The Working Class Demands Results

The Pitch: Economic Update for February 17th, 2022

(The Pitch is a weekly economics newsletter written by Zach Silk. Follow here on Medium or sign up for free on Substack to receive a new issue in your inbox every Thursday.)

Friends,

I want to call your attention to a piece in the American Prospect titled “Democrats, Speak to Working-Class Discontent.” It’s written by Stanley Greenberg, the Democratic pollster who coined the term “Reagan Democrats” back in the 1980s. At that time, the party largely ignored Greenberg’s warnings that President Reagan was winning over a generation of working-class Democrats with his simple, affirmative messages — and the party paid the price over the next three decades. Greenberg has studied recent polling, and he’s back to ring a new alarm bell about working-class voters: “Today, the Democrats’ working-class problem isn’t limited to white workers,” he writes. “The party is also losing support from working-class Blacks and Hispanics — a daunting 12 points off their margin since 2016.”

Greenberg found that working-class voters, regardless of race, love progressive, middle-out economics. But, and here’s the problem, those same voters don’t believe Democrats want to promote those policies, or they don’t know that Democrats support those policies. In a simulated midterm election where Democrats argued that “We should bend over backwards for those who work hard so we create jobs in America and grow the middle class again,” Democrats’ results improved by five percentage points — enough to turn the tide of dozens of tight Congressional elections around the country.

It’s not enough for our leaders to believe that working-class Americans desperately need a raise — they need to communicate that message directly to working-class Americans and then they need to enact policies that support those words. It sounds simplistic, but this is a lesson that Democrats failed to internalize back in the 1980s, and that fatal mistake unleashed four decades of trickle-down economics that has enriched the wealthy few at the expense of everyone else. Democrats can’t afford to leave the working class behind again.

The Latest Economic News and Updates

Black unemployment numbers are finally down, but historical gaps persist

Deon Osborne at the Black Wall Street Times reports that the Black unemployment rate has fallen to 6.9 percent — the lowest rate since the pandemic began. And while he notes that Black unemployment has fallen faster under the Biden Administration than it did under the Obama Administration, Osborne also points out that “the unemployment rate for Black Americans has remained double that of Whites, no matter who is president and no matter how well the economy is doing.” You can see that in the chart below, which tracks unemployment for Black men and women (green and purple lines, respectively) with unemployment for white men and women (blue and red lines, respectively) over the last 50 years:

Obviously, this is not a new problem in American history. Michelle Holder has explored the history of unemployment for Black men during recessions and recoveries for the Washington Center for Equitable Growth. She finds that Black men are pushed out of the labor force in huge numbers during recessions, and they face difficulties when rejoining the workforce during recoveries. Holder offers several policy solutions including a federal jobs guarantee and more equitable employment screening policies that can help finally bring Black unemployment in line with white unemployment.

Welcome to the Great Exhaustion

As part of the New York Times Magazine’s special “Future of Work” issue, Noreen Malone wrote an excellent essay titled “The Age of Anti-Ambition,” which suggests that the Great Resignation is about more than just the pandemic — it’s a rational response to decades of ever-more-frenetic work culture in America, coupled with income inequality. Americans paused during the pandemic, Malone theorizes, and finally understood that they weren’t up for the never-ending hamster-wheel of work anymore.

“For decades, job productivity has been increasing while real wages haven’t. People were already stretched thin,” Malone writes, adding that “it’s as if our whole society is burned out. The pandemic may have alerted new swaths of people to their distaste for their jobs — or exhausted them past the point where there’s anything to enjoy about jobs they used to like.”

But what about those workers who can’t afford to step out of the workforce? Elise Gould has examined the latest Census Pulse data and found that five million more Americans are back in the labor market in early February than there were in early January, when the Omicron variant was at its peak. Drilling down into the numbers, she finds that nearly one-fifth of those five million workers who rejoined the workforce this month were either sick with Covid themselves or caring for sick relatives in January.

If you’re not getting a 7.6 percent raise, you’re not getting a raise

For Vox, Rani Molla explains in detail why all those nice, big pay raises workers have been getting are in fact not measuring up to increased inflation. The average American worker would have to receive a 7.6 percent pay bump to make up for the bite that higher prices are taking out of their paychecks, and some employers are trying to make up that difference by adding additional benefits and perks to their working environment.

I especially appreciated this graphic showing what promised pay raises (the gray bars) actually work out to (the red bars) for real-world workers at retail, restaurant, and grocery chains:

Americans are satisfied with their own lives but dissatisfied with the direction of the country

A new Gallup poll makes an unbelievably frustrating discovery: “Americans’ satisfaction with the direction of the country has fallen to 17%, the lowest in a year. At the same time, Americans’ satisfaction with their own lives has ticked up to 85%, just five points shy of the 2020 record-high point.” Of course, there’s some partisan spin to the polling — only four percent of Republicans are satisfied with the country’s direction — but the dissatisfaction is widespread: only 30 percent of Democrats are happy with where America is going.

