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This report by Martin in the NYT points out that Ohio no longer plays a critical role in U.S. presidential elections. It was critical for a Bush win over Gore, and president Obama carried it by 2 points against Romney in 2012. It is critical for Trump to win. For Hillary Clinton other states are gaining importance as they better reflect the demographic changes in the U.S. and the mix with minorities- states such as Georgia, N. Carolina, Colorado and Florida. Ohio has not seen an influx of Hispanics as other states, and is now more white, more evangelical voters, and reflects a mix that was prevalent earlier. 

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Wages in U.S. manufacturing are declining as the U.S. regains competitivness with Mexico, China and other emerging market countries in manufacturing, through a combination of productivity from new machinery and lower wages. At the same time as this revives U.S. manufacturing this is lowering wages in manufacturing based economies in the midwest and other parts of the country. This can be seen in cities like Dayton, Ohio, where in the past good paying jobs could be found in manufacturing without a college diploma. Many of these jobs paying $15-$20 an hour are being replaced by lower paying jobs paying $10 an hour. With the cost of college education already spiralling beyond the reach of ordinary incomes, and college debt reaching $1 trillion and harder to payoff, the move to lower wages increases the probabilities that college will remain elusive to children in these families. The automated plants and lower number of workers needed to operate machinery in new and modernized plants means unemployment in manufacturing will see slow growth. This is likely to lead to continued high unemployment in cities that lag behind in college education for opportunties outside of manufacturing and in manufacturing jobs. This is also why more experts are calling for government, college and private sector support for vocational training to improve job and income opportunties....

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Rising wages and rising production costs for Chinese exports of low tech products like shoes, clothing, toys, clothing, furniture, means a lot of these factories will shut down and move to lower wage countries like Vietnam and India or elsewhere. Elimination of rebates on more than 2000 export items raises cost of manufacturing 14-17% according to Guangzhou based American Chamber of Commerce in South China. And the the tough new labor law enforcing worker rights would increase manufacturing costs by 40% according to the Textile Council of Hong Kong. Additional costs would be incurred to meet tougher environmental controls and anti pollution laws and stricter enforcement. As a result of this Adidas wants its suppliers like Taiwan based Apache Footwear with 18000 employees in Guangdong to move as fast as they can to India where it opened a second factory. This process will unfold over several years till India and Vietnam bercome the new sources of cheaper goods because of the large supply of manufacturing labor for lower value added products, as it will take years to build the logistics and infrastructure for these plants in these countries. But because wages will also rise in India and the laws in India are more likely to be enforced than they were in the atmosphere in China where the Communist led government may have turned a blind eye to enforcement and worker rights in the interests of growth, the export of deflation to the west in the way of cheap Chinese products may be a thing of the past. China is doing this as a planned move it appears. Why? On the surface it makes sense that the heavily polluting factories making lower value added products like shoes, clothing, toys, furniture, would not receive rebates from te state and to improve living conditions and promote consumption at home the government woud pass tough new laws to ensure employee benefits and collective bargaining rights, and employee job security. It also reduces trde tensions at a time when the US economy will be in poor shape and jobs lost become a political issue in the 2008 presidential campaign. But there may bigger pressing concern and urgency in these moves after so many years of this being discussed and this may be that China finally may be at a moment when it is confronted with a sober fact that the US consumer is heavily in debt and may not support China's export growth model much longer and with it China faces a really significant slowdown in its growth rate from 11% to maybe half that if China does not develop its own domestic markets for growth. The old foreign investment model may not work anymore. See the link to Ireland where growth is falling off quickly. Higher wages and longer term jobs with benefits would enable a large middle class to develop from this huge manufacturing worker base especially as China moves to more value added products where even higher wages would be paid. This in turn creates a domestic market over time that would insulate China to some extent from the winds that would be blowing from a US economy suffering from a deep recession that may last several years. This may be evident in the words of the Governor of Guangdong when he says that the government is not abandoning the exporters but that selling domestically is good for the country and good for the people. Something deeper is at work here and one would expect an about turn in policy where instead of workers not receiving back wages and lax enforcement that went on freely in the last decade we would see an effort to build the kind of middle class that would provide the market for Chinese goods that would sustain growth at a more modest but sustainable pace. Which means in the short term all those workers at factories that make toys, shoes, clothing and furniture in provinces like Guangdong would be jobless. Some of these factories may move to provinces in the interior like Sichuan and Hunan provinces which may pickup employment. A report by the American Chamber of Commerce in Shanghai written by Booz Allen says that a fifth of the companies surveyed are considering relocating outside China, and that over half of foreign manufacturers surveyed think that mainland China is losing its competitive advantage to places like Vietnam and India....

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Analysis by Sentier Research of U.S. census data shows U.S. median household income declined from $54,983 in Jan. 2009 to $50,964 in June 2012, adjusted for inflation. This is $4019 in lost real income. The decline is 8% from $55,470 in 2000 before the burst of the dot come bubble. Some of this is because of trends of smaller family, lower fertility rates and more Americans living alone. But as a look at the figures in this research by Catherine Rampell of the NYT, 8/23/2012 shows, the losses in income affects all demographics, hit blacks and people with some education like a high school diploma but no degree the hardest, and also reflects the persistence of long tem unemployment which lowers income.

