

Pete Zeliff, CEO of p.w. minor, doesn't anticipate much impact from potential changes to NAFTA and favors trade barriers that protect U.S. manufacturers.

"Even if we run into problems with renegotiating these trade deals and we can't export as much, if we can't import as much then we don't need to export as much," Zeliff said. "It creates a bigger market for USA-made products."

Neither Mexico nor Canada figures big in Graham's imports or exports. Graham designs and manufactures vacuum and heat transfer equipment for energy markets.

"We sell across the globe," Jeff Glajch said. "We sent a lot to the Middle East, a lot to Asia, South America. We don't tend to do a lot of business in Europe. We don't have a particular country that is more than 10 percent of our sales."

Jim Campbell, CEO of Chapin, said that any change with NAFTA will have some impact on his business, but it's unclear now what that impact will be. He said he belongs to a group that represents CEOs of U.S. manufacturing companies and NAFTA isn't universally loved by that group.

"The general consensus is that NAFTA didn't work as well as everyone thought it would," Campbell said. 

He said he tends to favor the kind of bilateral agreements Trump has said he intends to seek.

"If we have an agreement with just Canada, we can try to work out things so they are favorable to both sides," Campbell said. "The issues with Mexico are quite different than the issues we might have with Canada."

That said, he wants to see what the Trump Administration does before deciding if it's good or bad. Any change will affect Chapin and his main competitors equally, he said, so he anticipates a level playing field in that regard.

"Depending on how they do it, it could work out really great or it could be a disaster," Campbell said. "All I know is NAFTA is the devil we know and we all work around it."

CHART: Exports have increased on both sides of the border with Mexico since NAFTA was signed.

Previously:

Part 4: Trump, trade and the local economy

By Howard B. Owens

The Farm Economy

This is part four of an eight-part series on trade and how changes in policy might affect the local economy.

It's hard to say just how much of what is produced in Genesee County is exported overseas. There are several companies that manufacture products here and ship what they build to China, Europe, the Middle East, Mexico and, of course, Canada, including Liberty Pumps, Chapin and Graham.

There is no database, though, that tracks exports at a rural, county level.

What we can say with some certainty, however -- our county's biggest export is what is grown here on our farms.

Everything the Trump Administration is talking about related to trade has the potential to have a big impact on local farmers. 

According to Dean Norton, an Elba dairy farmer and former president of the New York Farm Bureau, Trump's tack toward protectionism has already had an impact. When Trump canceled U.S. participation in the Trans-Pacific Partnership, New York farmers lost about $100 million in potential new revenue, Norton said.

"People don't understand that about 25 percent of what is produced locally is exported farm product," Norton said. "Exports and imports generally have a positive effect on the bottom line when it comes to trade."

Collins said he understands that agriculture is important to his district and he promises to represent those interests in Washington.

"There are a lot of ag issues and for many people when we talk about trade they think about cars and widgets and not about ag," Collins said. "I can promise you, I will be a voice at the table. I can't promise outcomes, but I can make sure the issues are on the table."

While Walmart and Target shoppers might find some electronics, clothing, and housewares more expensive during a trade war, supermarkets may not be able to stock some of our favorite foods. Besides the crops that can't be grown domestically, such as bananas and cocoa beans (at least in quantities sufficient to meet demand), many other crops are available out of season because they are grown in other countries, such as blueberries, lemons, watermelons and strawberries. 

"Consumers demand strawberries 12 months out of the year," noted Maureen Torrey, co-owner of Torrey Farms, but the only way we get strawberries in winter, she noted, is to import them from South America, primarily Chile.  

We import tomatoes and avocados from Mexico and Canada. California grows avocados but not enough to meet the current demand for guacamole.  

"The demand has gone through the roof," Torrey said.

Our tomatoes used to come from Florida, Torrey said, but after NAFTA (North American Free Trade Agreement), much of that production shifted to our southern and northern neighbors.  

Asked if the United States could again produce tomatoes, Torrey said, "That goes hand-in-hand with the fact we don't have the labor anymore to grow these hand crops. There's a lot of factors that interact with these whole trade agreements."

Mexico is second only to Canada as foreign suppliers of food to U.S. consumers, much of it products that can be easily grown in America.

