No matter what the outcome of the 2020 elections, the Republican Party never will be the same. Its new direction and outlook will last decades after Donald Trump leaves the stage. The party’s longtime predilection for big-business interests and crony capitalism has yielded to a focus on the working class in the heartland.
From fat cats to Joe Sixpack. From pinstripes to denim and flannel.
He has forged the Republican Party into a party that pursues the interests of working-class and middle-class Americans. His election demonstrated the folly of the Republican establishment’s plot to win the presidency through promoting the agenda of its corporate donors.
Trump carried Pennsylvania, Ohio, Michigan, and Wisconsin by adding working-class voters to the party’s base. He made working-class Americans the center of his politics, and he took the entire Republican Party with him. He consistently draws above a 90 percent approval rating from party voters. Up until the Wuhan virus lockdown, his rallies drew capacity crowds with thousands of extra fans gathering outside the venues. Even today, some party leaders resent this refocus.
American workers have been rewarded for their support of Donald Trump. After years of falling or stagnant wage growth, wages began a sustained rise in late 2017. In September 2017, average hourly earnings growth surpassed 2.8 percent for the first time since the Great Recession a decade ago. Since August 2018, average hourly earnings have grown at a rate of 3 percent or more, month in and month out.
Wage gains for “production and nonsupervisory employees”—the American working class—hit the 3 percent mark in August 2018 and quickly rose above 3.5 percent. In October 2019, workers were earning on average 3.8 percent more than they had the prior year. Inflation was at 1.76 percent. So at that point, workers’ wages, after chronically failing to keep up with inflation for decades past, were growing at double the inflation rate.
Impressive. And rarely, if ever, did you hear any celebration of it by the left-wing media.
Better still, the best gains were going to workers at the low end of the pay ladder. Americans without a high school diploma experienced wage growth of nearly 6.5 percent in 2018, the largest hike among all educational demographic groups. This was a reversal of the Obama era when wage growth was concentrated among workers with the highest incomes. Before the Dems spent quite so much time wailing about wealth inequality.
American workers were winning again.
When wages limped along in the Obama era, employers were too stingy to pay more to their workers. They were guilty of this long before he took office. After the 2009 financial crisis, wage growth failed to rebound as the US economy tiptoed into recovery. Wage increases were subpar for years afterward.
From 2010 through 2016, the last year of the Obama administration, wage growth for Americans managed to hit 2.5 percent only once, in 2016, and fell as low as 1.5 percent in 2012. For the first three years of Obama’s second term, average wage growth ran 2.16 percent per year—compared with a 2.96 percent rise, on average, in the first three years of Trump. That is 37 percent higher growth for the Trump tenure.
Bravo! As my Twitter followers heard from me on June 19, 2020, the president had created 3.1 percent real wage growth at the time. That would rise to 3.5 percent later, a nice jump. More Americans were working than ever before, and he seemed a sure bet to be reelected because of it. Dems’ messaging, meanwhile, hewed to their standard socialism, in stark contrast with Trump’s buoyant form of capitalism.
It remains to be seen if workers can keep on winning. With wages barely rising for ten or twenty years, productivity—how much in goods we produce for the same unit of work—rose handsomely at a higher rate. The upside went to the owners of capital rather than to the workers.
Rather than celebrate the reawakening of wages, the elite and the resistance to President Trump saw a darker picture. Corporate America and the nation’s central bankers believed that something must be done to stop those wage gains. They still feared the specter of inflation, looming but nonexistent for years. The better Trumponomics started looking, the more prone the Fed was to raising interest rates.
This is why the president also was waging a relentless campaign to press Federal Reserve chairman Jerome Powell—his own pick to run the central bank—to stop raising rates and start cutting them deeply. (See chapter 12.)
America’s elites had become so comfortable with secular stagnation, and so spoiled by cheaper labor overseas and low wage growth in the United States, that they greeted even the slightest upward pressure on wages with panic.
