A tougher stance in trade policy. “Relocation vouchers” to help unemployed Americans move to job opportunities. Maybe not deporting all those immigrants who have entered the country illegally.
Those are some of the policies economists say might help answer the financial anxieties that have mobilized many Americans behind the right-wing populism of Donald Trump’s presidential candidacy.
Mr. Trump’s appeal on the campaign trail – drawing large crowds, including many who aren’t normally active in politics – has arguably been the central story of the Republican primary. Economic worries have been one of the central factors behind the real estate magnate’s appeal.
Polls have found that, compared with other candidates, Trump draws strong support from white workers with a less-than-college education and less-than-average incomes. This same demographic group has seen an unexpected rise in mortality in recent years, including a rise in suicides and in deaths from alcoholism or addiction to painkiller drugs. It also has arguably been hit hardest by economic globalization, with some economic research finding that average workers in advanced economies have seen incomes stagnate.
In his campaign rallies, Trump resonates with these voters by arguing that American jobs and wages are being eroded by trade with China – and by an unchecked tide of immigrants across the southern border.
But what would actually help these voters most economically?
Economists see a range of possible solutions. Not quick fixes. And not always ones that Trump and his supporters endorse. But in many cases policies well-suited to helping these disaffected voters could also help the broader economy and Americans in general.
Here are some of the most prominent ideas – drawn from thinkers across the political spectrum, and in some cases from Trump himself:
Change the immigration dynamic. Trump has been unequivocal on illegal immigration, promising to build a wall across the southern border and to deport those in the country illegally. Some economic research supports the idea that low-skill American workers take a wage hit when unskilled immigrants arrive and compete for jobs.
But others say that if Trump were actually able to implement a massive deportation program, it would harm the overall economy by disrupting and shrinking the labor force, not to mention that the crackdown would be costly and socially divisive.
Offering a path to citizenship for undocumented immigrants – as well as tightening the border – could actually help push up wages modestly for working-class Americans, says Josh Bivens, a policy analyst at the Economic Policy Institute, a left-leaning think tank in Washington. Currently, workers int the country illegally can be easily exploited. If they were given the standard protections of United States labor law, wages could increase across the board. “It's bad to compete with workers that are really exploitable,” Mr. Bivens says.
At the other end of the labor market, reforms that welcome more high-skill immigrants – those with advanced degrees – could encourage innovation, many experts say. Trump, among others, has embraced this general idea.
Stand up for American workers on trade. The standard line of economists and of establishment policymakers (left and right) is that free trade benefits virtually all involved, and that the US has gained from trade-opening policies toward nations including Mexico and China. But here in South Carolina and across the US, skepticism of that view is widespread. Trump resonates when he champions the goal of making America a “winner” again in global economy.
“We lost a lot when we shipped everything to Mexico and China,” says Diane Bridges, a Trump follower who joined an estimated 6,500 others to hear the candidate speak in January. Looking at closed factories and textile mills in her region, and at the challenges up north in Detroit, she says politicians have made “some definite trade mistakes.”
Some economic research finds that rising trade with China has had adverse impacts on jobs and wages in many US communities. The longstanding orthodoxy on trade, while not overturned, is increasingly open to question. Peter Morici of the University of Maryland is among those who say a smarter US policy would push harder against foreign tactics of cheap currencies, subsidies, and discriminatory regulations. He praises Trump for bringing these ideas into the Republican primary race. A rival view is that if get-tough efforts are pushed too far, the result could be a global trade war that hurts all involved.
Seek “full employment,” without overloading on debt. Of all the truisms about helping average workers, perhaps the truest is that they do best when the overall economy is chugging forward. In the late 1990s, a strong economy helped wages grow as unemployment sat at historic lows; consumer optimism was far above its present levels. The question is how to achieve stronger growth without building dangerous levels of public debt or asset-price bubbles. (Remember the dot-com stock bust? Or the housing bubble?)
How to do that? Some of the ideas listed below might also help.
Invest in needed infrastructure. Trump has embraced this idea, and so do many policy experts. In a survey organized by the University of Chicago’s Booth School, a panel of US economists overwhelmingly agreed with the statement, “Because the US has underspent on new projects, maintenance, or both, the federal government has an opportunity to increase average incomes by spending more on roads, railways, bridges and airports.” The Flint water crisis also has pointed up an urgent need to invest in replacing American cities' aging lead pipes.
Boost technology and innovation. Much of the political debate on economics is a contest between proposals to reduce inequality on the left and proposals for greater freedom (to cut taxes and regulation) on the right. Some economists see an opportunity for more focus on encouraging innovation, not least so the US doesn’t lose its prowess in research and manufacturing to other nations.
Congress just took one step that may help, with a budget deal that makes the business tax credit for research and experimentation permanent. Designating 20 “manufacturing universities” and expanding manufacturing extension partnerships are among other needed steps, argues Robert Atkinson of the Information Technology and Innovation Foundation, in Washington.
Reform the corporate tax code to promote investment. Lower taxes in general may not be an elixir of growth, especially if lost revenue simply means rising public debt. But many economists say reforms that lower rates and simplify taxes for corporations could bring more investment to US shores. Details are a matter of debate, but Trump and some others in both parties are saying the code should encourage profits to be invested at home not stashed abroad.
Mend the safety net. Trump has pledged not to cut Social Security and Medicare, and that meshes well with public opinion, which is strongly opposed to cuts in those entitlements that Americans pay taxes to support during their working years. But nonpartisan budget experts say entitlement reform is needed as part of any long-term plan to preserve the nation’s fiscal health. So far, Trump and the other candidates aren’t doing very well at saying how to rebalance the books while avoiding a harsh blow to the many who rely on these programs.
To reduce poverty nationwide, many experts embrace an enhanced Earned Income Tax Credit that would encourage more people to work. Coupled with a boost in the federal minimum wage to $10.10 per hour, the result could be a significant reduction in poverty that pays for itself (by reducing reliance on other government programs), argue Isabel Sawhill and Quentin Karpilow of the Brookings Institution. Many economists say a modest minimum wage hike would help workers, on balance, even if it costs some job opportunities.
Improve schools and match training with job-market demand. Education is an often-mentioned imperative – including in Trump’s speeches and his new book, titled “Crippled America.” But improving schools isn’t quick and it’s just one piece of a larger puzzle. A more-educated worker won’t automatically earn more money, unless employers are demanding those skills. Pay for college grads has stagnated along with that for the less-skilled. Perhaps here it’s worth noting that Trump’s supporters in South Carolina and nationwide aren’t solely people with a high school diploma or less. (His support is just weighted lower on the education spectrum than that of rivals such as Sen. Marco Rubio of Florida.)
Ideas on the left include more investment – such as in early education and in helping people pay for college, ideas on the right include efforts to hold college tuition down and to revolutionize primary education through vouchers and school choice. An idea less in the political fray would be new efforts to connect those who aren’t college bound with training for middle-skill jobs that pay well and are in demand. In general, a more educated work force is a building block toward a higher-productivity economy – with higher wages – in the long run.
Promote mobility. One of the great conundrums of the current economy is that, for all of America's rise-from-poverty ethos, the country isn't doing very well compared with other nations in enabling people to rise up the economic ladder.
Relocation voucher payments to help unemployed people move to places with openings for them, or transit upgrades that focus on nontraditional commuting routes around metro areas, are some among the options some economists are floating that could help many working-class Americans. And looking at reforms focused especially on the poor, recent research suggests that shifting more public housing to mixed-income neighborhoods would give a boost to social mobility.