Published July 22, 2024
For the third time since he descended that escalator in Trump Tower in June 2015, Donald Trump will accept the presidential nomination of the Republican Party. This time, he greets a party transformed. At the outset, very few Republican politicians talked like then-candidate Trump. Now, nearly all of them do. The “forgotten men and women of our country” are no longer afterthoughts, but the focus—at least rhetorically—of much of the conservative policy conversation.
Reformists of various stripes had vainly encouraged the GOP to take the concerns of working-class voters seriously; under Trump’s leadership, the party has since realigned. His rhetorical focus on immigration and trade felt jarring at the time; it’s now stock-in-trade for most elected Republicans. And his 2016 picture of an American economy in shambles, with “laid-off factory workers, and the communities crushed by our horrible and unfair trade deals…that [have] been destroying our middle class,” resonated with many.
Though attributing broad macroeconomic trends to whomever occupies the Oval Office is always a bit overblown, the economy really did start to hum during Trump’s time in office, before the black swan event of COVID. And, though it does Republicans little good to admit it in an election year, the post-pandemic economy has continued to deliver for low-wage workers. In many respects, the story of the last decade in economic policy is showing that, when it is running properly, the American economy is capable of great things. Conservatives in the populist vein should avoid slipping into hyperbole when arguing for working-class-friendly economic policies.
Of course, there remains much more work to be done. But contrary to three frequently heard myths, conditions for workers and struggling regions have more silver linings than one may think. The economic talking points that have dominated the Trump era may—if current trends persist—be soon in need of a refresh.
Myth: No one wants to work anymore.
The American work ethic, we frequently hear, is in terminal decline, beset by porn or drugs or video games or other villains du jour. Overall labor-force participation may be near an all-time high, but men need aggressive policy sticks to get them back to work. Sen. Rick Scott of Florida accuses the left of having waged a “war on work.” Hardline conservatives like the Center for Renewing America’s Russ Vought would like to see work requirements attached to Medicaid to curb spending. The Foundation for Government Accountability’s Michael Greibrok argues that the lack of work requirements is to blame for the labor shortage and sluggish economic growth. To restore the “dignity of work,” they say, we need policies—like attaching work requirements to safety-net programs—that keep individuals from living off the dole.
Work is good. It is essential for a healthy economy and a precondition for economic self-sufficiency. But some of its champions guild the lily.
Let’s drill down on native-born males in what economists call “prime age” (25 to 54 years old.) Back in 1995, when today’s 54-year-olds were 25, 91.5% of males in this demographic were either working or looking for work. The long, gradual decline since then flattened, and even partly reversed, around 2015, as the macroeconomic picture improved. Workers came back in from the sidelines, with labor force participation among prime-age, native-born males reaching 88% in 2023.
Is there room for improvement? Of course. Gallup’s Jonathan Rothwell finds similar trends, and suggests poor chronic health and rising disabilities may be to blame. But the overall story shows how propitious macroeconomic conditions can help attract marginal workers off the sidelines and that carrots may work better than sticks. Take Georgia, the most recent state to attach work requirements to its state Medicaid program. The result has been a common theme for the practice: more hoops to jump through, higher administrative costs, and far fewer individuals covered than expected—about 1% of the estimated total so far.
Work requirements make sense in some welfare programs, but the logic of threatening to take away health care coverage from people who may indeed be too ill to work remains underdeveloped. If healthy labor markets are working the way they’re supposed to, Americans don’t need punitive safety-net hoops to recover the “dignity of work.”
Myth: Working-class wages keep falling further behind.
The left has long focused on income statistics that purport to show rising inequality. And some on the right have swung that cudgel as well, lamenting “the carnage caused by the neoliberal turn in American political economy.” The economy may be growing, wrote Rod Dreher in 2017, but “it doesn’t make sense to talk about overall economic gains to the American economy when so many of those gains have aggregated towards the top.”
Wages did, indeed, stagnate for a time. But today’s workers face a rosier picture. Even after accounting for the weirdness of COVID-era labor markets, workers today enjoy much more leverage than just a decade ago. In 2022, researchers at Oxfam found roughly one-third of workers made less than $15 an hour. In 2024, less than one-quarter of U.S. workers make less than $17 an hour (somewhat confusingly, their report still labels this improvement a “crisis”). Some of this is due to minimum wage increases and inflation. But more is due to a labor market that has been giving workers more power and higher earnings. As AEI’s Michael Strain recently pointed out, average hourly wages have been growing faster than the overall price level for the past year and change.
