Trump Lifts the Economic Underdogs
The movie “Cinderella Man” depicts the incredible true-life tale of boxer James J. Braddock, who rose from abject poverty and the bread lines of the Great Depression to fame and fortune as heavyweight champion of the world -- all in a matter of months. In the film, Braddock arrives at a government welfare office to repay the assistance he had received while still poor and declares, “I believe we live in a great country, a country that’s great enough to help a man financially when he’s in trouble … and I just thought I should return it.”
Americans love such tales in which the downtrodden succeed, and underdog stories make for great cinema. In real life right now, a lot of economic underdogs in America are growing into a prosperity they did not think possible just a few years ago. Simply put, it’s time for the little guys, the underdogs, to shine. For example, while government dependency expanded massively during the slow growth of the last decade, since the Inauguration of Donald Trump almost 2 million people have dropped off of food stamps.
On Friday our country cheered yet another stellar jobs report released by the Bureau of Labor Statistics. And unlike the sluggish expansion of the Obama years, the lion’s share of this labor market strength benefits middle-income and previously ignored workers. For example, non-managerial wages accelerated at a 12-month rate of 2.7 percent, the highest in a decade. The jobless rate for non-college graduates fell to the lowest level since 2001. Even for those who did not complete high school, good news abounds, as the jobless rate for that working-class, underdog population has now been below 6 percent for the each of the past five months.
Quite clearly, President Trump is delivering on his promise to end the “American carnage” and revive depleted manufacturing in our land, as 334,000 manufacturing jobs have been created since his election. How? First the historic tax reform spurred hiring by companies, especially small businesses that are growing more confident. Further, those entrepreneurs welcome a more sensible and restrained regulatory framework as the president shrinks the burdensome footprint of federal bureaucrats.
These reforms represent a particularly powerful tailwind for Hispanics, statistically by far the most entrepreneurial demographic in America. Speaking of Hispanics, the labor market news for them has been stellar. In U.S. history, there are only eight months where Hispanics report a jobless rate below 5 percent, and an incredible seven of those eight months have been in the last year alone under Trump’s growth agenda. The news is similarly strong for blacks, where the gap between black and white unemployment shrank to the smallest disparity on record. If President Trump is a racist, as his media critics constantly (and unfairly) allege, then he is remarkably bad at it!
Joining the trend of underdogs winning, even financial markets now reflect this new reality. Lately the small-cap stocks that comprise the Russell 2000 Index massively outperform the giant multinationals that dominate the S&P 500. Why? Because investors increasingly believe in growth at home rather than overseas and small-cap companies tend to focus more domestically. So even within capital markets, the scrappy little guys have been the biggest winners of this new growth paradigm.
To be sure, there is much more work to do. After a long, tough slog for middle-income workers, we need successive years of faster growth and higher pay to truly broaden the economic benefits and reduce the incredible income inequality that has marked this century so far. But the trend, at last, shows ample reasons for optimism. It’s time for the economic Jim Braddocks – blue-collar laborers, people of color, and small companies – to rise up and claim their piece of the American Dream.