The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

Anger in the Hills

12/03/2019

I have long argued that globalization has tremendous benefits, although there are costs to be paid, such as retraining and relocation.  Years ago, Congress grabbed the benefits and wouldn’t pay the cost.  Instead, that price was paid by the people of lower-middle class America.  The most important book for the last ten years was Hillbilly Elegy by JD Vance, in which he described the growing hollowness of people employed in those industries most damaged by globalization, particularly in the rural areas of Appalachia and the South.  They suffered.  They suffered unfairly.  Their resentment morphed into anger, and they vented that anger in 2016, when they provided that extra push to get Trump elected.

Since the Great Recession, their progress has been slow, but there are some signs of hope.  The Labor Force Participation Rate is finally increasing.  Women entering the labor force account for the biggest increase in the Participation Rate, followed closely by those without a high school education.  The historic lows in the unemployment rate have given many the encouragement to look for a job again.  They are giving-up on “giving-up”. . . finally!  The poverty rate among both Blacks and Hispanics is now at an all-time low.  The historically wide gap between white workers and Black workers is also at an all-time low.  Plus, the jobs lost during the Great Recession are not the new jobs created.  They are mostly better!  Wages are finally starting to rise for lower-income workers to about 3.5%.  With inflation at a lowly 2.0%, “real” wages are finally increasing.

However, against all this good news is the difference between urban and rural areas.  The unemployment rate is lower and wages are rising faster in the urban areas than in the rural areas.  Democrats in the urban areas are faring better than the predominantly Republicans in the rural areas.  The “Hillbillys” are getting further and further behind their urban relatives.  Maybe, that is the reason this part of the President’s base still remains so angry in a good economy?

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