Income Inequality and Trump’s “Forgotten” Americans

In his State of the Union address, President Donald Trump touted economic progress during his year in office.

President Donald Trump often brags about the nation’s economic performance on his watch. “We took a big, big beautiful ship that we’re turning around, and a lot of good things are happening,” Trump said recently. He has a point: The stock market has soared and unemployment has dropped to this century’s low point since he took office. How much influence a president has on the economy and how much of the recent surge is due to trends that began under Trump’s predecessor are, of course, debatable, but all chief executives own the good news while blaming others or unforeseen forces for the bad. Trump is not alone in this (though, perhaps, a tad premature: President George W. Bush could have made similar claims at a similar point in his tenure, and we all remember how that turned out).

The current strong economic showing masks two dispiriting trends involving wealth and its distribution. The first is the long-term trend of the concentration of income in the hands of fewer and fewer Americans. The gap between the rich and everyone else has been growing by leaps and bounds since the middle of the last century. Just a few statistics: The top 10 percent of Americans now average more than nine times as much income as the bottom 90 percent. And, income disparity becomes more glaring further up the income ladder. Today, the top one percent average over 40 times more income than the bottom 90 percent. The top one percent of income earners have more than doubled their share of the nation’s income over the last 50 years. Income inequality today approaches levels similar to those during the Gilded Age in the late 19th century.

Billie Taylor, a restaurant worker at Disneyland in Anaheim, California.

It is not just that wages at the bottom are depressingly low; it is that those wages often are not enough to support workers. A recent report from the Economic Roundtable indicates that three-quarters of the workers at Disneyland do not earn enough to cover basic expenses. One worker, Billie Taylor, is an employee at a Disneyland restaurant earning $11.50 an hour. She is homeless. Other workers report skipping meals, being unable to afford prescriptions, and having to forego Christmas presents for their children. Granted, Disneyland is located in Orange County, California, one of the wealthiest and most expensive areas in the nation. But, the plight of Disneyland workers is not unique. Recently, a Walmart store in northeastern Ohio held a food drive to provide Thanksgiving meals for its employees, and McDonald’s published a sample monthly budget that assumed its workers would need a second job. 

Wages have risen modestly recently, but there is no evidence that the vast income gap has narrowed. Trump can hardly be blamed for this, nor is his administration alone in presiding over an economy in which income distribution is so wide. President Barack Obama did little or nothing to diminish the income gap, and Republicans and Democrats in Congress have provided no solutions to the problem.

The second trend concerns the regional distribution of prosperity in modern America, a disparity that poses a peculiar political problem for President Trump. A recent analysis prepared by the Brookings Institution for The Washington Post illustrates uneven national growth patterns. In this decade, large metropolitan areas — those with one-million people or more or more — witnessed 16.7 percent employment growth. Metropolitan areas with populations between 250,000 and one million experienced 11.6 percent employment gain, while those with fewer than 250,000 people — small towns and cities — saw only a measly 0.4 percent growth in jobs. Rural areas experienced a 4.4 percent growth in new jobs. The author of the analysis, Mark Muro, says, “This decade has been on balance, lousy for small towns and rural areas, with job growth heavily tilted to big metros or larger mid-sized cities.”

Economic growth has mimicked employment trends in its regional nature. The prosperity of the Obama years and year one of Trump is concentrated in the nation’s big cities — particularly along the coasts — where the digital and information revolutions are taking place. Politically, this means the most prosperous areas voted overwhelmingly for Hillary Clinton in 2016. Clinton captured a majority of the vote in metropolitan regions of over one-million people. Trump edged Clinton in mid-sized areas, but he won handily in smaller metropolitan areas, and he captured huge majorities in rural regions. Counties supporting Clinton produced two-thirds of the country’s new jobs and three-fourths of its economic growth in recent years. 

Ron Brownstein calls the juxtaposition of this economic and electoral data “the prosperity paradox” because “the nation’s economic growth is being driven by the places that are most resistant” to the current president. Trump, after all, won the presidency championing the “forgotten men and women” of rural and small-town America. But, nothing he has done, at least so far, has narrowed the gap in income distribution nationally nor reduced the geographic disparity regarding prosperity. While Trump and Republicans claim the mammoth tax cut they pushed through Congress will benefit the middle class, most analyses demonstrate that the long-term effects of the law will exacerbate income inequality. And, the tax cut is the only legislation Trump can claim thus far.

As for the “forgotten” Americans, Trump says his trade policy is geared to benefit them by returning jobs to the steel mills of western Pennsylvania. While there is plenty of evidence to suggest Trump slapped new tariffs on steel and aluminum in a fit of pique, the protectionist measures are couched in terms of benefitting workers. This, of course, ignores the impact of tariffs on everyone else — through higher prices — and it disregards economic shifts in America away from industrial reliance on steel as well as more efficient production methods utilizing fewer workers.

President Donald Trump addressing supporters at a rally in Moon Township, Pennsylvania.

Trump’s failure to help those voters most loyal to him may have an impact in 2018 and 2020. Widening disparities in income inequality and the distribution of prosperity threaten to leave the “typical” Trump voter further behind. Trump probably knows this, which explains his rather inchoate speech to his supporters this past weekend in western Pennsylvania. If he cannot give his voters jobs, he certainly can offer them red meat. Unfortunately, that is not real food for their tables. 

Posted March 13, 2018

 

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