The global elites at the nation’s huge trading companies, financial institutions, multinationals, and tech titans benefited from globalization, cost cutting, layoffs, offshoring, and stagnant wages (with rising productivity, of course). As wage growth started waking up in the Trump era, they soon concocted a cause for this alarming trend: the United States suffers from a severe labor shortage. That must have been why wages had been rising handsomely since Trump took office, especially at the low end—up almost 7 percent, more than triple the pace of inflation.
Some authorities, starting at the conclusion and finding a way to get there, said that the United States is incapable of providing enough workers from its own population, which is why we must open our gates and let millions of immigrants rush into our country to fill service jobs—albeit the service economy was supposed to be the crutch that would let us limp along after losing our manufacturing base.
Experts cite myriad reasons for this purported labor shortage: tepid long-term GDP growth in the United States; the aging population as ten thousand people turn age sixty-five every day; our low birth rate. This leads to intellectual arguments and more studies, this time on why the United States is in for a future of stagnant wages and workers can skip seeking higher pay altogether. This creates more self-defeatism and reasons why we are barely able to make it out of bed.
It was as if the elites had been gaslighting Grandma to make her think she is more feeble and frail than she really was.
This argument by the globalist elites is a laughable canard. Even before the coronavirus, almost 40 percent of able-bodied Americans under age sixty-five were out of the workforce and sitting at home. It is a shocking figure. The labor participation rate, as a percentage of all people who could be working, is near 62 percent and has been in decline for many years. This shows how much richer the United States is than we realize. More important, it is proof that many Americans were unmotivated by the stubbornly low pay that companies continued to offer.
If too many eligible workers stay out of the workforce, the solution is simple if we believe in a truly free market: businesses must pay better starting salaries to persuade the idle to reenter the workforce. But both large and small employers often can avoid paying more for low-end workers because millions of undocumented immigrants in the United States illegally will work for below-market wages. Thus the focus on fomenting talk about the labor shortage.
This imaginary labor shortage is a favorite reason for explaining why, to hear the Democrats tell it, the United States is doomed to become another Japan, on life support and in recession for thirty years—unless we import more people from overseas. Lack of workers was one of the biggest concerns that businesses reported to the Federal Reserve System for its “beige book,” a collection of anecdotal evidence about economic conditions gleaned from conversations with owners in each of the Fed’s twelve districts. The phrase “labor shortage” became a mantra repeated endlessly in the mainstream left-wing media.
In May 2017, the New York Times published an article with the startling headline “Lack of Workers, Not Work, Weighs on the Nation’s Economy.” The story included a number of anecdotes about alleged worker shortages—most of them showing nothing more than the fact that wages were rising—which the media usually hailed as a good thing.
One construction company claimed it had raised its starting wage by 10 percent to almost $18 an hour and still was unable to attract sufficient workers. The free-market answer to that problem is to raise wages by 15 percent or to whatever level will persuade workers to quit their jobs and come work for your business.
The data show just how little tolerance business leaders have for wage growth. The average weekly earnings of construction workers in Utah stood at $970 in April 2017, according to the Bureau of Labor Statistics. That was a rise of just $30 a week from a year earlier, up 3.25 percent. Weekly pay had been higher four years prior to that, at $980. The numbers are not adjusted for inflation, so the actual decline has been steeper.
But somehow, offering a 10 percent raise and failing to find an abundant pool of grateful, unemployed workers was evidence of a labor shortage—at least, it was evidence to the Times. The truth is that companies in Utah and across the United States were slow to raise wages even as unemployment fell to record lows. They were spoiled by having spent so many years having their pick among the oversupply of millions of unemployed people.
Workers, for their part, had spent so long toiling amid low wage growth and knowing they were imminently replaceable that they were unaccustomed to asking for raises. That is their fault. Even today, the rate of workers voluntarily quitting their jobs to get something better is very low by historical standards. The jobless rate fell to an all-time nadir in the first three years of President Trump’s first term, and the quit rate should have been higher.