When the president talks about NAFTA (a deal he promised to renegotiate as soon as he took office, but has yet to act on) he's usually drawing his ire on Mexico, Trump and administration officials have indicated Canada need not worry about drastic changes to the trade deal, but local farmers have long-standing complaints about trade with Canada.

While you might think NAFTA would make it easier for WNY farmers to ship grain, dairy, and meat to our northern neighbors, the opposite is true, they say, yet the U.S. market is completely open to Canadian farmers. The Canadian government, they charge, even subsidizes shipments of agriculture products to Florida.

Norton said dairy farmers have been battling Canadian restrictions since 1996.  

Various Canadian agriculture programs provide price supports, import quotas and production caps on domestic dairies. Since most of these programs are provincial, rather than controlled by the Canadian federal government, the restrictions are beyond the reach of the World Trade Organization. U.S. dairy farmers are unable to file a complaint with the WTO.

"The dairy industry there doesn't want to compete with imports even though their dairy industry is dying," Norton said.

Trade is important to farmers because from $120 billion to $140 billion worth of the nation's agricultural output is shipped overseas, which is why farmers get very nervous about the idea of new trade barriers

Last year, all of CY Farms soybeans were sold overseas, said its CEO Craig Yunker, noting that trade is fundamentally important to agriculture because of the whole concept of comparative advantage. What one country grows well, another may not, so they're both better off trading with each other than trying to produce something that neither can do as well as a trading partner.

"A banana republic down there can't grow corn and we don't grow bananas," Yunker said.

Yunker agrees with Norton -- that it hurt U.S. farmers to pull out of the Trans-Pacific Partnership.

Trade deals do more than open markets, he said, they set rules, allowing companies to compete on a level playing field. The rules deal with government subsidies, health and labor regulations and environmental concerns.

"All of these things were setting rules for a trading block and we helped set the rules," Yunker said. "We were able to do that because those other countries wanted access to our markets. Now China will put a trading block together and now China will set the rules."

China was not part of TPP, but keeping the Chinese market open to U.S. ag products is very important to farmers. As the Chinese economy grows, so does Chinese food consumption. Higher standards of living means people eat more meat, so the Chinese not only need more grain to feed themselves, they need it to feed their farm animals.

"They buy such a large amount of grain, just the thought of them shutting down would send a panic through world markets," Norton said. "Their billion and a half people are increasing lifestyle consumption so it's important that we're going to want to be at the table to provide some of those products for them. If we're not, some other countries are going to be and they will have no qualms about replacing the United States. Trade is a very dog-eat-dog world."

Russia and China have been improving trade relations over the past couple of years and recent Russia has become the world's largest wheat exporter.

That's significant, with or without new trade barriers, because grains are commodities and commodity pricing is impervious to protectionism. The only thing protectionism can do on commodity markets is make things more expensive.

For many products people buy and sell, a number of factors can determine the price. Quality, service, unique features, brand loyalty and other factors affect what people are willing to pay. But some products, known as commodities, don't have those differentiating features going for them. It all comes down to supply and demand. The greater the supply, the lower the demand, and then the lower the price. When supply drops and demand goes up, prices go up.  Commodity traders actually make their living placing financial bets on the trends in prices for commodities, which includes corn, wheat and soybeans.

Farmers don't set the price on commodity products they sell. The market does. That means trade barriers, or a rise in the value of the dollar, can make it much harder for domestic farmers to sell their crops overseas.  

As an example of the impact global markets can have on grain prices, Norton pointed to the recent history of corn. A couple of summers ago, the Midwest suffered a huge drought, hurting corn farms in those states. In WNY, we had plenty of rain and bumper corn crops. Local farmers took advantage of the weather patterns and planted more corn, but we still don't produce enough here to shift the world market. Corn prices hit record highs and local farmers reap bigger profits.

Last year, worldwide corn supplies rebounded and New York was hit with drought conditions, meaning less corn was grown here. As a whole, the New York ag industry suffered a $1 billion loss in 2016, according to the New York Farm Bureau.

"We are affected by what happens in Argentina, Brazil, China, all those things affect us one way or the other," Norton said.