Looking at the average wage can be misleading, since it can be affected by the composition of the workplace. During the peak of COVID, for example, “average” wages rose not because people were getting raises, but because low-income workers were being dropped from their jobs, mechanically pushing the average wage higher. And talking about wages alone doesn’t necessarily address broader questions of wealth and inequality, as American Compass’s Mark DiPlacido recently discussed here on The Commons. Ernie Tedeschi, former Chief Economist for the White House Council of Economic Advisers, tries to control for these compositional effects to construct what he calls the “Low-Wage Index.” He finds workers in the bottom 25% of incomes have seen sustained (inflation-adjusted) wage growth at only two times over the past half-century or so: the late 1990s, and the back-half of the 2010s and early 2020s.
It’s no wonder that workers with below-average wages, like those in the service sector, look back fondly at the economy of the pre-COVID Trump years. During that time, they were catching up with those making above the median. The higher wage premium associated with being a college-educated worker peaked in 2015 and has been falling ever since. All this because the Federal Reserve, urged on by President Trump, largely got monetary policy right, fiscal conditions were good, and businesses had stability to invest, grow, and hire. Full employment, it turns out, is really good for workers, particularly for those on the lower rungs of the ladder.
Strong labor markets aren’t a panacea; rates of family formation continued to fall even as the economy picked up steam. But they are necessary to help everyone feel that capitalism can work. And the wage compression and growth that has taken place over the past ten years is worth celebrating.
Myth: Coastal elites are leaving heartland America to wither.
For much of the 2010s, “superstar cities” sucked up brains and bodies from America’s heartland. But the post-COVID (and post-BLM) landscape has reshuffled the cards. A new report by the Economic Innovation Group’s August Benzow finds that the roughly one-fifth of counties that most struggled from 2000 to 2016 have seen a relative boom post-COVID. Fueled by the rise in remote work, a rise in business formation, and relatively affordable housing prices, rural and semi-rural counties have benefited from the great post-COVID shakeup.
Take Elkhart, Indiana, where the economic picture was grim. In March 2009, the jobless rate in Elkhart was 20%, the worst in the U.S. But as economic conditions improved, the RV industry recovered which built capacity and attracted workers. Wages soared. By 2018, the local KFC was offering $150 signing bonuses in its search for new workers. In summer 2022, Elkhart topped the Wall Street Journal’s ranking of emerging housing markets nationwide, as the post-COVID remote work boom helped more households consider northern Indiana. Erie, Pennsylvania, another poster child for Rust Belt blight, has also seen its fortunes improve.
President Biden’s policies deserve some of the credit. The bloated American Rescue Plan unquestionably helped fuel inflation, but also compensated for some of the economic shock of the pandemic, enabling the U.S. to achieve the highest post-pandemic growth of any G7 country. Running the economy hot, rather than forcing austerity, has helped fuel demand and kept unemployment rates low—how long that approach can persist will be a question that bedevils the next occupant of the White House. On top of the infrastructure spending passed in 2021, the bipartisan CHIPS Act, whatever its other flaws, helped inject money into parts of the country that don’t always get federal largesse, including 31 regional tech hubs from Tulsa to Missoula.
Populism can be an affect. It can also—as the selection Senator J.D. Vance (R-Ohio) for the G.O.P. ticket indicates—be a helpful, guiding principle in developing public policy choices. The decision to prioritize blue-collar workers, parents without a college degree, and families making below the median wage can provide a sound rationale and clear direction for the future of conservative policymaking.
Yet the working-class revolution in the GOP is incomplete. Scratch a self-styled populist and you too often find macroeconomic and policy conceptions set in the Tea Party era. A party of workers and families needs more than the heuristics that were operative coming out of the Great Recession. Touting the success of tight labor markets and strategic investments in regions and key industries should take center stage. Republicans who have been pushing their party in a pro-worker direction should claim credit, and be unafraid to update their rhetoric for an economic context in which the forgotten men and women are, increasingly, being remembered.
Patrick T. Brown is a fellow at the Ethics and Public Policy Center, where his work with the Life and Family Initiative focuses on developing a robust pro-family economic agenda and supporting families as the cornerstone of a healthy and flourishing society.
