Red America’s Employment Gap Gets Larger the Closer You Look

The economic gap between blue and red America may be wider than you think.

Late last year, the Institute of International Finance compared the labor-force participation rates between states that voted for Donald Trump (red) and those that voted for Hillary Clinton (blue) and found blue-state participation was about 1.5 percentage points higher. The reason: Blue states were more likely to be heavy in job-creating industries like technology and finance, while red states were more tethered to slower-growing sectors like retail and manufacturing.

But the analysis needed to be refined, says the IIF’s chief economist Robin Brooks. Big coastal cities have become job-producing engines and many of them are in the blue states. A state-by-state analysis simply could reflect the economic power of the coastal centers.

In a new analysis, the IIF, a banking trade association in Washington D.C., examined the impact of urban centers across the nation. Red states had 51 of the nation’s largest 86 metropolitan areas. Of those red-state metro areas, 31 voted for Mrs. Clinton—making them “blue islands,” in a red sea, as Mr. Brooks calls them.

The IIF re-ran their analysis by assigning those blue islands to a reconstituted blue America. That produced even more dramatic results: The gap in labor-force participation roughly doubled to about four percentage points.

To Mr. Brooks, the results help explain the firm support red America has for Mr. Trump’s protectionist and anti-immigration policies. “To unite the country, you need to supercharge the economy. Then the labor market will get tighter and you’ll suck in workers on the fringe,” he says. “Much of red America isn’t participating in the jobs growth. They’re on the fringe.”

Protectionist policies promise to stop jobs from moving overseas and immigration restrictions block job competitors from moving nearby. In places where job growth is slow—red America—that has an obvious appeal, he says.

RELATED

Donald Trump Is Still Their Man (Jan. 21)

Job Gains in Red States Catch Up to Blue States (Jan. 30)

Why Are People in Red States Dropping Out of the Labor Force? (Nov. 28, 2017)

from Real Time Economics http://ift.tt/2G0jtvg