The 89% Pay Cut That Brought Trump-Mania to America's Heartland

Understanding the Republican candidate's anti-free trade, working-class appeal

Manuel Aragon plays with his one-year-old son in Acuna, Mexico.

Photographer: Matthew Busch/Bloomberg

Amid the rugged cattle farms that dot the hills of southern Kentucky, in a clearing just beyond the Smoke Shack BBQ joint and the Faith Baptist Church, lie the remains of the A.O. Smith electric-motor factory.

It’s been eight years since the doors were shuttered. The building’s blue-metal facade has faded to a dull hue, rust is eating away at scaffolding piled up in the back lot and crabgrass is taking over the lawn. At its zenith, the plant employed 1,100 people, an economic juggernaut in the tiny town of Scottsville, population 4,226.

Randall Williams and his wife, Brenda, were two of those workers. For three decades, they helped assemble the hermetically sealed motors that power air conditioners sold all across America. At the end, they were each making $16.10 an hour. That kind of money’s just a dream now: Randall fills orders at a local farm supply store; Brenda works in the high school cafeteria. For a while, he said, their combined income didn’t even add up to one of their old factory wages.

Randall Williams.
Randall Williams
Photographer: Luke Sharrett/Bloomberg

Just as the Williamses were being informed by A.O. Smith that they’d be let go, a young Mexican woman named Zoraida Gonzalez was hired some 1,200 miles away in the hardscrabble town of Acuna, just over the Rio Grande from Texas. To replace its Kentucky output, A.O. Smith was ramping up production in lower-cost Mexico, a move facilitated by the signing a decade earlier of the North American Free Trade Agreement. Gonzalez was brought in to help handle phone calls.

Now 30 years old and in charge of payroll, she makes about $1.75 an hour, on par with wages earned on the plant’s assembly line. It may not seem like much by U.S. standards. (Or, for that matter, to some of the workers toiling in the heat of Acuna’s factories.) To Gonzalez, though, the money has been life-changing. It’s given her things she says her mother never had: a washing machine, cable TV, a Ford Freestar minivan that she shares with her boyfriend, daily zumba classes at a nearby gym and the hope that her 11-year-old son, Angel, will be the first member of her family to attend college.

Gonzalez doesn’t know much about Nafta and she knows even less about Donald Trump or the way he blames U.S. trade deficits with Mexico and China for the loss of jobs in America. But Williams sure does. He voted for the billionaire in Kentucky’s Republican caucus this month. So did many of his neighbors. In Allen County, a collection of eight towns strewn along the Tennessee border, Trump dominated his rivals, racking up 42 percent of the vote on his way to a narrow victory that night in Kentucky.

It was one of those kinds of results—in the heart of southern Baptist country that was supposed to vote for the conservative Ted Cruz—that revealed the extent to which Trump’s anti-free trade tack has touched a nerve with the millions of working-class Americans who feel financially squeezed. Of course, there are other parts of his unconventional platform that have made him the Republican front runner, such as his proposal to build a giant wall along the border, but his appeal in old factory towns has been stark. In three particularly hard-hit counties north of Detroit, for example, he took almost 50 percent of this month’s primary vote, more than double the tally for his nearest rival.

City Councilwoman Beverly Anderson sits for a portrait in the living room of her home in Scottsville, Kentucky, U.S., on Friday, March 18, 2016. Photographer: Luke Sharrett/Bloomberg

City Councilwoman Beverly Anderson sits for a portrait in the living room of her home in Scottsville, Kentucky, on Friday, March 18, 2016.

Photographer: Luke Sharrett/Bloomberg

“Nafta is the worst thing that’s ever happened to the U.S.,” said Beverly Anderson, a Scottsville councilwoman who worked at the electric-motor plant for 28 years.

Prior to Nafta, trade between the U.S. and Mexico was a relatively tame affair. The two sides alternated between deficits and surpluses—small figures, typically no bigger than a few billion dollars. U.S. exports quickly jumped after the accord went into effect in 1994, but the imports pouring in from Mexico climbed faster, and by 2015, the U.S. was posting a deficit of almost $60 billion. (With China, the U.S.’s largest trading partner, the gap has ballooned to over $360 billion a year.)

Robert E. Scott of the Economic Policy Institute, a think tank critical of free-trade deals, estimates these deficits with Mexico alone have cost 850,000 Americans their jobs. This, in turn, has a “chilling effect,” Scott said. “It actually causes wage losses for everybody who doesn’t have a college degree.” After accounting for inflation, hourly pay at U.S. factories has been stagnant since the early 1970s.