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One of the quirks of the unemployment rate released by the Labor Department is that it is declining- declined to 8.1% from 8.2%, from March to April 2012- even though the number of unemployed may be increasing. When adjusted for the discouraged workers who would be working today in a more normal environment the unemployment rate today would be around 11%. Crucial in grasping unemployment numbers is the labor force participation rate- showing the number of working age Americans with jobs or looking for jobs- which is affected by the number of baby boomers retiring and leaving the work force, and by the number of workers who are too discouraged to look for work. The long term unemployed currently form about 40% of people unemployed in the U.S., which is quite high and cause for concern for Fed chairman Bernanke. Many of these long term unemployed it is feared will permanently drop out of the workforce, causing a drop in the productive potential of the economy and lowering economic growth. Already many have dropped out of the workforce, causing the labor force participation rate to decline faster than the gradual decline seen in the last decade as baby boomers retire. Between 2009 and 2012, a three year period, the labor force participation rate dropped about 2% to 63.6%, compared to the normal drop of 1.3% over a seven year period from 2000 to 2007. Combining the impact of the two trends, one demographic and the other a result of the 2008 global financial crisis and excessive risks in the U.S. banking system, leads analysts to to lower the longer term economic growth forecast for the U.S. to 2%, compared to the U.S. Fed's forecast for 2.3-2.6% growth....

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Strack of DW.com reports on the 2016 CDU convention where Merkel received 89.5% of the vote. Merkel receives applause for the burqa ban, and her denunciation of populist hate sentiment, of Islamism and parallel societies, parallel cultures. The best passages of Merkel's speech says Strack, were about reunification, about how she started in politics from the natural sciences, her start at SPD, then shifting  quickly to the "Democratic Beginning" leading to the CDU. "Head into the open," "that is where freedom is," and says Strack she had the hall listening to a chancellor speaking with emotion when in the past she has been cool and reserved. Parallels to the 1994 campaign of Kohl for a fourth term when enthusiasm came only from "generation" Kohl are being made.

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RDQ Economcs expects the consumer price index to come in at 4% by the end of 2011. Rising prices of corn and fuel largely account for this rise.

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Declining manufacturing wages in the U.S. and the return of manufacturing jobs. Indiana's experience with new manufacturing plants.

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Bernie Sanders points out in this NYT op-ed the idea that Donald Trump could benefit from the same discontent among working class voters that helped the Leave campaign is a wake up call for the Democratic Party. He calls for global trade and a global economy that works for working class, middle class Americans.  Sanders is pushing for a Democratic Party that embraces the concerns of working class Americans, that understands the impact of factory closings and loss of jobs, of economic uncertainty, of declining incomes and shrinking opportunities.

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This editorial in the NYT says Bill Clinton moved the Democratic Party to the centre in 1992. In 2016 about 25 years later, after the removal of the Glass Steagall Act led to the 2008 global financial crisis and a deep recession, after the trade relations with China led to loss of U.S. manufacturing jobs over two decades and the hollowing out of industry in the midwest, things have changed. The revolution led by Bernie Sanders, a shrinking middle class, smaller access to college education for the middle and working class, and wide disparities in income, are putting the Democratic Party closer to its roots and the days of FDR. The Democratic Party platform calls for a 21st century Glass Steagall Act to separate normal banking from investment banking, opposes the TPP to prevent any further export of jobs overseas, and goes for a $15 minimum wage. This was also evident at the opening day of the Democratic National Convention when Sanders told the gathering in Philadelphia that even though he was not the candidate, these are the planks of the platform that Hillary Clinton will be pushing for in her presidency. What the editorial does not point out is that the Republican economic platform also calls for reinstatement of Glass Steagall Act, opposes TPP and opposes any loss of American jobs to overseas locations. It differs on the minimum wage leaving it to the states, and it is likely to skew tax cuts towards the wealthy, but also possibly removing the lower income brackets from taxes as Britain has done under the Conservative Party. Both parties today are looking for support from the middle and working class and have directed their appeal to these two groups which are in upheaval. The election of Trudeau in Canada recently also followed this trend, after the hollowing out of Canadian industry in Ontario and Quebec in a similiar pattern as in the midwestern U.S.  ...

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According to Germany's Federal Labor Agency, about 1.5 millon workers in about 63,000 companies were in the short-work or Kurzarbeit plan. Under this plan companies are able to put workers on shorter work week schedules without seriously impacting wages. Companies pay for the hours put in by employees on shorter work schedules and the government pays upto 67% of remaining wages. For March 2010 693,000 workers were on the Kurzarbeit plan. Another German way of softening the impact of a recession is to allow companies to keep a work-time account. Employees get paid now for a certain number of hours that they agree to work during an upturn in demand. So that for certain machine tool makers employees work 250 hours less during a downturn but still get paid and make up for this during an upturn by working overtime and still taking in regular wages. What this does is to reduce the need for new hiring during an upturn.

