The Income Puzzle: What Populism in America Is (and Isn’t) About
Trump’s base earns more than the average American, the U.S. outpaces nearly every advanced economy, and trade imbalances aren’t what you think. So why the grievance?
Intro:
The common story goes like this: America’s populist wave is a cry from the economically left-behind — people whose livelihoods have been hollowed out by globalization, free trade, and technological change.
It’s a compelling narrative. It’s also wrong.
When you dig into the numbers, you find that the U.S. is doing better than almost anyone else — and that many of the people most drawn to the populist message are doing better than most Americans. Which raises a different question entirely: if it’s not primarily about economic deprivation, then what is it about?
1. Higher-than-Average Median Income Among Trump Supporters
In 2016, exit polls reported in The New Yorker showed Trump supporters earning an average of $72,000 a year — about $11,000 more than Clinton supporters — and that two-thirds of Trump voters had incomes higher than the national median. This doesn’t mean there aren’t financially struggling Trump supporters. It does mean the narrative of a purely “left-behind” populism misses the mark. You can be doing better than most Americans and still feel politically aggrieved.
2. The U.S. as a Global Income Leader
OECD data confirms that the median household income in the United States is higher than Switzerland, Japan, Germany, and Britain — with only Luxembourg ahead. The U.S. median is nearly double Japan’s.
Contrary to the “stagnation” claim, U.S. median incomes have risen substantially over the past several decades:
According to Federal Reserve Economic Data (FRED), real incomes for the lowest income brackets are up over 40% since the late 20th century.
The Economic Policy Institute finds that inflation-adjusted hourly wages have grown steadily over the past 30 years.
Interesting aside: While the “China Shock” is often cited as a major job destroyer — with estimates of 2 to 3.7 million U.S. jobs lost — the conservative American Enterprise Institute recently argued that even the lowest estimates overstate the case and fail to account for offsetting job gains elsewhere.
3. Trade Imbalance Is About Productivity, Not Just Policy
As Jeffrey Sachs has explained, a trade imbalance simply means that purchases of goods and services from foreign sources outpace sales of U.S. goods and services abroad. This reflects not just trade agreements but also relative productivity, competitiveness, and consumer demand.
In other words, America’s trade deficit says as much about what we buy, how much we produce, and how competitive we are, as it does about the actions of foreign governments.
Conclusion: What This Says About Our Populism
If Trump supporters are, on average, better off than the median American…
If the U.S. median income outstrips nearly every advanced economy in the world…
And if trade imbalances have more to do with productivity and competitiveness than with simple “bad deals”…
…then it becomes harder to argue that our brand of populism is primarily about economic deprivation.
It may be that culture — identity, social change, and perceived status shifts — plays a central role. Or the dissatisfaction may spring from other sources: mistrust of institutions, regional economic stagnation, political tribalism, or the erosion of a shared sense of national purpose.
To this we might add something more distinctively American: a deeply ingrained individualism that can carry with it an overweening need to be right, to justify one’s claim as an authority, and to defend a (religion-inspired?) sense of one’s own goodness — a goodness that seems to require constant validation.
More likely, several of these forces interact, reinforcing one another. Whatever the mix, the discontent is striking because it comes from a segment of the population that is, in global and historical terms, better off than most — yet still convinced it is being put upon.
Coming up: We look at a recent report from Yoni Applebaum, who says that workers willing to relocate more than 2 hours from their hometown voted for Clinton by a 6 point margin; those relocating less than 2 hours favored Trump by 9 points. Those never leaving their hometown favored Trump by 26%. This needs exploring!
Sources & Further Reading
Median Income of Trump Supporters: “How Greenwich Republicans Learned to Love Trump,” The New Yorker, May 11, 2020. https://www.newyorker.com/magazine/2020/05/11/how-greenwich-republicans-learned-to-love-trump
Exit polls showed Trump supporters earning $72,000 a year on average, with two-thirds above the national median.OECD – Household Median Income Comparisons: OECD Data Portal. https://data.oecd.org
Confirms U.S. median household income higher than Switzerland, Japan, Germany, Britain, and nearly double Japan’s, with only Luxembourg ahead.Federal Reserve Economic Data (FRED) – Real Median Income Growth: St. Louis Federal Reserve. https://fred.stlouisfed.org
Shows real incomes for the lowest income brackets up over 40% in recent decades.Economic Policy Institute – Wages and Compensation: Economic Policy Institute. https://www.epi.org
Documents steady growth in inflation-adjusted hourly wages over the last 30 years.American Enterprise Institute – The “China Shock” Debate: AEI Commentary. https://www.aei.org
Critiques the methodology behind high-end job-loss estimates from trade with China.Jeffrey Sachs – Trade Balance Fundamentals: “The Real Causes of Trade Deficits,” Project Syndicate. https://www.project-syndicate.org