It was as if the tool of offering higher wages to attract new workers had fallen out of the favor among US businesses and no one had noticed because it hadn’t been necessary to do so for so long. But now that far fewer unemployed people were desperate for any job, employers profess to be unable to find staff. It is as if they have forgotten how to poach workers from competitors, or perhaps they remain too stingy to start paying up—and are in tacit collusion, across the land, to keep things that way.
One of the sources of low wage growth, even as unemployment declined, may have been companies adding less experienced workers and part-time consultants instead of expanding their full-time staff. These newcomers tend to earn lesser wages, and their hiring reduces the need for full-timers. Their presence can make experienced workers hesitant to demand better pay.
But as the Trump boom took hold and pushed our economic expansion into the longest on record, companies found it harder to find new workers—at the lower-than-market rates they wanted to pay, at least. More baby boomers were hitting retirement age, forcing companies to compete for younger workers to restock their ranks.
Another upward force on wages had to be the surging optimism that had taken hold in the American people and the US economy following the election of Donald Trump. Consumer sentiment soared and then remained at historic highs month after month. Consumers are also workers, and that confidence may have led them to seek higher wages for the first time in years. Give me a raise, they say, or I may hunt for a job elsewhere.
What’s more, workers knew that Trump had staked his political fortunes on their economic fate. He had taken on powerful actors in the economy that many workers see as opposed to their interests, from chief executives to China. When General Motors set plans to close a plant in Ohio, Trump went after it on Twitter, brushing off attempts by management to blame the unions. Even before he took office, he had shamed Carrier into scuttling plans to close a furnace factory in Indianapolis and move production to Mexico.
Even that small victory was under scrutiny by the New York Times. A reporter revisited the Carrier site almost two years later, publishing a gainsaying story on August 10, 2018. The headline positively jeered, “At Carrier, the Factory Trump Saved, Morale Is Through the Floor.”
The article admitted that local unemployment in Indianapolis was down to a low 3.3 percent, the factory had saved 700 jobs, and it had recalled another 150 workers who had been laid off. The plant had the capacity to turn out eleven hundred new furnaces a day. The problem, the Times said, was worker absenteeism:
What’s ailing Carrier isn’t weak demand. . . . Instead, employees share a looming sense that a factory shutdown is inevitable—that Carrier has merely postponed the closing until a more politically opportune moment.
It added:
In some ways, the situation is a metaphor for blue-collar work and life in the United States today. Paychecks are a tad fatter and the economic picture has brightened slightly, but no one feels particularly secure or hopeful.
The better things started to look for higher wages, the worse the supposed labor shortage was reported to be, in the media, at least. On April 3, 2018, a website in Monterey Bay, California, reported that restaurants were struggling to find workers: “Qualified cooks and dishwashers have all but disappeared, and in response local restaurants have lowered their standards while raising pay. Current applicants have weaker skills . . . and cooks with just a few years experience are applying for jobs better suited to those with a decade or more on the line.” The piece quoted an executive chef as saying “We pay dishwashers $14 an hour ($3 above minimum wage) to offset (the shortage). . . . To be honest, it’s the most integral position. If you can’t put food on a clean plate you have nothing to sell.” The article noted that in the past, “restaurant owners could always keep kitchen salaries in check because candidates were lining up around the block.”
After years of being at a disadvantage in negotiating with employers, US workers were gaining sway and had more choices. More power for the workers—usually, this would be something the media would hail heartily. When it happens under President Trump, the response is muted at best. That’s okay, honey badger don’t care, as the funny YouTube video put it some years ago; it applies well to President Trump.
Two weeks after the Monterey Bay story ran, the media meme pushing panic over a supposed labor shortage culminated in a piece in the Wall Street Journal. It ran in the paper’s news pages.
The Journal’s op-ed pages long have been an outlet for advocating open borders and low wages. Run by longtime insiders in Washington, the Journal editorial page carps at the president more than it praises him. Star columnist Peggy Noonan, long ago a speechwriter for President Reagan, tacitly despises him. Karl Rove, the Republican consultant who helped elect George W. Bush, publishes smart columns that offer Democrats advice on how to run against him. Even from the most conservative paper in the United States, President Trump gets less support and praise than he has earned.
