Miami Herald Logo
mcclatchydc Logo

Homepage

The Trump economy generates self-reliance rather than government dependence

Presidential adviser Ivanka Trump and Council of Economic Advisers Director Tomas Philipson
Presidential adviser Ivanka Trump and Council of Economic Advisers Director Tomas Philipson The White House

The recent news that the economy blew past expectations and added 266,000 jobs in November, along with positive revisions of 41,000 additional jobs to the prior two months, show that the labor market is experiencing a new revival under President Donald Trump and remains strong well into the longest expansion in U.S. history. But looking behind the headlines about these impressive numbers reveals that this economic boom disproportionately benefits previously left behind Americans by offering paths to self-reliance rather than reliance on government programs. The Trump administration’s policies boost the demand for workers, incentivize those outside the labor force to find work, lower barriers to entering the labor force, and provide training opportunities so Americans can get the skills they need to fill open jobs.

As the November jobs report released Dec. 6 confirms, the labor market is breaking records on a monthly basis. The unemployment rate is close to its lowest rate in 50 years among virtually all demographics, particularly disadvantaged groups. The surge in labor demand has resulted in 7.1 million job vacancies, which outnumber actively searching, unemployed workers by more than 1 million. Before Trump took office, there had never been more recorded job openings than unemployed workers. Since the 2016 election, the economy has added more than 7 million jobs, as opposed to the 1.9 million predicted by the Congressional Budget Office in the fall of 2016.

These gains are bringing people off the sidelines into employment. In October, nearly three-quarters of people entering employment came from outside of the labor force — the highest number on record. And the prime-age labor force is growing, reversing losses under the prior administration. Under the prior administration’s expansion period, the prime-age labor force shrank by roughly 1.5 million people, while so far under the current administration it has expanded by 2.1 million. The current labor market revival is not a continuation of past trends, but instead a direct result of Trump’s pro-growth policies.

The rise in labor demand is not only leading to more jobs, but also to higher pay and lower income inequality. The lowest wage earners have seen the fastest nominal wage growth (8.9%) of any income group since the Tax Cuts and Jobs Act of 2017 was signed into law. Beyond this increase, from the start of the current expansion to December 2016, average wage growth for workers lagged that of managers. Those without a college degree lagged that of college graduates, and African Americans lagged that of white Americans. Since Trump took office, each of these trends has been reversed.

Today’s top headlines

Sign up for the Afternoon Update and get the day’s biggest stories in your inbox.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

This growth in jobs and wages has increased economic self-reliance rather than reliance on welfare programs. As Americans filled open jobs, the number of people in poverty decreased by 1.4 million last year, and the poverty rates for African Americans and Hispanics reached historic lows. Under the Trump administration, the number of people claiming unemployment insurance as a share of the population is the lowest on record. Similarly, Medicaid rolls are decreasing predominantly because of a reduction in the number of individuals eligible for the program, caused by income growth as opposed to eligibility restrictions.

The Trump administration is continuing its relentless focus on promoting self-sufficiency and reducing inequality. In July 2018, the National Council of the American Worker, of which we are both members, was established to further boost job opportunities for disadvantaged groups. The White House’s Pledge to America’s Workers, whereby companies commit to providing re-skilling opportunities, has led to more than 350 companies pledging over 14 million new work and training opportunities for Americans. The administration also worked with Congress to enact bipartisan legislation to address the national opioid crisis, which recent research indicates has lowered the prime-age male labor force participation rate by as much as half a percentage point, and criminal justice reform that promotes work as a central element of successful reentry. Furthermore, the Trump administration has expanded access to quality child care for nearly 800,000 families across the country, and is working to further reduce the cost of that care to encourage greater entry of poorer parents into the workforce.

Another element of our efforts is the opportunity zones created by the 2017 tax reform. Opportunity zones provide tax-advantaged treatment for economically-distressed areas. These tax cuts spur investment and drive up labor demand, directly helping the disadvantaged achieve self-sufficiency through increased economic activity. Supply-side tax cuts are the opposite of the traditional, failed approach to fighting poverty, which entails higher taxes to fund demand-side subsidies for health care, food and other goods that incentivize people to limit their hours or stop working to qualify.

The Trump administration’s continued focus on promoting self-sufficiency and reducing inequality helps disadvantaged groups to get the skills they need, find work and support their families. There is no better way to achieve these goals than through pro-growth policies that raise labor demand and have companies bidding to attract workers. November’s outstanding jobs report is further proof that this approach works and will continue to deliver economic gains to those Americans who need it most.

Ivanka Trump is advisor to the president. Tomas Philipson is director of the Council of Economic Advisers. Both are members of the National Council of the American Worker.

All-access digital subscription

Connect to local news for just $4.99 a month for 12 months.

VIEW OFFER
  Comments  
All-access digital subscription
#ReadLocal

Connect to local news for just $4.99 a month for 12 months.

VIEW OFFER
Copyright Commenting Policy Privacy Policy Do Not Sell My Personal Information Terms of Service