What is this project about?

We are a task force of former policymakers who served under both Democratic and Republican administrations. We want to find out whether major changes to U.S. foreign policy are needed to make America’s middle class better off.

Working with local academic partners, we are gathering data on the economic impact of foreign policy in different U.S. states.

We just published our first report on our case study of Ohio, with researchers at The Ohio State University (OSU). We’ll turn next to Colorado and Nebraska.

We will use these case studies to make recommendations in a final report. That will be published in 2020, as the foreign and economic policy debates of the presidential campaign heat up and take shape.

Why do the project?

There has been heated debate—especially since the 2016 presidential elections—about whether U.S. foreign policy needs to change to deliver a better economic outcome for American working families.

Salman Ahmed
Salman Ahmed is a senior fellow at the Carnegie Endowment for International Peace, where he focuses on the future of U.S. national security strategy and its role in promoting national economic interests.
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Many U.S. foreign policy professionals, myself included, had strong opinions one way or another. But on reflection, our reactions were based on assumptions that were not systematically discussed or tested often enough in the White House Situation Room. 

It’s a question that deserves serious attention, but policymakers face bureaucratic and political constraints. Those who focus on the U.S. role abroad, largely from a geopolitical and security perspective, do not get a chance to interact much with people working in the public and private sector at the state and local levels, who are intimately familiar with the economic realities working families face.

Another problem is that the foreign and domestic policy communities within the federal government operate largely separately. This makes it difficult for them to come up with new, truly integrated policy solutions.

Why did you choose Ohio?

Ohio was an obvious choice because its economic and political diversity make it a microcosm of the country as a whole. It has prospering and globally connected big cities with diversified economies, like Cincinnati and Columbus. It also has smaller cities and towns that still rely heavily on manufacturing, and rural counties with productive farms and agribusiness. The state is a big player in energy, with abundant shale resources. And it hosts major defense-related activity, such as the Wright-Patterson Air Force Base in Dayton.

Ohio spans the political spectrum. It has conservative Freedom Caucus members (who are typically further to the right of traditional Republicans), moderates in both main parties, and social and economic progressives. And, as is often said, Ohio is a bellwether state. Every president since 1964 has won Ohio.

How did you choose people to interview?

We interviewed several dozen people, including state and local officials, heads of economic development organizations, small business owners and entrepreneurs, local labor representatives, and community leaders. We focused on them because they are addressing the economic challenges firsthand, so they are intimately familiar with what it takes to create good, middle-class jobs. These people’s voices are not often heard in the Washington-based foreign policy establishment. We wanted to lift them up.

We talked to people in six different places: Cleveland, Columbus, Coshocton, Dayton, Lima and Marion. This provided a spread of big, medium-sized, and smaller cities and towns, with different local economic and political conditions. Each had its own mix of industries, and markedly different voting patterns in the last few presidential elections.  

The interviews were completed with the help of an Ohio-based researcher and former journalist, and our partners at OSU. We also reviewed quantitative data on state- and nation-wide trends, and relevant research from our partners at OSU.

Did you learn anything unexpected?

It is easy to assume that this story is largely about how trade policy affects Ohio, and that, as a manufacturing state, its interests trade-off against other nonindustrial states. That is, indeed, an important part of the story. However, Ohio is a diverse place and serious trade-offs play out within the state itself.

For example, Columbus is the state’s capital and largest city. It is home to the state government and OSU, and the headquarters of major insurance, retail, utility, and health care companies. It is now the eighth-fastest growing city in America, pulling talent away from neighboring regions dealing with declining populations. That includes smaller cities like Marion and Coshocton, less than 100 miles away, which are fighting to reinvent their economic bases since major employers left.

Foreign trade definitely played a part in manufacturing job losses and dwindling wages in smaller cities. But the people we spoke to also point to other factors. For example, the loss of local ownership of businesses, declining union participation, competition with other U.S. states, and automation and other technological advances. They stress that trade is just a piece of the puzzle, albeit an important one.

People’s views on trade did not divide neatly along political lines, as those outside Ohio may assume. In areas that voted for Trump and Hillary Clinton alike in the last election, we heard people say that they wanted harder push back against China’s “unfair” trading practices. Many people criticized past administrations for not doing enough to enforce trade rules, and expressed appreciation for Trump taking a tougher line with Beijing.

But some of those same people also said they feared an escalating trade war with China. They worried that unstable trade policy would undermine Ohio’s efforts to attract foreign investment, and made it clear that they welcomed investment from China. They see a successful precedent in Japan, which was once a fierce competitor. The Japanese car company Honda is Ohio’s top manufacturing employer, and Japanese investment accounts for 70,000 jobs.

Is trade more important for economic well-being than other parts of foreign policy?

Some Washington-based policymakers may argue that other aspects of foreign policy matter just as much—or more—than trade, for middle class Americans’ economic well-being. For example, efforts to promote global economic growth and stability, and policies that leverage the United States’ economic muscle to shape the rules of global finance, trade, and investment. Policymakers might also point out that the United States can prevent and deter international crises – such as wars or pandemics – that could threaten the global economy.

But much of this activity is invisible to most Americans, and its localized effects on jobs and wages—the most commonly cited indicator of middle-class well-being—are near impossible to quantify.