The news story continued the new agenda: “The U.S. is facing a severe worker shortage, forcing employers big and small to explore the labor market’s youngest echelon, which is piling into the workforce.” Average wage growth for production and nonsupervisory employees that month had been just 2.8 percent. Yet the paper claimed that businesses were experiencing “historic, severe worker shortages.” Well, they should pay more, so that wages rise at, say, a 3.5 percent or 5 percent rate, and then check on whether the fake labor shortage persists.
The article contained a chart showing that the employment rate of American teenagers had been rising, as if to support its premise. Zoom out to a wider view, and it turned out that teenage employment remained far below prerecession levels. In fact, fewer teenagers than ever were seeking employment.
It had escaped even the Journal that that was less evidence of a “very dire” labor shortage than, perhaps, the fact that wages were still too low to interest an American teenager in taking a low-level job.
No one knows for sure why teenagers stopped working. But the timing of it suggests two factors: trade and immigration. The steep decline began a few years after the North American Free Trade Agreement was signed in 1994 and accelerated after China was fully admitted to the World Trade Organization in December 2001.
Just as trade with China and Mexico under NAFTA had hit certain US communities especially hard, it had reduced teenage employment in particular. At the same time, the foreign-born share of the US population was hitting a historic high. Guest workers and immigrants, both legal and illegal, could be hired to do the jobs that American teenagers had once filled.
The effects of this are writ large in the summer resort business in the nation’s posh playgrounds, including Martha’s Vineyard in Massachusetts, preferred by President Obama, and East Hampton on Long Island, a beach retreat for media titans and Wall Street bigs. Another hotspot is Nantucket Island, a Quaker outpost off the coast of Massachusetts that was converted long ago into a summer resort for America’s wealthy. It provides a case study of what happened to jobs for American teenagers.
Nantucket was a prized summer job location for the young men and women of New England a few decades ago, within living memory of some of the longer-term residents of the island—the ones who were there before the hedge fund managers and lobbyists sent the prices of summer cottages to unimaginable heights.
The youngsters arrived at the island for summer break from high school or college to work as golf caddies, dishwashers, waitresses, and groundskeepers—the kinds of jobs filled by immigrants today. Now Nantucket, like many seasonal resort areas across the country, is entirely dependent on foreign workers for the low-end jobs teenagers once filled, such as bagging groceries.
Hiring teenagers in summer jobs at the resorts had been on the wane since 1990. The same year, a foreign guest-worker program opened in the United States and began letting in a new influx of service staff by the thousands. More young people sought internships and other college-oriented pursuits rather than a summer of cash from manual labor.
In June 2005, the Times celebrated the legions of “fresh-faced students from Bulgaria, Poland, and Lithuania.” But a “labor shortage” created by delays in the guest-worker program had put a crimp into summer plans for the hoi polloi:
But this year, a guest-worker shortage could cripple the season there, and at many other resorts. In Colorado, the Broadmoor Hotel in Colorado Springs was denied all 250 visas it customarily receives from the federal government for housekeepers, landscapers, and masseurs. In Michigan, the Yankee Rebel Tavern on Mackinac Island is trying to make do without its usual staff of 18 dishwashers from Jamaica. And in Florida, Amelia Island Plantation has no one to help manicure its golf links.
The paper also lamented, “The shortage also means fewer foreign faces. The guest-worker program, created in 1990, had the unintended effect of transforming formerly apple-pie resorts into virtual Epcot Centers of languages and cultures.” The shortage was so severe that the Times included this somber note: For the second year in a row, the labor shortage could mean long waits at restaurants, shorter menus, untidy hotel rooms, reduced store hours, and poor service.
