The Corner

Economy & Business

Re: The Roots of American Working-Class Discontent

(Earnie Grafton/REUTERS)

In response to A Debate about the Roots of American Working-Class Discontent

I’m delighted to be having this conversation with Scott, who is second to none in the thought and nuance he brings to discussions of America’s economic conditions. The good news is that we generally agree on the data itself (as a rule of thumb, I go with whatever Scott says!). But we diverge sharply on how to make sense of it and what it is telling us. My view, as I describe in The Once and Future Worker, is that American workers — specifically, those without a college degree — are facing a deepening crisis, for which primary responsibility lies with a couple generations’ worth of public policy that disregarded labor-market health. I see that segment of the labor market as fundamentally broken, and believe that repairing it should be our focus.

Let’s start from the wage data that Scott analyzes. The analysis reminds me of a skillful cross-examination by a defense attorney. A scrupulously honest attorney, to be clear. But it’s as if current economic conditions are his client and the only task is to bring forward every exculpatory line of argument and piece of evidence. So while the standard Bureau of Labor Statistics data look alarming (e.g., median earnings of a high-school graduate down 15 percent between 1979 and 2017), Scott introduces a long series of adjustments: a different price deflator, 20th and 50th percentile instead of high-school graduate, add in benefits, disaggregate by race to account for immigration, and so on. Each of these is a valid critique and a worthwhile lens to look through. But there are plenty of critiques and adjustments one might propose in the opposite direction: rising commute times, higher income volatility, artificial increases at each percentile caused by labor-force dropout at the bottom, the low marginal value of expensive health benefits, higher payroll taxes, and so forth.

To paint the most accurate picture of economic conditions, rather than the one friendliest to the status quo, our efforts at recalibration have to be balanced. (It would be rather strange if the standard government measure of wage trends were the most pessimistic one possible.) Of course, it’s always possible that some enormous overlooked factor is determinative. But that’s not the case here. Scott’s adjustments, all in one direction, still bring us to just a 10 percent compensation increase across 40 years for the median male, during a period in which GDP per capita more than doubled. We should also look beyond aggregate data and recognize that the picture may be much worse for certain places and groups. Take young men — of particular relevance for family formation and social stability. The Census Bureau reports that “in 1975, only 25 percent of men, aged 25 to 34, had incomes of less than $30,000 per year [in 2015 dollars]. By 2016, that share rose to 41 percent of young men.”

Any single measure, especially one sensitive to so many assumptions and adjustments, provides only one of the many important lines of evidence we should want to query in constructing our understanding. Here are some others, none determinative but all probative, that I think are crucial to filling out the picture:

1. Stagnation and inequality.We can celebrate a rising tide that lifts all ships even if it is lifting some faster than others. But if a sizeable population instead faces the twin ills of being stuck and left behind, that’s a real problem. First, because human beings are entitled to care about their relative position and their progress. Second, because getting left behind has tangible economic impacts if society and the economy reorient themselves around goods and services and a culture that you can’t enjoy. And third, because a rising safety net is going to make work look ever less attractive or respectable. The labor market doesn’t just have to ensure you can buy the same stuff as in 1975, it has to be one through which you can still take pride in supporting a family and participating fully in society.

One metric that I consider especially telling is to compare the median earnings of a male high-school graduate with the poverty threshold for a family of four. In 1970, that worker cleared the threshold by more than 120 percent. By 2016, he cleared it by less than 40 percent. Compare the actual 2016 income of $33,500 to the hypothetical income of $54,000 he’d be earning if he were as far beyond poverty as his 1970 predecessor.

2. What people say.We survey people about their lives, their satisfaction with the country’s direction, and the opportunity they see. On these measures, people are deeply unhappy. I find particularly striking that only 37% of Americans believe today’s children will grow up to be better off financially than their parents. Again, not determinative, but not irrelevant either.

3. Behavior. The share of prime-age males out of the labor force has increased dramatically in recent decades, and most sharply among those with less education. In Coming Apart, Charles Murray reports that in his “Fishtown,” the share of households with a full-time worker fell from 81 percent in 1960 to 53 percent in 2010. If I understand Scott, he sees this as evidence that the labor market is not the problem, because if people aren’t even looking for work then it doesn’t matter what work is available. I would say exactly the opposite — that men giving up on work entirely is prima facie evidence of a deeply broken labor market. And then there is the much wider range of social maladies that are particularly afflicting the segment of society that is under economic pressure. The ensuing public-health crisis — driven especially by rising substance-abuse and suicide rates — is so severe that life expectancy has now fallen for three straight years nationwide.

4. Theory. Lastly, while this isn’t evidence per se, I do think it relevant that the theoretical framework under which we have pursued economic growth for the past 50 years holds straightforwardly that we should expect to see the creation of “winners” and “losers.” We built an education system geared entirely toward college completers. We exposed the less-skilled segment of the labor market to extraordinary competitive pressures from both foreign workers and immigrants. The Right cheered on the demise of organized labor. The Left cheered on the throttling of heavy industry in pursuit of environmental quality. The premise was that an ever larger and more efficient economy was going to generate so much wealth that we could compensate whoever got left behind. We can’t be too surprised or skeptical when that predicted result then occurs.

None of this proves that worsening labor-market conditions are responsible for all our problems. Nor do I think the labor market is entirely responsible. But returning to the trial metaphor, the standard of proof for understanding societal challenges can’t be “beyond a reasonable doubt.” If it were, we would remain permanently paralyzed, quickly dismissing every claim in every direction. Rather, we are looking for the best understanding of conditions, the best explanation of their cause, and the best response available.

And by that standard, the preponderance of the evidence shows that a growing share of the less-educated population is worse off than 40 years ago, that a major way they are worse off is that the labor market offers them fewer opportunities for work that will support their families and communities, and that this particular failure has great explanatory power for many of their broader social problems.

Of course, culture is important too. But while Scott highlights the imperfect correlation between economic shifts and social consequences, the cultural explanation’s flaw is much deeper: It doesn’t hold for the “winners.” We all swim in the same cultural pond, generally speaking, but we swim in very different labor markets. All those college graduates with their libertine parties and their sinful music and their pornographic HBO shows still manage to find jobs, get married, raise kids in stable environments, and so forth. It would be a strange coincidence if exactly the segments of society whose economic fortunes have declined, and who our policy intentionally and explicitly ignored, just happen to be the ones suffering.

A final thought, before handing the mic back to Scott: The point of my argument is not to offer “go back to 1975” as the solution. Rather, I see acknowledgment of the serious economic problems that our nation faces and the ways in which our preexisting policy agenda has failed as the starting point for discussion of opportunities to do better. In my experience, conservatives sometimes reject the existence of problems for fear that a breach in this first line of defense leaves nothing stands between the big-government hordes and the capital. But this is backward. If we throw all of our resources into that one line of defense, and the ground under it proves weak, then the rout really will be on. Much better to confront our problems forthrightly and make our stand where the battle should be decided and where we can win, on questions of how best to address the challenges that we have.

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