February 26, 2020 at 5:00 am ET
After a surprisingly contentious Democratic debate last week, it’s clear that few of the so-called “moderate” candidates are ready to take on Sen. Bernie Sanders and his message of radical economic change. For the rest of the country, this means that the vilification of billionaires and big business that has fueled Sanders’ campaign is likely to continue for the foreseeable future. But despite the senator’s frequent and colorful diatribes, the average American family is doing well in today’s economy and pointing that out might just deflate a campaign that has largely succeeded on hot air.
The U.S. economy has expanded uninterrupted for more than 10 years now and the unemployment rate is the lowest it’s been in almost 50 years. The share of workers between the ages of 25 and 54 with a job is at its highest level since 2001 — suggesting that the growing economy and low unemployment rate are actually pulling workers off the sidelines and getting them back into the labor market. As new businesses and jobs are created, employers are having trouble filling job openings quickly. That increased competition for labor among employers means that just as job opportunities are increasing, wages are as well.
While wages are up across the board, workers at the lower end of the wage scale have seen their wages rise more than those with higher-paying jobs. According to the Federal Reserve Bank of Atlanta, the bottom 25 percent of wage earners rose by 4.5 percent between November 2018 and November 2019. In the same period, the highest 25 percent of wage earners saw wages increase by 2.9 percent. There is always room for improvement, but the significance of the wage growth experienced by lower-wage workers shouldn’t be ignored.
Furthermore, in his remarkably timely new book, “The American Dream is Not Dead (But Populism Could Kill It),” American Enterprise Institute scholar Michael Strain makes the case that these positive economic gains have been accruing for quite some time. Strain notes that wages for “typical workers,” who make up about 80 percent of the workforce and are not managers or supervisors, have increased by 33 percent since the summer of 1990 (after accounting for inflation). Moreover, Strain points out that the “median household saw market income gains of 21% between 1990 and 2016…” (even more after taxes and government transfers are taken into account) and households “in the bottom 20% saw their post-tax-and-transfer income grow by 66% over these years.”
Of course, acknowledging that the economy is doing well is not the same as asserting nothing needs to change or be reformed. But the economic reality does suggest that perhaps Sanders-style, sweeping federal changes might not be the best path forward. In fact, many of the economic issues facing average Americans, such as the high cost of housing and unnecessary barriers to certain occupations, are issues that exist primarily at the state and local levels.
Restrictive land-use regulations, such as restrictions on density, minimum lot size requirements, and inclusionary zoning mandates, have made building new housing in America’s most prosperous areas much more expensive and even illegal in some cases. Nationwide rent control laws, like the one put forward by Sanders, would only exacerbate these problems. Fortunately, from California to Virginia, states are considering and adopting changes to such rules in an effort to make it easier for housing supply to meet demand. As opportunities for employment are increasingly concentrated in more urban areas, making sure that housing is affordable in those areas is essential in ensuring that Americans have the opportunity to succeed.
Even when housing isn’t a problem, there are still far too many restrictions that lock people out of their preferred careers, particularly those with lower incomes or a criminal record. Often implemented through occupational licensing requirements, these restrictions are ostensibly passed to protect public safety. Despite affecting only about 5 percent of occupations in the 1950s, today it’s estimated that nearly 25 percent of occupations now require some kind of license — even though a report from the Obama administration found no evidence that such restrictions have a positive impact on quality. A variety of states have taken action to ease the burden on would-be workers, from Arizona’s universal recognition law to rolling review requirements like those passed in Nebraska and Ohio. While every state should examine these restrictions and make sure that the unnecessary barriers to employment are removed, this is ultimately a state issue rather than a federal one.
Certainly, there are ways in which federal health care and education policies could and should be reformed, but acknowledging the truth about the economy makes the case for reform over revolution. As long as those seeking the Democratic nomination for president insist that the economy has been devastating for average Americans — and that the most important solutions are at the federal level — Sanders’ blustering about economic and political revolution will continue to be successful.
Ben Wilterdink is director of programs at the Archbridge Institute, a Washington, D.C.-based think tank focused on economic mobility.
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