The playgrounds of America’s elites had become inhospitable to young Americans. The foreign workforces that dominated their payrolls were openly hostile to American summer workers, whom they viewed as taking “their” jobs. Often an individual restaurant or business would be staffed entirely by workers from one country. The Times article reported that nearly all thirty-five bus drivers employed by the Nantucket Regional Transit Authority were foreigners, mostly from Bulgaria. Being able to speak the foreign language or the local dialect of the workers became more or less a job requirement. So a kid from South Boston had no chance of making it as a dishwasher, bus driver, or baker.
Once upon a time in America, teenagers complained about having to work too much. Sixty years ago, Eddie Cochran lamented in the song “Summertime Blues,” “Every time I call my baby, try to get a date, my boss says, ‘no dice son, you got to work late.’” But by 2016, most American teenagers were idle, and they shunned even trying to get a job. Work was for foreigners.
This is a lamentable change in our economy, mostly unnoticed in our society. Traditional American values have a foundation in our ability to improve our lives through hard work and determination. The crash in teenage jobs that began in the 1990s was a warning sign of what was happening across the United States. It received scant attention.
Most Americans think of themselves as members of the middle class, whether they are young men and women toiling at a digital start-up, earning minimum wage at a part-time job, assembling trucks in the Midwest, or practicing law at a white-shoe law firm. Throughout our history, we were the Land of Opportunity, rather than the Land of Envy that we hear a lot of politicians talking about now.
We admired the achievements and financial rise of those who earned it, without idolizing or envying them. We respected those below us on the income ladder and their efforts to climb higher. We saw ourselves as able to rise above any restraints put on us by dint of our lineage or the lack of it. We believed that hard work gave us the opportunity to improve our circumstances for ourselves and our children and grandchildren.
The higher wage growth ignited by the Trump agenda came without any government-ordered hike in private wages. Democrats have long pushed raising the minimum wage as a sop to voters and a great claim to be helping the poor. Let us order parsimonious employers to pay more or be in violation of the law, they say. The old Soviet Union took a similar approach to wage growth before it collapsed economically and politically.
The Dems wanted to force companies to pay a higher minimum wage of $15 an hour nationwide—whether a person worked in New York, where prices are extortionate, or in rural Idaho, where prices are lower.
This is a bad idea. If raising the minimum wage were the path to prosperity, if it really worked, the congressmen of both parties would have lifted starting pay to $100 per hour by now. Just force evil big business to pay for it.
A higher, legally mandated minimum would do nothing to help workers or lift their wages. The United States had upward of 155 million people employed full-time in the boom times before the Wuhan pandemic. Fewer than 1 million of them were in minimum-wage positions. Typically they stay there a year and move up the pay ladder—without government intervention.
Raising the minimum pay to $15 an hour from the $7 or so of recent years would force employers to double the pay for entry-level jobs. It would prompt them to fire upward of a million of their lowest-paid workers and use more part-time staff, according to the nonpartisan Congressional Budget Office. This would deprive even more American teenagers of a shot at early entry into the first jobs of their lives.
Many states mandate higher minimum wages than the feds do, and that is their right. New York forces businesses to pay almost $12 an hour, whether the employee is a burger flipper or an insurance adjustor. The states know best, at a local level, what works for them. Still, letting the free market determine where rates should go is a smarter way to operate—if employers will pay fairly and play by the right rules.
To the extent that raising the minimum wage forces employers to bump up the pay of more experienced workers the next few levels up, it means it was done by government fiat rather than by market forces. Ultimately this kind of thing helps crush thriving economies. It is a masked form of socialism if taken too far.
After President Trump had racked up strong growth in wages, his lib enemies had to find another way to throw shade at it. Weeks after holding his one-man show in the East Room to sign the China trade deal, he made a triumphant State of the Union address on February 4, brimming with energy and can-do possibility.
Four days later, an “exclusive” article appeared in USA Today, citing the real reason for the impressive growth under President Trump: it had been caused by states that had raised the minimum wage. What? The headline was “Trump Touted Low-Wage Worker Pay Gains but Much of the Credit Goes to State Minimum Wage Hikes.”
