That’s apparent in what I think of as the “’Big Short’ sigh.” There’s a point in that (excellent) movie when the narrator says, referring to the financial “innovators” who brought you the housing bubble and the Great Recession, “and they all went to jail … just kidding!” In fact, the narrator points out, they got bailed out, regained their profitability and quickly got back to “innovating.”
At which point, the audience let out a huge, collective sigh. People are still pissed off about that one.
The Fix: Why Bernie Sanders’s win in Michigan matters so much
The electorate’s anger is also fueled by a more basic manifestation of the inequitable economy that even Donald Trump has lamented: the long-term stagnation of wages for various groups of workers. Tom Edsall argues that “[T]he economic basis for voter anger has been building over forty years.” Bill Galston stresses that when the “implicit bargain between average citizens and their leaders” — you work hard, you get ahead — “breaks down because leaders don’t live up to their side of the bargain, all bets are off.” A group of Washington Post reporters contends that the anger behind Trump’s ascendancy “is more than just anger at the political class or rebellion against political correctness. It reflects decades of lost jobs and falling wages for a swath of blue-collar Americans, who saw their opportunities diminish and developed a sense that someone has stolen something from them.”
Why Donald Trump is winning
In order to dig a bit deeper into these claims, I’ve been looking into the wage and income trends behind them. Here is the first installment of what I’m finding, and as one friend to whom I showed the data succinctly put it: “No wonder they’re angry.”
First, the Bureau of Labor Statistics provides a long, historical look at the real hourly earnings of production, or blue-collar, workers in manufacturing. The story couldn’t be simpler: their hourly wage doubled from the 1940s to the 1970s but has flat-lined since. We could stop here and you’d get the picture (and consider the results of last night’s primary in Michigan as you look at the figure).
And remember, while the BLS only counts employed workers who report wages, we know that the employment rates of non-college-educated men have gone down as they’ve lost factory jobs over the years. That reality is a related source of voter anger, particularly in the rust belt, and it’s an important factor in the wage trend above.
The next figure gets at this job loss problem by including men who’ve dropped out of the job market (i.e., they get a zero in these computations; thanks to CBPP’s Arloc Sherman for running the data for me). The figure shows the real median and 25th percentile annual earnings of white men aged 25-54 years old, including zeroes. (If you’re in that age range and didn’t work, we keep you in the sample. Or, if you only worked half the year, you’re in there, too.)
And what a dismal plot it is. For both low- and middle-earning white guys, there’s a small bump up in the full-employment 1990s, though no great shakes. But since 2000, it’s stagnation and worse. The real median wage is down 14 percent since then; the real low wage is down a whopping 26 percent.
Both pictures clearly support the above assertions connecting anger to paychecks: decades of stagnant earnings for blue-collar factory workers and sharp declines in the real earnings of middle- and low-wage white men.
I’m sure this isn’t news to many readers. The Economic Policy Institute has been tracking such wage trends for years. (It will soon be releasing its 2015 wage decile results; I’ve seen them and they’re really interesting, but my lips are sealed for now.) And there are always caveats when looking at any such series. These data don’t follow individuals over time, so they don’t capture the “age-wage profile:” the fact that an individual’s earnings tend to rise with experience. And recent analysis suggests that controlling for the composition of wage earners can make a difference over time as well.
But accounting for these nuances would not change the story. There is a demonstrable link between real earnings and real anger.
The question is, do any of the candidates have real solutions? In fact, some do and some don’t. Details to follow.