CHART: Corn prices, 2007-2016

Previously:

Part 3: Trump, trade and the local economy

By Howard B. Owens

China and robots

This is part three of an eight-part series on trade and how changes in policy might affect the local economy.

Times change, Congressman Chris Collins argues. He doesn't dispute that for the later half of the 20th century, a regime of trade agreements and more open trade worked well for the United States, but we no longer live in the same post-war world that forged those instruments of trade.

We face competition from China that presents a unique challenge to U.S. economic dominance, and automation is eating jobs the way tornadoes tear through trailer parks.

"We went from an agricultural economy to an industrial, production economy and now through automation, we have fewer jobs," Collins said.

We don't know the future, he said, but "where are these people going to work if we don't make stuff? We need to have opportunities that others don't have."

The American Dream (a term first coined by historian James Truslow Adams in 1931) is an ethos founded on the idea that we are a country that makes stuff.

We are builders. We are factories. We are smokestacks and train tracks and men with lunch buckets and lug wrenches. 

The perception that Trump campaigned on is that the American Dream ain't what it used to be. Economists disagree over whether that's true. While over the past 30 years a greater share of income earned has gone to the nation's richest 1 percent, there's evidence that suggests it's still possible for the poor and middle class to move up the economic ladder.

The balance between income inequality and economic mobility is a matter of debate. For those who perceive a problem, the question is who or what to blame.

Trump found ready targets in China and trade deficits.

"We can't continue to allow China to rape our country, and that's what they're doing," Trump said during his campaign. "It’s the greatest theft in the history of the world."

While campaign, Trump said the trade deficit with China was either $400 billion and $500 billion. For 2016, it was actually $347 billion.

Economists debate how much impact China has had on U.S. manufacturing jobs since the country of 1.4 billion people joined the World Trade Organization in 2001. On one hand, while the United States has lost five million manufacturing jobs since then, actual factory output has increased at the same time; however, the Economic Policy Institute reports that the rise of China as a global economic power has displaced 2.7 million workers, including 2.1 million in manufacturing. 

China may pose a different kind of challenge for the U.S. economy than we've faced before, but it isn't clear the Trump Administration has come up with a strategy beyond slapping tariffs on every Chinese import.

The big worry among economists is that Trump's rhetoric, let alone actual tariffs, will spark a trade war. The man Trump hired to oversee the National Trade Council, Peter Navarro, is regarded as being ideologically opposed to China.

Even though the local economy has few direct ties to China, how the country's trade policy goes with China will have an impact locally.

To the degree that trade with China matters in Genesee County, it matters more to consumers and farmers than manufacturers. For consumers, trade with China means money saved on gadgets and consumer products. For farmers, China is a big part of world consumption of food, especially grain, so even if local corn and soybeans are never shipped directly to China, the price farmers can get for these commodities is based on worldwide prices and the strength or weakness of the dollar. 

The manufacturers we interviewed said, for the most part, they don't trade much with China nor do products from China directly compete with their own products.

For Batavia-based Chapin Manufacturing Inc., the biggest worry is how China handles protection of intellectual property, according to CEO Jim Campbell.

"Individual companies in China ignore our U.S. patents so we have to defend them most vigorously," Campbell said. "We go head-to-head with China in the Pacific Rim area, mostly in Australia and New Zealand. China has a significant advantage in freight costs to these areas over us in Batavia."

Trade with China is minimal for Graham Corp., said Jeff Glajch, vice president and CFO for Graham Manufacturing in Batavia. There are some parts Graham imports from China, but it's not a significant piece of the business, he said.

If there were new trade barriers with China, it wouldn't have a major direct impact on Graham, he said.

"In the big basket of all the changes, I don’t think it would cause us significant harm," Glajch said.

Any new difficulty in trade with China might have a bigger impact on Liberty Pumps, but CEO Charlie Cook didn't express much concern, though he said it's still too soon to say what might be coming that will change foreign trade for his company. China has been an area of company growth, he said, with sales growth of about 12 percent, which is a bit higher than companywide growth.

