Monday, November 21, 2016

GROWING THE WORKING CLASS


The most important voter group in the American economy is the working class. While not the largest taxpaying group, the working class provides critical labor that makes all our industries work. A healthy vibrant economy is one defined by a growing middle class, which is not the case in the United States. If America is going to be great again, policymakers need to pay greater focus to implementing growth policies for the middle class and foster an economy that encourages work.
The American economy is not a complete free market capitalist economy. With the implementation of the New Deal and other big government programs, socialist economics became an integral part. As a result, redistribution programs provide income to those in society that cannot work or are currently out of work. Over time, poor public policy placed greater burden on the working population, burdening them with the need to support a growing population of those outside of our economy.


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From Zerohedge.com (via Google)
For almost five decades, the proportion of working Americans is on the decline. Currently, the workforce participation rate is at an all-time low. Economic policies that discourage hiring combined with overly generous social programs that discourages work, many Americans are stuck on the sidelines, depending on society rather than contributing to it.

President Elect Donald Trump won the 2016 contest by building a coalition of working class voters that want to return to labor market, hoping he was the change the economy needed. In order to deliver on his campaign promises, Trump will need to focus his domestic and economic agenda on providing growth, opportunities, and incentives for this important group of Americans.  Trump will need to reverse the wage stagnation and diminished take home pay symbolic of the Obama economy, creating opportunities for income mobility.

Key components of Trump’s domestic proposals could provide short term benefits for middle class Americans. For instance, repealing and replacing Obamacare, if done properly, can reduce outrageous premium hikes and improve quality of plans. Increased health insurance costs reduced the amount of disposable and discretionary income for many families. Many insurance plans became more expensive and required more out of pocket cost than before the program came in effect.

Additionally, reforming America’s tax code could prove important for middle class paychecks and for career advancement. Compared to other 2016 candidates on both sides of the aisle, Trump’s tax plans was the only plan that would allow more Americans to keep their hard earned income. Americans would see tax relief, allowing them to reduce debt expenses, invest, or consume more goods. In order to mitigate long term effects, Trump should consider reducing the tax benefits for the higher brackets of Americans.  

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In addition to personal tax reform, corporate tax reform is long overdue. In comparison to other industrialized nations and emerging markets, the United States possesses a high tax burden, which discourages investment and expansion in our economy. Reducing the brackets and allowing repatriation of foreign funds would provide a significant stimulating effect, providing momentum to re-establish domestic manufacturing. Furthermore, reducing tax brackets and eliminating tax breaks would go far in making our economy more competitive while not dependent on taxpayer funds.

Americans understand the need for regulations, but many might not understand the impact of excessive regulation. Funds spent on regulatory fees and consulting payments for compliance could be better spent on employee training, product and process improvements, and other operational areas. In addition, regulation that eliminates operations without a bridge plan in place should be repealed. Energy policies that inhibit coal production should be reduced, allowing coal workers to contribute to our society. Cleaner energy should be our goal, but there needs to be a proper transition, not politically motivated phase out. Government should not choose winners and losers in our economy.

Generous social programs keep many able body citizens out of the economy, as welfare payments can exceed minimum wage in some states. Ensuring all able body citizens of working age are able to contribute to our economy is the only way to truly make our society stronger together. Strengthening welfare to work requirements and increasing participation not only is economically optimal, but allows government to focus funds on those who truly need assistance.

Hillary Clinton pushed for an American economy that encourages work. The only way to achieve that is to foster one that creates opportunities and income mobility. Moreover, social programs should not pull people out of our economy. Foster an economic environment that creates jobs. Support wage growth. This will make our working class grow again.