Trump—and to a lesser extent, Democratic candidate Bernie Sanders—has found so much success in expressing the working-man's anger that just about no candidate, not even Hillary Clinton, whose husband signed the Nafta deal, is now willing to fully embrace free trade. Trump’s proposed solution has been to impose restrictions on imports, a strategy that almost two-thirds of Americans backed in a Bloomberg Politics national poll last week. Little if any talk on the campaign trail is dedicated to the benefits of the surge in cheap imports, primarily subdued inflation that preserves consumers’ purchasing power.

Factory workers at a Regal Beloit Corp., also known as Peasas II, walk to the buses that will take them home after their shift has ended in Acuna.

Factory workers at a Regal Beloit Corp. plant, also known as Peasas II, walk to the buses that will take them home after their shift has ended in Acuna, Mexico.

Photographer: Matthew Busch/Bloomberg

On the Mexican side of the border, the benefits are clearer.

Hundreds of thousands of manufacturing jobs have been created in the past two decades. In Acuna alone, there are some 38,000 factory workers today. Back in 1980, the town’s entire population was just 42,000. And while evidence of sharp wage growth is hard to find in these industrial communities, other data points underscore the role Nafta has had in helping boost the lives of many Mexicans: Gross domestic product per capita has climbed 23 percent and, more important, the decades-old surge of illegal immigrants crossing the border in search of work has receded. Since 2005, more Mexicans have left the U.S. than have entered it, according to Pew Research Center.

The Colona Cedro neighborhood of Acuna, Mexico.

The Colonia Cedro neighborhood of Acuna, Mexico.

Photographer: Matthew Busch/Bloomberg

Acuna is a sun-drenched, dusty town carved out of the broad mesa that stretches across northern Mexico. On the opposite side of the border sits Del Rio, Texas, home to Laughlin Air Force Base. Back before the factories came, Acuna was best known for bars and strip clubs that catered to the off-duty airmen, a culture that rock band ZZ Top glorified in a raunchy, racially-charged 1975 hit “Mexican Blackbird.”

Some of those seedy elements remain today, but they’re surrounded by block after block of residential and commercial developments. Right next door to the electric-motor plant—which Regal Beloit Corp. acquired from A.O. Smith five years ago—there’s a Blueline factory, where workers make paper products; farther down the street, Magna Seating employees churn out car seats and seat covers; and then there’s a textile operation run by Muller.

Across town, Gonzalez and her boyfriend, Manuel Aragon, a worker in the car-seat factory, live with their two children in a subsidized-housing community. The smell of laundry detergent and simmering pinto beans wafts out into the afternoon air. Kids play in the middle of the road. Dogs are everywhere, barking constantly as strangers walk by. All the houses are nearly identical here, save the differing shades of pastel paint—aqua green, pink, yellow—that coat the exteriors. They’re concrete, narrow and squat.

Zoraida Gonzalez and Manuel Aragon, at their home in Acuna, Mexico on March 16, 2016.

Zoraida Gonzalez and Manuel Aragon, at their home in Acuna, Mexico, on March 16, 2016.

Photographer: Matthew Busch/Bloomberg

Some in the neighborhood, including other Regal Beloit workers, complain about the grind of factory life. Not Gonzalez. Sure, she’d like a bit more pay, and yeah, she wouldn’t mind having a few more creature comforts, but “we’re doing good.”

“We have food to eat, we’re together, we have work and health,” she said.

Back in Scottsville, that kind of optimism is rare.

Williams, now 60, shares none of it. Politicians “keep saying things are going to get better,” he said while waiting for customers to show up at the farm supply store on a recent weekday afternoon. “They’re not going to get better.”

QuickTake Behind the Free Trade Debate

Jeff Woods is still angry, too, about A.O. Smith’s departure. His mother had worked at the factory. Today, she’s a pharmacy technician, making a fraction of her old wage. “Somebody works there all their life and you get to be 50-something-years-old and your income gets cut in half because the place moves to Mexico,” he said. “That’s not right.”

Woods played it coy when asked which candidate he backed. He wouldn’t outright say, but he went on to speak glowingly about just one of themthe one who’s not a career politician and who says he’ll crack down on illegal immigrants and bring jobs back to America.

—With assistance from Brendan Greeley and Anne Reifenberg.