US workers have gone backwards under Biden and Harris

Of all the good news Vice President Kamala Harris has received since replacing Joe Biden at the top of the Democratic ticket, perhaps none was more surprising than the finding that more Americans say they trust her, rather than Trump, to steer the US economy.

The difference that the monthly Financial Times poll found—42 percent trusting Harris, compared to 41 percent trusting Trump—isn’t particularly significant; it’s more of a tie.

But it was the first time the Democratic ticket was even in the running on this measure. And yet, for many liberal pundits, the fact that so many people distrusted Biden on the economy was just a failure of Democratic messaging.

Judged from the vantage of macroeconomic indicators, the US economy is, as an economist quoted in the Wall Street Journal put it, “the envy of the world”. Of all the advanced industrial economies, the US has made the strongest recovery from the covid crisis of 2020-21.

The lowest unemployment rates since the 1960s; the lowest rate of Black unemployment in 50 years; wage gains from 2019 to 2023 to the poorest 10 percent of the working class surpassing those of higher-income groups; a four-fold increase since 2021 in construction spending for manufacturing—these are all talking points that Biden/Harris partisans cite.

Yet the incumbent Democratic president suffers from historic rates of unpopularity and was probably on track to lose to Trump in November before he stepped down. This was enough to befuddle all of Biden’s key advisers.

But socialists aren’t so befuddled when taking a hard look at the reality of life and work in the US. From that vantage point, all of that economic glitter isn’t gold.

Start with real wages. An Economic Policy Institute analysis of data going back to 1949 concluded: “Economic performance is stronger when Democrats hold the White House”. While the Biden administration is no exception, when compared to the Trump administration, one statistic stood out.

That was “percent growth of real wages of production and non-supervisory workers”. In non-statistical jargon, that means workers’ wages, adjusted to show their buying power. Two years into the Biden administration, workers had lost ground. The only other administrations in which real wages declined were the Carter, Reagan and George H.W. Bush administrations—those in power when the employers’ offensive against labour, and high inflation, attacked workers’ living standards. According to this statistic, Biden did worse than Reagan and Bush.

The post-pandemic decline in inflation might push real wages into positive territory by the end of Biden’s four years. But the fact that this is no certainty is part of the explanation for why Biden wasn’t “getting credit” for the economic trends that most economists and politicians consider positive for incumbents.

It’s common for people to think about the price of eggs or petrol when they think about inflation. But aside from commodities like these, the prices of which fluctuate with supply and demand, there are essential commodities and services with long-term price increases. Rent, housing, child care, education and health care top the list here. Each has undergone double-digit increases in real costs over the last several decades. This means that life’s everyday “background” expenses—especially for people under the age of 40—are a constant source of stress and debilitating debt, even for people with decent jobs.

“This is the most money we’ve ever made, and this is the brokest we’ve ever felt”, Nicole Lewis, a teaching assistant living with her husband and three children in Michigan, recently told the Wall Street Journal’s David Uberti.

Taking child care as an example, journalist Annie Lowrey notes:

“So childcare for [kids aged] zero to five, this is a cost that families are paying for a relatively short time in their lives. And it is absolutely, absolutely crushing. Average childcare costs for a year are between $18,000 and $24,000. And the problem is not just with how much people are paying, it’s that people don’t pay. A lot of folks cannot afford that. And we do not have enough coverage through programs like Head Start [a federally funded early child education program for low-income families]. Head Start is severely underfunded. One in five kids who would qualify for Head Start, gets Head Start.

“And so, folks drop out of the labor force. They rearrange their work schedules. They get family members to help. And the issue is that we have basically maxed out what people can afford to pay, and that still doesn’t mean that childcare workers who are among the lowest paid in American life have a living wage. Most childcare workers are still making $14 or $15 an hour. It’s just not enough.”

In a bout of covid-stimulated experimentation, the Biden government’s 2021 American Rescue Plan provided tax subsidies to working families. These had the dramatic impact of cutting child poverty in half in one year. But to restore capitalist “normality” and scotch any idea that working people should expect their government to look out for them, the administration allowed the tax credits to lapse near the end of 2021. The predictable result was an increase in child poverty—to levels higher than they were pre-pandemic.

Biden scrapped plans for increased subsidies for child care, universal pre-kindergarten, and wage increases for childcare workers as his “Build Back Better” plan was rebranded as the Inflation Reduction Act (IRA) in 2022. The IRA took steps to address some costs, like the outrageous prices Americans pay for prescription medications. But the core of the IRA was billions in corporate subsidies and tax incentives to stimulate a transition to an electrified economy that can compete more directly with China.

The Biden/Harris recovery has also been highly unequal. According to one estimate by the Economic Policy Institute, the bottom 50 percent of earners increased their incomes by almost 5 percent. But the top 1 percent has gained more than 10 percent. That is the highest return for that mega-rich slice of the population since the Reagan administration in the 1980s.

The lowest-income workers have earned the largest wage gains in an economic recovery in decades. Yet, even working full time, these workers earn less than $30,000 a year. US income inequality is more extreme today than it was in 1963.

It’s common to describe US politics as “polarised”. But it’s also clear that the economic conditions for millions of ordinary people contribute to that polarisation. It’s not just the reason the November election is a toss-up despite the Biden-Harris “strong economy”. It’s also why millions feel that the major institutions of government and business are rigged against them, no matter which party is in power.