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National Review
National Review
5 Nov 2024
Ramesh Ponnuru


NextImg:The Corner: Presidents Don’t Seem to Have Much Effect on Inequality

(A note on this post: Yes, I am whiling away some time until we have election results.)

The commentator Batya Ungar-Sargon piqued my interest a few months ago when she Xed, “Trump is the first American president to shrink income inequality in the US in 60 years. Securing the border & tariffs on China were a huge part of how he did it.” At the time, I made a note to look into that claim some more, but didn’t until I saw a version of the thought appear in an article she just wrote for Compact.

There she writes,

Trump’s voters are hoping for a return to that bygone era of 2019, when working-class wages had risen for the first time in 60 years, while inflation was just 1.8 percent. While neither the free-market right nor the Trump-deranged left wants to admit it, Trump was the first American president in half a century to shrink the income gap. And he did it with an intentional policy mix.

There was a tax cut that put money in the pockets of middle- and working-class Americans and a new trade policy—represented by the renegotiation of NAFTA and the imposition of tariffs—aimed at shoring up American manufacturing. But the real mechanism whereby Trump’s economy redistributed wealth from the top 25 percent of wage earners to the bottom 25 percent was his border policy, which radically reduced the number of illegal immigrants entering the homeland through the southern border.

I’m predisposed to like some of these policies and dislike others, but here I just want to see if the underlying factual claims are correct. From what I can see, they aren’t.

Both of Ungar-Sargon’s links go to a Wall Street Journal article that does not say that the Trump years were the first time the income gap shrank in 50–60 years. It includes a graph that contradicts her claim. It shows that the lowest 25 percent of wage earners had higher wage growth than the top 25 percent from 1998 through most of 2002 (during the presidencies of Bill Clinton and George W. Bush) and again from 2014 through 2019 (during the presidencies of Barack Obama and Trump).

The most recent CBO report on economic inequality includes data on a measure of it called the Gini coefficient. Including the effect of taxes and government benefits, inequality peaked in 2007. It dropped during the Great Recession and has since bounced around in a narrow range with no obvious trend separating the Obama and Trump years (and, so far, limited data for the Biden years). Don’t take account of taxes and transfers — arguably a better measure to test whether there is a strong link to immigration — and again there is no pronounced trend.

What about Ungar-Sargon’s statement that working-class wages increased under Trump for the first time in 60 years? If true, that’s more important, in my opinion, than any trend in inequality. See figures 1 and 2 of this recent report by Scott Winship. The bottom fifth of male wage-earners saw increased income, using various measures, from 1990 through the start of the 2000s, and then again from after the Great Recession until Covid. The bottom fifth of female wage-earners saw growth from the mid 1980s until the onset of the Great Recession, and again from after the Great Recession until Covid. There are no sharp turns based on president or party. (Nor are there any in data for workers at the 25th percentile, which Winship provided me.)

The very first part of Ungar-Sargon’s argument may, however, stand up. It would not be surprising if many voters looked back fondly on the period of rising real wages, low unemployment, and low inflation that lasted from slightly before Trump took office until Covid hit. But for her stronger claim about immigration, trade, and inequality: As interesting as it is, it doesn’t appear to be true.