Harry S. Truman had a saying, “If you want to live like a Republican, vote for a Democrat.” The idea, of course, was that Democrats were the party of prosperity, not the GOP. Today, the economic data are unambiguous: Whether it’s real wage gains or job creation, average Americans have fared far better under Democratic than Republican presidents. Like all questions of causality, why that’s true for the economic bottom lines of everyday workers is hard to tease out. It seems to apply, for example, whether Democratic presidents pursued policies that involved heavy fiscal stimulus, as under Joe Biden, or were more constrictive, such as Bill Clinton, who raised taxes and balanced the budget.
Meanwhile, Republicans pretend that their policies lift everyday workers and their families. The public seems to buy it, generally giving Republicans better marks on the economy than Democrats, often by hefty margins. Why is the citizenry misled? Again, causality is hard to discern. Is it just poor messaging on the part of Democrats? We can’t be entirely sure.
What is truly startling is the astonishing degree to which American workers have fared better under Democratic than Republican presidents. The significant contrast between each party’s record on wage and job growth has held true from the election of Ronald Reagan in 1980 through to the onset of the pandemic, just after 2019 ended, and after that, starting once again under Joe Biden.
The raw economic facts are clear. The Bureau of Labor Statistics (BLS) records the growth in real wages (after adjusting for inflation) going to America’s private-sector production and nonsupervisory workers, who comprise about three-quarters of all working Americans. Production and nonsupervisory workers are average or everyday working Americans—not owners, bosses, or managers.
From 1980 through 2019, according to the BLS, production and nonsupervisory workers received real wage increases that were a staggering 40 times greater annually when Democrats held the presidency than when Republicans did. The average real wage going to these workers in 2019 for a full-time employee over a year grew by $210 during the 23 years after 1980 when Republicans occupied office, versus an increase of $5,975 during the 16 years that Democrats held office. Wage stagnation was nearly exclusively a Republican phenomenon.
Let’s look at a different metric: the median wage for all workers. Based upon full-time work over a year, it increased a meager $740 over Republicans’ two-plus decades in office versus a $7,500 increase during the 16 years of Democratic control. That’s nearly 15 times more per year than under Republicans.
Symbolized by the landmark United Auto Workers wage deal, the post-pandemic economy, since mid-2022, has brought real wage growth to America’s workers under Biden that not only outstripped Trump’s best year, but also surpassed the net real wage increase for production and nonsupervisory workers that occurred over the Republicans 23 years in charge of the presidency since 1980. (It is true that wages suffered under Biden while the pandemic was still widespread due to the now-diminished surge in inflation. See Robert J. Shapiro’s “Why Biden’s Good Economic News Hasn’t Helped Him Politically—So Far” and his many other pieces on Biden’s economic record.)
Similarly, for job creation, the private sector generated barely one-half the jobs annually under Republican administrations from 1980-2019 as it created under Democratic ones—950,000 private-sector jobs per year on average under Republicans up to the start of the pandemic versus 2.1 million jobs annually under Democrats. Following the pandemic, under Biden, the economy has generated 2.7 million jobs per year, practically three times the Republican average.
On the other hand, interestingly, the economy’s overall annual growth rate since 1980 has been much the same under the two parties. Not even 1/10th of one percent per year has separated the Gross National Product’s real annual rate of growth during Democratic and Republican presidencies.
So, if the economy’s growth was little different under the two parties, what accounts for the far superior Democratic performance regarding wages and jobs? There are likely several explanations, but part of the answer must have to do with how effectively the economy spreads the gains from its growth to everyday workers in the form of higher real wages and the creation of more jobs.
Many Democratic policies accent incentives to stimulate owners and managers to spread the gains from growth and boost wages for average workers. These policies can be called ‘pre-distributionist’ because one of the effects of the policies is to lift workers’ incomes through wage gains from businesses within the economy rather than through redistribution through government programs.
