Free trade and immigration have been leading political discussions across the globe in recent years. Although the crackdown on immigrants by the Trump Administration is publicly led by fears of border and national security, one of the unspoken issues with immigration are national wages as often immigrants are blamed for eroding them. One week into the federal shutdown and the Trump tariffs has risen concern about the economy with Americans.
Often cited by Americans and what drives recent political dialogs is the belief that free markets and low-cost labor have eroded America’s middle class. According to Pew Research, America’s share of the middle class has dropped from 61% in 1971 to 51% in 2023.
But is America’s middle class worse off today than it was in the 1980’s when free trade policies started to become public policy? Although many will argue that the middle class “is being ‘wiped out’ by increases in the price of housing, education” and other factors, others argue that one need only to look at the rise of the median household income since 1980 to dispel the notion that the middle class is losing to free trade, or immigration. Proponents of the middle class making more money now argue that the idea that the middle class is being eroded is based on the erroneous belief that the middle class is losing out to rising costs that salaries can’t match. This could be true, but the blame is on rising costs and not on free trade or immigration policies.
Nonetheless, pessimism among lower-income people persists. The younger generations are more skeptical of achieving the “American Dream” than their older counterparts. Not surprisingly, higher income Americans are more optimistic about reaching the “American Dream” than their poorer peers.
Norbert J. Michel, in his recently released book, Crushing Capitalism, How Populist Policies Are Threatening the American Dream argues that it is misleading to lay blame on free trade, immigration and technology for the decline of the middle class.
Instead of eroding the middle class, Michel argues that policies pushing against free trade or immigrant workforces “pose serious risks” to the America’s middle class. Claims that immigrants or even technology destroy jobs or harm the middle class are exaggerated, according to Michel, who argues that although they are initially disruptive, the long-term effects are that they boost productivity and lower prices leading to better opportunities for Americans.
Statistics show that America’s middle class has decreased proportionally since 1971 but not because they disappeared but, rather, because they became higher-income Americans.
Nonetheless, arguments that the middle-class is losing ground often ignore other important factors like the educational attainment of younger Americans. American children’s achievement test scores have been stagnant for decades. American math skills have been stagnant for decades and American students continue to fall behind other countries. In 2022, American students placed 16th out of the 81 countries in science.
An uneducated workforce is ill-prepared for the jobs a highly industrialized economy requires. It is difficult for lower-income families to help their children access educational facilities while for wealthier American families, education seems to lag as well.
Another factor pressuring the American middle class are rising healthcare costs, which is the reason behind the current federal government shutdown.
The American middle class has the highest medical debt in the country. The debt puts more pressure on the middle class leading to the belief that America’s middle class is being eroded.
Finally, contrary to the popular belief that immigrants contribute to the decline of American wages, hurting the middle class, economists generally agree that immigrants do not hurt American-born workers.
Instead of hurting the American workers, immigrants are being absorbed into the American workforce while American unemployment remains low suggesting that immigrants are not displacing the American worker. Instead, they are filling job sectors that need workers.
Immigrants have become such an integral part of America’s labor force that the U.S. Department of Labor recently ordered the rules for allowing migrant workforces into America’s agricultural sector be streamlined because of “immediate dangers to the American food supply” caused by the recent Trump Administration’s immigration policies.
America’s middle class isn’t disappearing because of free trade, immigrants or technology but because Americans are failing in school and because of the higher health costs they face. Some even argue that the middle class isn’t disappearing but simply getting wealthier. It isn’t because of free trade, immigrants or technology, as some would like to believe that is eroding America’s middle class, but because the middle class isn’t getting educated and are facing higher medical costs.
