A “friend” brings to my attention the latest column from Rich Lowry, editor of National Review. With the stock market tanking, he has some advice for Donald Trump:
For a president who underlined the increasing importance of working-class whites to the GOP coalition and who trampled so much bipartisan economic orthodoxy during the campaign, to be so overtly obsessed with the stock market is a strange disconnect….This isn’t how he should view it, and it was shortsighted to be so boastful about the good times.
….Wages would be a worthy new object of his attention. Trump has the ability to shift the public conversation onto ground of his choosing, and it’d be better if wages didn’t often take a back seat to the stock market and GDP growth. Trump has a story to tell here. A historically low unemployment rate is having an effect. Wages grew at a 3.1 percent rate year over year in October and November, the highest level since 2009.
This illustrates the problem with economics and the right: they believe their own nonsense too often. Lowry is trying to make a purely political point here, namely that if the stock market is going down, the president should start boasting about something that’s going up. Obviously that makes a kind of hardnosed pragmatic sense, but the problem is that wages aren’t exactly kicking ass these days.
Here’s a simple chart showing three different measures of wage growth over the past few years:
There’s no story here for Trump. The red line is the Employment Compensation Index, which includes everything that employers have to pay for: wages, Social Security, health insurance, etc. The green line is average cash earnings growth for everyone from burger flippers to neurosurgeons. The gray line is cash earnings growth solely for blue collar workers, who make up about 70 percent of the workforce.
I included all three of these to forestall any griping that I was cherry picking. But they all tell the same story: real wage growth during the Trump presidency is pretty low. In the most recent quarter, real wages grew about 0.2 percent over last year, and a guesstimate based on October and November numbers suggests that in the final quarter real wages grew about 0.4 percent. That’s better than no wage growth, but hardly something Trump can be hanging his reelection hat on.
As for why Trump brags on the stock market, it’s because he’s a billionaire Republican and billionaire Republicans care about the stock market. Likewise, he doesn’t care much about wages because higher wages give workers more leverage and this annoys billionaire Republicans. I’m pretty sure Lowry knows this, since Republicans scream blue murder about hyperinflation being right around the corner every time wages for ordinary workers go up half a percent.
As for Trump, he prefers to demagogue about the border wall, which is perfect for him. He can pretend that a wall will cut down on illegal immigration and therefore help workers, which gets him applause from the working class. Business owners, however, know that the wall won’t do anything, so they’re happy to let Trump rant. Everyone’s happy.