No, there is not a war on America's working class

Given inflation, where is America’s working class now?

Listen to certain pundits — such as Batya Ungar-Sargon, author of the new book “Second Class: How the Elites Betrayed America’s Working Men and Women” — talking about the poorest Americans, and you may get pessimistic. But it’s simply not true — there is no “war on the working class.”

Despite the bad news about inflation, wage gains for Americans have actually continued to be robust — and not just on average or for the economic elites. In fact, the bottom 20 percent of workers has seen the largest real wage gains since 2019, outpacing inflation by about 9 percentage points.

Let’s take a longer view on how working-class wages are doing, starting with data produced by the Bureau of Labor Statistics. Truck drivers represent one large working-class occupational group. There are roughly two million drivers of heavy trucks and tractor trailers in the U.S. as of 2023, and another one million drivers of light trucks. Heavy truck drivers had a median wage of $13.08 in 1997 (the earliest comparable data available), and it doubled before adjusting for inflation to $26.12 in 2023.

From 1997 to 2023, prices on average increased by about 90 percent in the U.S. This means that, if your wages doubled since 1997, they beat overall inflation; real wages of truckers rose slightly. And there are 600,000 more heavy truck drivers today compared to 1997.

Of course, the approximate doubling of prices I mentioned above is an average, and some prices have gone up more than that (while others have gone up less). The most important category that has risen sharply is housing. The median new home in the U.S. sells for about triple the cost as in 1997. This is a massive problem for everyone, including the working class.

The source of the housing problem is simple: Local zoning laws, specifically those that only allow single-family detached homes. This isn’t just happening in California and other deep-blue states. Housing prices are out of control across the country, with very few cities (whether in red or blue states) having home prices below four times the median income. We desperately need a populist movement to reform zoning laws.

Those who prefer tariffs — like Ungar-Sargon — don’t get it right. Consider steel workers: As Scott Lincicome argued in 2017, the steel industry has “probably received more government assistance than any industry in the country.” Trade protectionism is a major part of that assistance. But, since 1987 (the earliest year with comparable data), employment of steel and iron workers fell by over 55 percent in the U.S., worse than the overall national decline in manufacturing.

You can try to argue that, with more protectionism, steel jobs would have been saved, but that’s likely wrong. Steel mills are much more efficient today, requiring fewer workers. Blame automation if you must blame someone, but don’t blame trade.

But is it becoming harder to find a job now? No.

For Americans with only a high school degree (a plausible definition of “working-class”), there were about 35.3 million workers in 1992. By 2022, there were slightly fewer — about 34.5 million — but that’s not because it became harder to find a job; it is because of demographics. In 1992, there were 47.5 million Americans of working age (25-64) with only a high school diploma, but this number had fallen to 42.7 million in 2022. In other words, the employment rate of high-school graduates (with no college) had risen from 74.3 percent in 1992 to 80.8 percent in 2022.

Are immigrants hurting wages and employment prospects for native-born, working-class Americans? A new working paper by economists Alessandro Caiumi and Giovanni Peri actually suggests the opposite: Employment and wages for less educated native workers actually improved from 2000 to 2019 when exposed to more immigration. Economists have failed to find any large negative effects from immigration.

No, everything is not fine for the working class. While inflation is mostly behind us, home prices will continue to be an issue until we solve our zoning and other supply-restriction issues. There are also other policy reforms that could help Americans transition to better-paying jobs, which don’t require them to attend a four-year college.

In my home state of Arkansas, voters are being asked this November to expand lottery-funded scholarships to include vocational and technical schools, which are currently only available for students at two- and four-year colleges. Reforms like this aren’t headline-grabbing in the way that shutting down immigration or trade might be, but they are ultimately the reforms that will help the working class in the long-run.

Another potential bipartisan reform involves updating occupational licensing laws, which require government permission to work in certain professions. While ostensibly to protect consumer health and safety, these laws don’t have much effect on those goals, although they do serve as barriers to entry for many low-income occupations. Licensing is an issue where the Trump administration came out in favor of reform, as did Barack Obama before him and President Biden too.

But, above all, let’s stop telling working-class Americans a false narrative of decline. They do face problems, but the solutions involve more freedom and more choices, not fewer.

Dr. Jeremy Horpedahl is the Director of ACRE and an associate professor of economics at the University of Central Arkansas.