The beginning of the story then attempted to undercut any credit President Trump can claim, noting that he had called attention to a blue-collar jobs boom and rapidly rising wages for low-income workers: “He’s correct, but Trump left out one thing: a large portion of those gains can be traced to minimum wage increases in more than half the states.”
The national newspaper cited a study “provided exclusively to USA TODAY by the National Employment Law Project (NELP),” saying that median wages for the bottom one-fifth of workers had “climbed much more sharply in states that have raised their pay floors than in states that haven’t.” The story argued that the president’s program had made no difference at all in the long run: “More broadly, real pay for the bottom fifth of workers nationally increased 3.6% from 2009 to 2018 while wages for all other workers were stagnant, the NELP figures show.”
That story got huge attention in the lib media. There had been no progress at all. How could that be? The answer lies—and I do mean lies—in intentional deception or abject depression.
The USA Today article failed to mention that the report supporting minimum wage hikes came from a group that promotes minimum wage hikes. NELP is a 501(3)c nonprofit advocacy group. Its website lists its achievements: “Won $15 minimum wages in NJ, IL, CT, and MD. Won local unemployment compensation legislation in D.C. for furloughed workers during the government shutdown.”
NELP makes no claim to being nonpartisan. Its fund-raising is run by ActBlue Charities, which assists Democrats. Its board includes Jared Bernstein, a former Obama advisor who was chief economist for Joe Biden; Sharon Block, a former deputy assistant secretary in the Obama Department of Labor; Elyssa McBride, secretary-treasurer of the American Federation of State, County, and Municipal Employees (AFSCME); labor lawyers; and assorted NGO executives. None of that was revealed in the story.
The paper cited “more than half of states” (twenty-six), but really it was less than half (twenty-three). The study included states that had small wage bumps for cost of living that were too tiny to have helped; they should have been excluded. The report framed a five-year period starting in 2013 for states that raised pay but used a nine-year period starting in 2009 to measure how much median wages rose. This is known as data dredging.
The last paragraph of the USA Today story said that in early 2020, two dozen states and forty-eight cities and counties would raise the minimum wage in their markets. Cities and counties at $15 an hour would double to 32 localities. The story neglected to say that it was a sign of economic strength in the era of Trump. State and local pols would avoid doing so if their economies were too feeble to withstand it.
The paper also reported that even the nonpartisan government Office of Management and Budget (OMB) had issued a report to Congress in late 2019 saying that the Trump administration’s “efforts to reduce taxes, eliminate regulations and implement fair trade deals are driving economic growth and increasing workers’ take-home pay far more effectively and efficiently than legislation.” The report was a response to a Democratic bill to raise minimum pay nationwide to $15 an hour.
Trump wins again.
Never again will either political party ignore the working people in jeans and flannel shirts in Flyover America. That will be another lasting ramification of the Trump Century. Other candidates of all stripes were too sophisticated and worldly to decry the decline of wage growth in the United States and the loss of US jobs to cheap labor in factories in Asia. CEOs, boards of directors, and investors were too focused on maximizing shareholder value and their own upside.
President Trump came to the rescue, and the Dems and the media still were in denial about it. He had confronted China in the crisis over the Wuhan virus. And thrown down the gauntlet of tariffs on a quarter-trillion dollars’ worth of Chinese imports to the United States. Rather than triggering a trade disaster, it got China to the table to make concessions and sign a new deal that will benefit the United States. Yes, huge.
That helped US wages head upward at higher rates than we had seen in years. The new China accord and the tariffs would contribute further to that. None of it would work, however, without putting into place another critical piece of President Trump’s five-pronged strategy: immigration reform.
It would become one of the most bitterly fought issues of the Trump presidency. He saw it as vital to protecting national security and reviving job growth: protect American jobs, and avoid undercutting our wage growth with cheap, imported labor; ensure strong borders and controlled immigration to let in those who can help our country most and refugees in special cases; block violent criminals and terrorists from slipping past our defenses.
It would have benefited the nation to have a debate on those grounds. The president’s opponents preferred to debate immigration policy on just one ground: President Trump, they said, was a racist.