Will Trump’s Economy Restore the American Middle Class?

In the midst of a record-breaking economy, middle America is still playing catch-up
February 19, 2020 Updated: February 20, 2020


With the 2020 election season officially upon us, the Democratic candidates are all keen to distinguish themselves by what they’re promising to deliver to voters. Many, if not most of those voters, would consider themselves middle class, even though “middle class” is defined much differently today than two or three decades ago.

But President Donald Trump’s economy hasn’t yet restored the middle class to where it once was.

Of course, by most popular measures, the U.S. economy is doing incredibly well. From record-low unemployment across all demographics to a record-high stock market and rising wages, Americans are definitely better off than they were four years ago. But in other important areas, quality of life for the middle class as a whole remains tenuous.

But wait, this is the best economy in half a century, right?

Well, in some areas, that’s definitely true. In general, the cost of living may be somewhat more affordable with the booming economy, but in others, as Annie Lowery of The Atlantic points out in a recent article, there are some disturbing realities that have drastically undercut the American middle class.

Those negative trends are the three big pillars of the U.S. middle class: housing, health care, and education. Today, about half of the so-called middle class can’t afford any of those. In fact, 40 percent of American adults don’t have an extra $400 in the bank to cover even a minimal unexpected expense. And, as you might expect, many also carry heavy amounts of credit card debt.

It didn’t use to be this way.

Meaning of Middle Class Has Changed

The reality of the “middle class” has changed and not for the better. It used to be that middle-class American families could live comfortably with one wage earner in the home, own two cars, put their kids through college, and enjoy their retirement on a small pension and social security.

It seems almost surreal to think about it …

But there was a time when the paycheck from middle-class professions such as teaching, nursing, engineering, business management, and the like was more than sufficient to allow families to live comfortably. Even trade occupations, such as carpentry, plumbing, or electrical, would more than cover mortgage payments and other monthly expenses.

Furthermore, health care insurance was affordable because medical care was, too. College was also affordable. Parents saved money on the side to pay for college educations without worrying about saddling their kids with debts the size of mortgages.

Federal Policies Gutted the Middle Class

But the days of the comfortable middle class are definitely behind us. Coincidentally—or perhaps not so much—the decline of the American middle class tracked rather closely the imposition of globalism on the U.S. economy.

For instance, the imposition of NAFTA on American workers in the mid-1990s led to factories moving from the United States to Mexico, and a rise in immigrants—mainly illegal—flooding into the country. This drove wages downward, turning formerly decent-paying, middle-class trade occupations into low-to-minimum wage jobs dominated by cheap, illegal labor.

A few years later, the normalization of U.S.–China relations led to a further mass exodus of U.S. manufacturing jobs to China. And the influx of labor kept wages low, while the social burden of immigrants, from unpaid medical care, subsidized housing, food, education, and other expenses, went skyward. Consequently, so did taxes to help pay for those costs.

The Real Cost of Living

And who paid the bulk of those taxes? Not the poor; and not the rich, either. It was, of course, the American middle class.

Meanwhile, middle-class wage rates stalled in the mid-1990s and stayed flat for the next two decades. And why wouldn’t they? Federal trade and immigration policies had destroyed the economic conditions that had, for more than a century, allowed the middle class to thrive.

But as the U.S. population and demand for college degrees continued to grow amid three recessions from 1991 to 2010, college space didn’t keep up. And as the wages of former occupations that were once the backbone of the middle class continued to stall, the need and demand for a college education went up, but the supply of college classrooms didn’t and continually fell behind. It’s only since 2012 that demand has fallen. Costs, however, continue to rise, increasing by 25 percent in the past decade.

This college education supply shortage was made worse by the U.S. government offering student loans to help middle- and lower-class students pay for the ever-rising costs of a college education. It enabled more students—legal and illegal—to be able to “afford” a college education, but drove costs and demand up even more.

This same dynamic has contributed to the extreme rise in housing costs. High demand in formerly affordable areas has outstripped many middle-class families’ ability to buy a house, even with two wage earners. There are other factors as well, including lax lending standards, low interest rates, and loose monetary policies by the Federal Reserve.

The ‘New’ Middle-Class Reality

Today, teachers often work second jobs to make ends meet. The rise of the gig economy is further evidence of just how insufficient middle-class wages have become. Housing prices continue to outpace wage rate increases, moving further beyond the reach of middle-class Americans.

What’s more, double-digit health care inflation means that fewer Americans can afford quality care. In fact, medical bills are the top cause of bankruptcy and financial hardship for the middle class.

And of course, education costs continue to skyrocket. As a result, so does the level of student debt among the middle class. This puts an additional burden on their ability to save for a house, retirement, or just for a rainy day.

Saving the Middle Class Must Be a Top Priority

The sad irony today is that the three metrics of life that used to be the pillars of the middle class are increasingly out of reach for most Americans. That must change, and sooner rather than later. Without a vibrant and solvent middle class, the United States ceases to be the great land of opportunity and political stability that it has almost always been.

The question is, if it can be done, which party will have the vision and political will to do what needs to be done to do it? Is what Bernie, Biden, Buttigieg, Bloomberg, or Klobuchar offering the American people the answer?

Given the statist agendas of these left-wing and outright socialist candidates, it isn’t likely that any of them have the desire or policies that will help the American middle class. Their answers differ mainly in rhetoric, but not so much in substance.

All will continue similar policies that have led to the destruction of the middle class over the past three decades: higher taxes on the middle class to fund more low-quality health care for those who don’t belong here, globalization that sends jobs out of the country, porous borders to deepen their voter base, and more state benefits for people who don’t pay into the system.

That leaves a massive opportunity for the current administration. Presuming Trump is re-elected, he must focus his efforts on restoring the middle class. That goes well beyond the stock market and a ready military.

He must restore those three middle-class pillars of affordable home ownership, health care, and education. That means further and permanently lowering individual tax rates, breaking the health care provider cartels to drive market competition, and allowing individuals and family the same low group rates through any affiliation. As for wages, it means stopping U.S. firms from hiring illegal labor, or importing labor to replace U.S. skilled workers in the high-paying high-tech industry.

Will these policies resurrect the middle class overnight? Of course not. But they would be steps in the right direction.

James Gorrie is a writer and speaker based in Southern California. He is the author of “The China Crisis.”

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

James Gorrie
James R. Gorrie is the author of “The China Crisis” (Wiley, 2013) and writes on his blog, TheBananaRepublican.com. He is based in Southern California.