The economic policy of the Trump administration appears to be bearing fruit for working class households in the nation. According to Bureau of Labor statistics, blue-collar wages have begun taking off. In the three quarters of 2017, wage and salary levels for factory workers, drivers, and construction workers rose faster than for professionals and managers. In some cases, the growth for blue-collar workers surpassed 4 percent.

In 2015 median household income, adjusted for inflation, rose 5.2 percent. In 2016, it rose by another 3.2 percent. During that time, lower-income households gained more, on average, than richer households. Stagnant wages marked the period the followed the end of the recession in June 2009 when wages and salaries rose by only 8.7 percent. At that time, prices increased at 9.5 percent. The median worker’s income-adjusted earnings in 2014 were no greater than they were in 2000. Concern over stagnant economic growth is often cited as one of the issues that drove voters to vote for Donald Trump in 2016. 

As unemployment fell from over 6 percent in the middle of 2014 to the 4.1 percent of today, wage growth has increased. Labor shortages appear to be acute in some areas of the economy. For example, tile and terrazzo contractors earn 11 percent more per hour than in 2016 and one-third more than in 2014. Strong demand is driving the labor market growth. While in manufacturing, output per hour worked is just 0.1 percent higher than a year ago, and has not grown at all in the past five years, production and wages have increased. 

Part of the reason may be the decline in the value of the U.S. dollar. It fell by almost 9 percent between January 1 and September 15, spurring international demand for goods Made in America. In the first three quarters of 2017, exports of good went up by almost 4 percent over 2016. Rising oil prices are driving investment in the oil shale business, while economists at the UBS bank estimate the overall investment in energy has been responsible for almost three-fifths of all economic growth this year. If trends continue, higher wages may drive more men, who are dominant in blue-collar jobs, to look for work. The improved labor market has encouraged workers in the 25-54 age demographic to look for work over the last two years. However, the increase in workforce participation has been almost entirely dominated by women. Currently, at 89 percent, the participation among men ages 24 to 54 remains at a near record low.

the strengthening labour market has encouraged more jobseeking by so-called prime-aged workers, ie, those aged between 25 and 54. But the increase in workforce participation has been almost entirely concentrated among women (see chart). At 89%, male prime-age participation remains close to a record low.

An analysis by the leftist Economic Policy Institute suggests that rising wages will cut into the bottom line of rich Americans. Rising levels of pay for lower- and middle-income workers have been met with a drop of 3.1 percent for the top 1 percent of earners in 2016: lower than they were in 2007 during the recession. This is reflected in a warning by the Texas Roadhouse restaurant chain, which warned investors recently that they should expect their wage bill to grow by 7 percent to 8 percent this year.

On November 3, the Labor Department announced that 216,000 new jobs were filled in October.

Donald Trump Jr. tweeted on Wednesday: "Shocking! He campaigned on just that, cutting excessive regulation, tax cuts, small govt, fighting for American jobs & for US companies etc... Confidence goes through the roof and the middle class wins. It’s a nice change to have a leader who actually loves & fights for America!"  

 



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Martin Barillas is a former US diplomat and the editor of Spero News.

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