They do so, for example, by promoting major public infrastructure projects that directly and indirectly create large numbers of new jobs, generating increased demand for workers; by expanding job training, apprenticeship, and educational programs to improve worker skills; by supporting minimum-wage hikes; by bolstering collective bargaining and interpreting labor regulations more favorably for workers, which boosts workers’ bargaining leverage; and by stiffening anti-trust regulations within labor markets to enhance competition among businesses for workers. All these policies strengthen labor and induce companies to spread the gains from their growth.
The same line of thinking exposes a severe shortcoming of the Republican trickle-down approach, which keys on incentives to prompt companies to grow and expand—hence the call for reduced taxation and regulation. The approach has little to say about incentives to prompt companies to spread the gains from their growth, which mirrors what happened under Republicans—hardly any gains went to workers. The economy grew, but workers’ real wages stagnated, and job growth stalled. With similar economic growth under Democrats, the economy delivered sizable real wage gains and robust job creation.
The two biggest annual real wage increases that production and nonsupervisory workers got when Republicans occupied the presidency came under George W. Bush in 2001 and Donald Trump in 2019. The two instances are examples of exceptions that prove the rule. In both cases, the economy had reached or was just coming off a state of full employment under Democratic administrations, establishing a natural competition for workers that created an economic incentive for companies to spread more of their gains.
The Trump years, up to the onset of the pandemic, were also unusual for a Republican president because real wage growth for everyday workers occurred during all three of those years. Even so, the results were not especially notable. Trump’s economy was built upon solid wage increases during the Obama presidency. Trump didn’t create the trend, and his economy didn’t even approach matching the wage increases it had inherited. The wage increase for production and nonsupervisory workers over Trump’s first three years until the pandemic totaled 2.5 percent. That’s substantially below the 4.8 percent real wage growth over the preceding three years under Obama.
Notwithstanding the Republicans’ generally weak wage and jobs record, however, Republicans might still retort that voters can depend upon them to be better overall managers of the economy. Were they?
By far the hardest and the longest economic recession to hit the country since the time that Reagan came into office was the Great Recession, which started under the second Bush administration (not counting the pandemic-induced recession under Trump that peaked at near-15 percent unemployment). In addition, Republicans have swelled the national debt markedly more over this period than Democrats did. And the stock market has risen significantly more during Democratic than Republican administrations.
Few workers are aware of the immense differences between the parties. Is that because of a stubborn, innate American inability to believe that the more pro-government party could be better at delivering private-sector prosperity than the Republicans, who more gleefully extol business? Or is it the actual rhetoric of each party?
There’s no way to be entirely sure. We do know, however, that Democrats have emphasized their pre-distributionist policies, including the role of such policies in spreading the gains from the economy’s growth to workers, quite a bit less now than Democrats did before the 1980s. One study from the National Bureau for Economic Research finds that Democrats’ diminished emphasis on their pre-distributionist policies and their impact accounts for up to half the number of working Americans with less education who have defected from the Democratic Party.
These workers have been the largest group of voters to turn away from the Democratic Party over the past half-century. If emphasizing pre-distributionist policies and the party’s exceptional wage and job performance relative to Republicans were to bring even a fraction of these working-class Americans back to the Democratic fold, the political change would be seismic–the difference between securing fragile majorities and sustainable governing majorities.
Higher wages and more jobs mean greater opportunity and greater opportunity enlarges freedom. If so, then Democrats are a party of economic freedom for everyday working Americans, considerably more than Republicans have been. Freedom is the single most potent political value in America. Nonetheless, the words “economic freedom” rarely cross the lips of Democrats any longer. Democrats have almost completely abandoned this powerful value as a goal. They shouldn’t.
Democrats have an amazing story to tell in 2024. They should tell it loud and clear.
John E. Schwarz is a professor emeritus of public policy at the University of Arizona, founder and Co-Director of Raise America’s Pay (RAMP), and former distinguished senior fellow at Demos.