When it comes to trade and China, one of the more interesting stories in local manufacturing is p.w. minor, a company with a 150-year local history that late in its history moved much of its production to China before nearly going out of business two years ago. Then Pete Zeliff and a partner bought the company's assets and Zeliff went to work repatriating that factory work to Batavia.

But the twist here is that one reason p.w. minor could start making all of its own shoes again is automation.  

And what Zeliff did isn't unique these days in American manufacturing. It's called "reshoring."

Three years ago, fewer than 100 companies were known to have reshored manufacturing, but it's been a growing trend. One of the more interesting recent examples was highlighted by CBS Evening News a couple of months ago -- a bicycle company that is owned by a Chinese billionaire.

Zeliff sees a future U.S. manufacturing sector that is large enough to accommodate a robust workforce, even if there are fewer jobs per square foot. Trade barriers will help make that happen, he said.

"We’ll still have jobs, more high-tech jobs to run and program and maintain these robots and things," Zeliff said. "We’ll have less low-tech jobs and more high-tech jobs."

That's a view of the future shared by Collins. If there are going to be fewer manufacturing jobs, all the more reason to make sure those jobs stay in the United States.

"Times do change," Collins said. "It's a different world we live in now."

GRAPHIC: The chart shows the decline in U.S. manufacturing jobs since the 1940s while production output has continued to increase. Economists say this trend is the result of machines replacing more and more manual labor. It is a trend that accelerated in the 21st century as computers came to play a greater role in manufacturing.

Previously:

Part 2: Trump, trade and the local economy

By Howard B. Owens

Globalization

This is part two of an eight-part series on trade and how changes in policy might affect the local economy.

One of the more interesting characters President Donald J. Trump has brought into the White House is Stephen K. Bannon, a top advisor to Trump with the job title of Chief Strategist. 

Bannon is a former Navy officer, Wall Street financier, former chairman of Breitbart News, and a former Hollywood producer who derives some of his income from royalties on the TV series "Seinfeld." To his enemies, he is a white nationalist, a fascist, a Nazi, even though these are characterizations he rejects and the evidence to support the labels is suspect. He calls himself an "economic nationalist."

His epiphany came, he has said, during the 2008 financial crisis. His father lost $100,000 when he sold his AT&T stock (without consulting a financial advisor or anyone in his family). When Bannon observed the ability of Wall Street CEOs to walk away from the crisis unscathed while hardworking Americans such as his father were hurt, he was incensed. Bannon believed (and he's far from alone in this perception) that Wall Street tycoons perpetrated a fraud while profiting from the meltdown. 

The crisis set Bannon on the path of an economic ideology he believes will protect the working people of America from the elites of a globalized economy. When Bannon and Trump met, in many ways, they were soulmates. Without using the term, Trump was probably an economic nationalist before he decided to run for president.  

Trump doesn't call himself an economic nationalist. He just says, "We're going to put America first." That's an emotionally more powerful term that has resonated with voters.

If we're going to talk about trade over the next few days and understand how the Trump Administration's policies may change the economics of Genesee County, if not the entire world, it would be helpful to understand what Trump and Bannon believe and where that fits into the history of economics.

When Trump talks about putting America first, the message resonates with a subset of his supporters who are against globalization.

The word globalization means different things to different people. To nationalists, it seems to mean a process by which countries begin to surrender their sovereignty to international organizations such as the United Nations, World Trade Organization and the World Court. To most economists, it means the world developing more tightly coupled economic ties and becoming more interdependent through trade with no need to trample national sovereignty.

The anti-globalist believe countries can best protect their sovereignty by restricting trade. That approach is called protectionism.

Many economists think the whole idea of protectionism was smashed by Adam Smith, the Scotsman who published "The Wealth of Nations" in 1776. "The Wealth of Nations" in a real sense marked the birth of economics as a course of study. Until Smith's monumental work, how trade worked was viewed through a lens of thinkers known as mercantilists. For the mercantilists, trade was a zero-sum game -- for every winner, there was a loser, for one side of a trade to gain, the other said had to fall behind. For that reason, mercantilists believed that governments needed to plan the trade of their countries and if necessary raise barriers to trade to protect homegrown production.

