By The Editorial Board | The Wall Street
Journal
Former
President Barack Obama and President Donald Trump
PHOTO: BILL
PUGLIANO/GETTY IMAGES; NICHOLAS KAMM/AGENCE FRANCE-PRESSE/GETTY IMAGES
Trump’s policies are helping workers more than Obama’s did.
Judging from last week’s debate, Democrats running for President
see America as a Dickensian nightmare of inequality. It’s the best of times for
millionaires and billionaires, and the worst of times for everybody else.
Time to wake up from the Barack Obama economy, folks, and
admit how many more Americans are prospering from the faster economic growth
and tighter labor market after the policy changes of 2017.
“Who is this economy really working for? It’s doing great
for a thinner and thinner slice at the top,” Massachusetts Sen. Elizabeth
Warren declared at the debate. “When you’ve got a government, when you’ve got
an economy that does great for those with money and isn’t doing great for
everyone else, that is corruption, pure and simple.”
Sen. Cory Booker, who hails from high-tax New Jersey,
moaned that “I live in a low-income black and brown community. I see every
single day that this economy is not working for average Americans.”
California Sen. Kamala Harris added: “You ask [the
President], how are you measuring the greatness of this economy of yours? And
they point to the jobless numbers.”
So job numbers and other economic evidence are fake news?
Hardly. The reality is that wages are rising at the fastest rate in a decade
for lower-skilled workers, and unemployment among less-educated Americans and
minorities is near a record low. Democrats want Americans to believe the
fictions they spin rather than what they see with their own eyes.
The press this week has noted that the economic expansion
reached its 10th anniversary, the longest on record. But the accounts ignore
that the last two years have been far different than the first eight in economic
policies and results. We’re long enough into the Trump era to track the
differences.
***
Start with Mr. Booker’s claim that minorities are being
left behind.
Really? The jobless rate for blacks is 6.2%,
which is only 2.9 percentage-points higher than for whites versus a 4.6
percentage-point difference before the start of the 2008 recession.
Unemployment has fallen twice as much among blacks as whites since December
2016.
Nearly one million more blacks and two
million more Hispanics are employed than when Barack Obama left office, and
minorities account for more than half of all new jobs created during the Trump
Presidency.
Unemployment among black women has hovered near 5% for
the last six months, the lowest since 1972, and a mere 3.5% of high school
graduates are unemployed.
But what about Senator Harris’s assertion that folks are
stringing together jobs to make ends meet? About 5% of Americans hold more than
one job, and this rate has held relatively constant since 2010.
Yet there are now 1.3 million fewer Americans working
part-time for economic reasons than at the end of the Obama Presidency.
A tighter job market is also pushing up wages for the
average Cory or Kamala.
Average hourly earnings for production-level
manufacturing workers have grown at an annual rate of 2.8% during the Trump
Presidency compared to 1.9% during Barack Obama’s second term. Production-level
manufacturing wages have accelerated even faster in Pennsylvania, Michigan and
Indiana.
While parts of Appalachia continue to struggle from a
decline in coal mining, shale-gas drilling has created thousands of jobs
including downstream in pipeline construction and petrochemicals—all of which
Democrats want to kill.
Private worker wage growth in West Virginia has
averaged 5.1% annually during the Trump Presidency versus 1.2% in the second
Obama term.
Mining and manufacturing have especially benefited from
the Trump Administration’s deregulation, but wages have been growing faster for
production-line workers across industries.
Productivity growth spurred by capital investment and tax
reform increased markedly last year, which should lift wages over time even if
job growth weakens.
Democrats are trying to woo folks in swing states who have
been harmed by President Trump’s trade brawls.
But per capita incomes have grown at significantly faster
rates under President Trump than they did under Barack Obama in Pennsylvania,
Ohio, Nevada, Wisconsin and even Iowa despite retaliatory tariffs on American
exports.
The disparity between middle-America and coastal bastions
of affluence has also shrunk. Incomes in Maryland, Massachusetts and Hawaii
grew faster than the national average during the second Obama term but have
since tracked lower. While New York State has become wealthier, its finance
income over the last two years has declined.
And here is the great paradox of the Barack Obama
economy. The Federal Reserve’s bond purchases and near-zero interest rates for
eight years drove up asset values and let corporations borrow cheaply while the
Administration’s punishing regulations bred business uncertainty that depressed
investment in human and physical capital. Those with financial assets prospered
more than middle-class wage earners.
The Obama Democrats talked constantly
about inequality rather than growth, and the result was less growth and more
inequality.
The Trump Administration has for the most part focused on
growth. Its policy mix of deregulation and tax reform has unleashed more
private investment and job creation that has lifted productivity and wages for
the non-affluent. The result has been faster growth and less inequality.
Corporate profits have grown four times as much during
President Trump’s first two years than during Mr. Obama’s second term. Yet
investor dividend payments increased more during the Obama Presidency as
businesses pulled back on investing in equipment, buildings and workers.
There are no guarantees this growth will continue, and
bad trade and monetary policy could derail it.
But the Democrats now running for President want to
return to the Obama policy mix of high taxes, willy-nilly regulation and income
redistribution, and more of it.
To win the economic argument they have to deny
the reality that Donald Trump’s policies are helping the Americans that
Democratic policies left behind.