On an economic level, there’s often been a great deal of correlation between one’s own economic situation and how one feels about the direction of the country. But those numbers have been spreading further and further apart as the country has become more and more hyperpartisanized. And while the “direction” numbers almost always are highly tuned to economic factors, it’s impossible to discern how much of that dissatisfaction with direction simply relates to the ongoing pandemic and its effects on everyday life.

Perhaps what this poll best illustrates is the fact that polling has become very complicated in the age of the internet, and even more unreliable as partisanship has grown over the last decade. Directional polling is especially broken, and should be regarded, skeptically, as one data-point out of many when shaping policy.

A useful new tool to help understand the size of American inequality

For Time magazine, Belinda Luscombe writes about a new online tool that tracks American income inequality at a granular level that was previously unthinkable for non-economists. The tool, titled Real Time Inequality, allows users to compare both income and wealth inequality between different percentiles of the economy, basically providing a real-time tracker of how much and how quickly the wealthiest one percent is absorbing the wealth that everyone else in the economy used to hold.

Real Time Inequality can also be used for other economic reasons, like charting the impact of pandemic-era stimulus payments on various sectors of the economy:

But it’s the growing inequality that deserves most of our attention — particularly the inequality that has grown during the last two years of the pandemic. For The Nation, John Nichols took a big swing by calling for a 92 percent tax on the billionaires who have profited to the tune of billions of dollars during the pandemic. It’s a proposal to tax the rich “back to where they stood when the pandemic surged in March 2020. With authorization from Congress, Internal Revenue Service auditors can calculate the excess profits of the billionaire class and then collect the cash in the spirit of shared sacrifice.”

For my two cents’ worth, I don’t think Nichols’s proposal is actionable, but these kinds of thought experiments are useful because they help us understand what policy is capable of, and what our goals and parameters for good policy should be.

Real-Time Economic Analysis

Civic Ventures provides regular commentary on our content channels, including analysis of the trickle-down policies that have dramatically expanded inequality over the last 40 years, and explanations of policies that will build a stronger and more inclusive economy. Every week I provide a roundup of some of our work here, but you can also subscribe to our podcast, Pitchfork Economics; sign up for the email list of our political action allies at Civic Action; subscribe to our Medium publication, Civic Skunk Works; and follow us on Twitter and Facebook.

• On Civic Action Live, we’ll be discussing why Democrats are losing ground among nonwhite working class voters, why Americans are happy with their own lives but unhappy with the direction of the country, and how much of American paychecks have been chewed up by inflation. Join us on Friday at 10:30 am.
• On the Pitchfork Economics podcast, Nick and Goldy field listener questions in a fun AMA (Ask Me Anything) episode. The great thing about these episodes is that they cover a wide range of topics not typically discussed on the show, including what people should do if they want to get involved in political work, why union busting is illegal, and exactly why giving a bunch of money to the wealthiest Americans isn’t good for the economy.
• For his Insider column this week, Paul runs down the nuts and bolts of inflation, explaining three important points that have largely gone undiscussed over the last six months. He ends the piece with a discussion about why corporate greed is a major factor for rising prices, which caught the attention of one of the nation’s leading economic thinkers. It’s not every day your piece is shared by Senator Elizabeth Warren:

Closing Thoughts

I wanted to take a moment to reflect on policy and legislative successes we’ve seen in my home city of Seattle and my home state of Washington. The first is JumpStart Seattle, a tax on the employers of high-salary workers, raising .7 percent for every salary over $150,000, and 1.4 percent for every salary over $500,000. While the usual group of trickle-downers threatened (as they always do) that the policy would scare wealthy businesses away from Seattle, JumpStart was a huge success in its first year, raising $231 in revenue — beating expectations and adding much-needed funds for housing, small business assistance, environmental protections, and combating the displacement of communities of color.

“Without JumpStart, Seattle would have faced an austerity budget during COVID. When we needed critical city services, and we would have been forced to scale back support and cut jobs,” City Councilmember Teresa Mosqueda told MyNorthwest, adding, “JumpStart didn’t only invigorate our economic recovery during a global pandemic, it is jump starting and fundamentally enhancing the services that make communities and our local economy more stable and healthier for the long run.”

The other local highlight is a bill passed this week in the Washington state Senate that would ban the sale of high-capacity magazines, which are often used by mass shooters. This bill still has to go on to the state House for a vote, but ten years ago even a commonsense measure like this one would have never even been up for a serious discussion.

Many people know the famous Otto von Bismarck quote about politics being the art of the possible, but in my experience that’s not quite right. Both JumpStart and the ban on high-capacity magazines were considered to be impossible in local politics a few years ago, but now they’re a part of the mainstream discourse. So the next time someone tries to tell you that the policy you’re championing will never happen, you should interpret that as a dare. With all due respect to von Bismarck, I believe that politics is the art of transforming the impossible into the inevitable.

Be kind. Be brave. Get vaccinated — and don’t forget your booster.

Zach