In contrast, Americans can see when exporting businesses create jobs and pay well, or when multinational corporations move production overseas. For example, exports account for about a quarter of a million jobs in Ohio. Two-way trade accounts for more than 1.2 million jobs, according to some business associations’ estimates. People also see the impact of trade on the affordability and availability of household consumer goods. In other words, trade is just a piece of a much wider set of international activities that directly and indirectly affect the economic well-being of America’s middle class. Yet trade stands apart from those activities, partly because of its visible impact.

What parts of foreign policy do local businesses and families care about?

Those we interviewed assume the first priority of U.S. foreign policy is to keep Americans safe from threats overseas. But they also expect it to make the country richer. For working families and communities, that prosperity is often measured in terms of more jobs and higher wages. By that concrete and visible measure, trade, foreign direct investment, and defense spending matter most in Ohio.

Why are manufacturing jobs so important to keep a thriving middle class?

As the people we spoke to explained, manufacturing still provides among the best-paying jobs for those without a college or advanced degree, especially outside the big cities. That is why Ohio and much of the industrial Midwest were synonymous with a flourishing middle class in the 1950s and 1960s, when manufacturing accounted for over 40 percent of the state’s jobs.

This also explains why so much attention is paid to preserving Ohio’s approximately 700,000 manufacturing jobs today. However, such efforts run up against automation, other technological advances, and market forces that reduce demand for workers. Ohioans realize that. No one we interviewed expects to turn back the clock to 1969, when manufacturing employment peaked at almost 1.4 million jobs. Circumstances have changed profoundly. Manufacturing accounts for less than 13 percent of the state’s workforce today, and a fair number of those jobs require specialized training and higher educational qualifications.

The most common jobs now available to those without a college or advanced degree are lower-skilled, low-paying service sector jobs that pay about $19,000 to $32,000 per year. That is two to three times less than a typical auto parts manufacturing worker earns. In the 1990s, Ohio’s top employer was General Motors. But now, as in almost half of U.S. states, Ohio’s top employer is Walmart.

One of the long-time Cleveland observers we interviewed summed up this new reality by asking, “Is there anything that will be the mass employer and the gateway to the middle class that manufacturing once was?”

“I don’t see it,” he answered.

Nine of the Top Ten Occupations in Ohio Are Low-Paying
Occupations Employees Median Annual Wage
Combined Food Preparation and Serving Workers, Including Fast Food 158,070 $19,150
Retail Salespersons 152,410 $22,190
Registered Nurses 124,620 $63,300
Cashiers 119,860 $19,360
Laborers and Freight, Stock, and Material Movers
(hand, without power equipment)    
111,410 $26,800
Office Clerks, General 100,760 $30,940
Waiters and Waitresses 96,160 $19,240
Customer Service Representatives 90,090 $32,240
Janitors and Cleaners, Except Maids and Housekeeping Cleaners 83,560 $23,920
Stock Clerks and Order Fillers 83,430 $24,040
Total 1,120,370  
Source: U.S. Bureau of Labor Statistics, “Occupational Employment Statistics: May 2017 State Occupational Employment and Wage Estimates,” https://www.bls.gov/oes/current/oes_oh.htm#otherlinks.

How much do economic considerations influence defense spending?

Most Americans would likely say that the most important purpose of U.S. international engagement is to keep the country secure and safe. But few are in a position to judge whether the estimated cost of what is required to keep the country safe is too conservative or inflated. And many communities can see the economic benefits they derive from defense spending, and the livelihoods that would be threatened if it were cut.

People in Ohio told us they were strongly opposed to expending precious blood and treasure on what they considered unwise, costly, and unfunded wars. Yet these same people also cautioned against cutting defense spending, which provides an economic lifeline for communities and households across Ohio through, for example, the Wright-Patterson Air Force Base in Dayton, NASA facilities, the production of tanks, and the National Guard. More than 65,000 Ohioans are employed by defense-related facilities and activities across the state.

We don’t take a position on how much the United States ought to spend on defense at this stage. We simply point out the economic trade-offs. Those calling for increased defense spending need to acknowledge that the money may be better spent in investments in infrastructure and education, which may yield better economic returns in the long-run.

On the other hand, those calling for major defense spending cuts need to be clear that many working families could suffer if these cuts are not offset with public financing for other badly needed investments in their communities.

What were your main conclusions after completing the case study?

Our biggest conclusion is that the caricatures that divide Americans into opposing camps—globalists vs. economic nationalists, free traders vs. protectionists, industrial states vs. those on the coasts—hide a more complicated reality. These portrayals ignore far more nuanced views and tough trade-offs that play out for the middle class in states like Ohio.

Ohio is indeed an important manufacturing state, where trade policy matters. Yet it is much more than that. Trade policy is not the only part of foreign policy that matters to Ohioans. Job losses that have nothing to do with trade loom large for entire communities. And those communities’ economic outlook can also vary considerably, even within 100 miles of each other.

In this more complicated reality, policymakers who want to forge a foreign policy that works for the middle class will need to do more than defend or oppose tariffs and trade agreements. They will also need to come up with comprehensive economic strategies, alongside their trade agendas, to help Americans compete in a changing global economy.

They must lay out the pros and cons of the federal government taking on a greater role in supporting state’s efforts to attract foreign investment. They should spell out how they will resolve the economic trade-offs associated with defense spending. And they should explain more clearly to the American people how they measure the economic costs and benefits of U.S. global leadership.

Salman Ahmed is working with a bipartisan task force of former policymakers to conduct studies in a number of different states. The task force, working with The Ohio State University, has just completed its first case study in Ohio. The team will next be working on Colorado and Nebraska in 2019, and preparing a final report with recommendations in 2020.