Smith said that simply isn't true. Smith argued that to force people to make at home what could be made more cheaply in another country was a waste of resources because the people doing less productive work could better spend their time doing things that made a greater contribution to the local economy. 

It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a tailor. The farmer attempts to make neither the one nor the other, but employs those different artificers.

The best economy, according to Smith, is one where each person is free to maximize his own productivity. By laboring in one's own interest, Smith observed, people contribute to the greater public good though that is not their true intention. His famous phrase from this passage is "the invisible hand," or that which guides the whole economy toward greater good through a series of self-interested actions by individuals. 

That is the essence of the free market.

Economist David Ricardo would expand on this observation with his theory of comparative advantage. Ricardo argued that two nations benefit when each engaged in their greatest economic capacity and then trade the results of that output. Ricardo's example involves a bit of math, but basically if one country has an advantage over another in making both wine and cloth, but the greater advantage lies in wine, then the wine country should make wine and trade for cloth and the country weaker in both wine and cloth should make cloth and trade for wine. In this way, both countries are more productive together than each doing their own thing.

Comparative advantage comes right down to the county level and even the individual farm level, said Craig Yunker, CEO of CY Farms. If one farmer has better ground for raising cattle and another farmer has better land for grains, they would both be foolish to try to be in the cattle and grain business. They are better off putting most of their effort into cattle for one and grain for the other (even if they both do a little cattle or a little corn).

The same applies to international trade, Yunker said.

"There are factories that have been closed for 100 years," Yunker said. "They don't make buggy whips anymore. There are cars being made in Mexico, but the technology comes from the United States. There are probably more cars being sold worldwide because of the expansion of production and we all benefit."

The way Pete Zeliff sees it though is the United States has a lot of advantages that it can use to grow manufacturing regardless of what the rest of the world does. Zeliff, owner of p.w. minor and a member of the Genesee County Economic Development Center Board of Directors, points to our lower cost of chemicals and our lower cost of energy, especially since the birth of the shale gas industry. That will make the United States more competitive in manufacturing, he said.

"The price of natural gas will be below $4 for the next 30 years," Zeliff said. "That will make us the most competitive country in the world. We're energy independent with the lowest cost of energy in the world. We can source 85 percent (of inputs for manufacturing) right here. The rest of the world cannot."

Even with Smith pointing the way to the value of free trade, many world leaders couldn't shake the appeal of protectionist policies because the benefits of free trade are incrementally diffused over time and across populations while the occasional costs of free trade are more visible (see: The Fruits of Free Trade (pdf)).

The world got itself into a lot of trouble through protectionist policies in the early 20th century, with protectionism contributing to a worldwide depression and eventually a global war. That created a greater realization that developed nations needed to find ways to cooperate.

That led to The Bretton Woods Conference, held in 1944 in New Hampshire and attended by delegates from 44 Allied nations, and the General Agreement on Tariffs and Trade (GATT), signed in 1947.

Bretton Woods led to the creation of the International Monetary Fund and of the organization that eventually became the World Bank (the late Barber Conable, Batavia's representative in Congress in the 1970s, became president of the World Bank in 1986). 

GATT governed trade among signatories until the creation of the World Trade Organization (WTO) in 1993.

The roots of these agreements were planted by events of the previous 40 years. The chaos that followed World War I was predicted by economist John Maynard Keynes in his book the "Economic Consequences of Peace." Keynes foretold the harsh consequences of the Paris Peace Conference on Germany -- predicting it would lead to future chaos.

After the Great War, America, along with other nations became much more protectionistic, making it much harder for Germany's economy to recover from the devastating consequences of the peace treaty. While protectionism here and abroard didn't cause the Great Depression, most economists agree that the Smoot–Hawley Tariff Act of 1930 only made matters worse, deepening what was then only a recession and prolonging the depression. 

It was with that background that Keynes and other economists who joined the conference at Bretton Woods sought to promote a more open global market for trade and the flow of currency. 

Bretton Woods and subsequent agreements helped bring greater political and economic stability to world, but these consensus organizations have also long been the targets of anti-globalists, such as the John Birch Society, founded in 1958.

Those views remained in the minority in the 1950s and 1960s, when the U.S. economy expanded at an average rate of 6 percent a year, and even in the 1970s and 1980s, anti-globalism was largely a fringe movement.  