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Inflation in China and rising wages are pushing up costs for American manufacturers. The pressure on China, most recently in Congress, is helping to push up the value of the yuan. This combined trend is making it attractive for some manufacturers to bring factories home to the U.S. A trend in the U.S. towards non-unionized labor and the new trend to a two-tier wage level- with lower wages for entry level workers- and the shedding of legacy health care costs, is creating a more cost competitive labor force in the U.S. This extends from older industries such as furniture and auto components to newer industries and technology. The new factories setup in the U.S. use technologies that require a smaller number of workers, in most cases less than half the number of workers that were employed earlier. This adds another element in cost efficiency, though it means fewer jobs are created with new plants.

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There appears to be a conscious deliberate decision by the Chinese government and policymakers to shift the economy from low-end technologically unsophisticated and polluting industry, that pays low wages with little worker protections, towards technologically sophisticated, environment respecting, and higher wage industry. This does not mean textiles are out, but textile companies that are larger better managed, able to introduce newer technologies and produce higher quality product- that command higher prices in the world market and therefore also able to sustain decent wages and worker protection- are in. Phasing out the smaller shops and the poorly run or deliberately polluting and labor exploiting companies run from Hong Kong or elsewhere. The general shift is to be a leader in products which are value added either by technology or human capital, such as better trained more knowledgeable workers. This is similiar to the shift Japan made after the sixties, as it moved from a rural to a urbanized society and textile companies like Kanebo became technologically sophisticated, while small shops withered out, and Japan gradually shifted into automobiles, electronics and chip making. The noticeable difference is that Japan with a prewar industrial base and a smaller market protected its home market for Japanese companies, whereas China lacking this prewar industrial base let foreign investment and companies overseas bring in equipment and use low cost Chinese labor to supply western markets. And it turned a blind eye to labor protections, at least till it had built up its own industrial base and knowhow with policy requiring Chinese partners in industry and technology transfer. Economic winds are also doing the job. Inflation, Chinese goods prices increased by 4.6% in May according to the U.S. Commerce Department. This is a result of the Chinese government requiring worker protections and decent wages and stricter pollution enforcement resulting in increased energy costs. For years the U.S. and other countries depended on China for low cost goods and the demand for low cost goods depressed margins which resulted in legitmate costs such as pollution control technology, worker protection and decent wages, being ignored. China is now left with heavy environmental cleanup costs, and a bad image internationally as a heavy polluter. The huge external trade surpluses China has built up exceeding a trillion dollars have pushed up the value of the yuan making Chinese goods costlier in world markets, and apparel and shoe makers in developed countries seeing Vietnam as a better lowcost alternative. The story of this phase of Chinese industrial development can be seen in a town like Honghe, a 90 minute drive from Shanghai, which has half of its 100,000 residents working in 100 factories and 8000 shops that knit, dye, package and ship some 200 million sweaters a year, bringing in according to local government estimates $650 million a year. Now many of these shops are idle and mirant workers are returning home. To see the subtler signs of the Chinese policymakers hand note that even visa policies have been tightened to make it harder for foreign buyers to visit Chineses factories and trade shows. Also the Chinese government has raised the minimum age for workers in these factories from 16 to age 18 and so on. And the impact is being felt in places like Honghe near Shanghai, Shengzhou another city near Shanghai which makes one third of the world's neckties, and in Dongguan in Guangdong where its toy, shoes shops close. The change also shows how quickly things can change in the world economy. Only 3 years earlier in 2005, Jiaxing Yishangmei Fashion Company, a family owned company was booming and had just landed Walmart Stores as a customer. Now Walmart no longer sources from this company. Analysts say that the Chinese sweater industry was probably overbuilt, with about 6 cities in China claiming to produce more than 100 million sweaters annually. A wave of consolidation could boost efficiency, and bring pressures to innovate rater than compete only on price. And many Chinese economists, and policymakers think China has relied too much on cost-cutting and simple production models to increase exports. A researcher at the Chinese Academy of Social Sciences thinks such a high dependence on foreign trade is not good for China. For the US and Japan this researcher says that trade is equivalent to 20% of gross national product and by contrast for China trade is equivalent to an extreme of 75% of GNP. ...

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In an interview with the Wall Street Journal, Mark Carney, the head of Canada's central bank and the head of the Financial Stability Board, says China is falling behind in its earlier committments made at G-20 meetings to move towards rebalancing the world economy. He pointed to the fact that consumption in China has moved from about half of China's GDP to about a third, in the last ten years. China's investment has also declined from half of GDP to about one third. Carney also raised concerns about the strength of the Canadian dollar for Canada's competitiveness. The report "China: 2030" by the World Bank and China's Development Reform Commission also calls for changes in the way China's economy has increased its dependence on state run companies.

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Fuller cites the WSJ about the 40% of the 1.4 million jobs created in the first half of 2014 being in the lower wage retail, food service and temporary help sectors. The 6.1% unemployment rate does not count the people who are too discouraged to look for work, these people dropping out of the statistic just as much as the people who have found work. The U-6 which includes those who work part time because they cannot find full time work and people discouraged and stopped looking for work is at 12.6% in March 2014, giving a more accurate reading of the unemployment situation in the U.S. for 2014.