It became more of a leftist and anarchist cause early in the 21st century.

Most people on the right were fine with global trade until a few years ago. Then there was the 2008 financial crisis hitting right at a time when China, which joined the WTO in 2001, was becoming a bigger economic power.

CHART: Gross Domestic Product (a measure of an economy's wealth) on a per-person basis for each country in the world, showing relative wealth and percentage of world population.

Previously:

Part 1: Trump, trade and the local economy

By Howard B. Owens

Introduction

This is part one of an eight-part series on trade and how changes in policy might affect the local economy.

At the top of his agenda, Donald J. Trump, told supporters while campaigning for president was that he would bring manufacturing jobs back to the United States.

"I am going to be the greatest jobs president that God ever created," Trump said at one campaign rally.

How Trump goes about reshaping American trade policy will likely have a profound effect not just on the whole United States but also on us in Genesee County as farmers, business owners, executives, employees, and families. As America's economy goes, so goes Genesee County, so over the past few of weeks, The Batavian has interviewed several local business leaders to see how Trump's campaign rhetoric and what has emerged as his administration's policy during his first 100 days in office are shaping their views of our shared economic future.

The views range from a full embrace of Trump's "Make America Great Again" bravado to fearful skepticism that trade barriers and protectionism will lead to trade wars and ultimately financial ruin.

"I think Trump is going to be good for us in business," said Pete Zeliff, owner of p.w. minor in Batavia. "He's going to start leveling the playing field. The way trade deals have been done, the playing field isn't level. It's really hard to compete with people overseas. Their labor is so much less, so naturally, things cost less money. What Trump has talked about, leveling the playing field makes total sense to me."

Jeff Glajch, vice president and CFO for Graham Manufacturing in Batavia, said that with Graham exporting more than it imports -- about 40 percent of its sales are overseas -- he thinks some of the policies contemplated by Trump and the Republicans in Congress will not only be great for Graham, but great for America and great for Batavia. Graham employees nearly 300 people locally and Glajch, who remembers more manufacturers here 30 years ago, would like to see a resurgence in local manufacturing. 

"We're encouraged by anything that favors U.S. production because I think we've been unfavored for quite a while," Glajch said. "It would be nice to see that shift back in our direction a little bit. It would be great as a country."

On the campaign trail, Trump spoke frequently of increasing tariffs, tearing up trade deals such as NAFTA (North American Free Trade Agreement) and the TPP (Trans-Pacific Partnership) and entering into a series of bilateral trade agreements (cutting deals with only one country at a time instead of deals that encompass several countries). To economists, that rhetoric sounds a lot like protectionism, and that's a dirty word to those who favor free trade.

Craig Yunker, CEO of CY Farms, said he favors free trade and is fearful of what Trump's disruption of international trade norms might do to the local and national economy. 

"The issue I have with people who talk about trade as a zero-sum game is that trade is a win-win game," Yunker said. "It's a very positive thing. It leads to higher incomes for both parties if done right."

"The issue," he added, "is that when we look at the percent of the pie we get rather than the size of the pie. We see a smaller piece of the pie, but the economy has expanded. The issue of the anti-trade mentality is to look at 'what is my share of the pie?' and the free-trade mentality and a more pro-growth mentality is 'let's grow a bigger pie.' "

Rep. Chris Collins, the first member of Congress to endorse Trump for president, said Trump's trade policies, and the policies he's pursuing in Congress with fellow Republicans, are unapologetically protectionist.

"Absolutely," he said.

Collins said he's concerned about the people who have lost factory jobs. They aren't the kind of people who are going to become rocket scientists, he said, or researchers. When they can't find a job, they become depressed, and too often they wind up in service-sector jobs at lower wages.

"We need to make stuff and give people an opportunity to make a good living who have a high school (diploma) or a community college degree," Collins said.

Top graphic: The graphic shows the number of people employed as a percentage of the U.S. population. As you can see, prior to the 2001 recession, the number hit 81.6 percent. It climbed back up to 80 percent prior to the 2008 recession and has been climbing for the past five years hitting 78 percent at the start of 2017.

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