Dec 2, 2016 8:44 AM EST By Noah Smith
In the aftermath of the 2016 presidential election, I’m starting to rethink one of my basic beliefs about the economy. For a long time, I’ve believed that what mattered most for economic well-being was money. Median income, consumption, wages -- all the things I cared about most were measured in dollars.
In most of economic theory, a job isn't treated as something inherently valuable -- it’s just a conduit through which money flows from employer to employee. But most people probably care not just about the amount of money they get, but how they get it. If they see themselves as having earned their daily bread, they feel better about themselves than if they got a handout. A job also probably has an important symbolic value -- it sends a message that society cares about you and has a place for you.
There are a few exceptions. David Blanchflower and Andrew Oswald have measured the impact of unemployment on happiness, and found that having a job is an important determinant of how satisfied people are, regardless of how much money they have. Meanwhile, some of the little sociology research I do know about shows that job status is important for keeping marriages together.
Meanwhile, out in the real world, Americans are hurting from a lack of jobs. A number of deep dives into the mindset of Donald Trump voters, both before and after the election, have focused on the loss of status and self-respect that less-educated men in decaying industrial regions have suffered as jobs have been lost and replaced by government benefits. One way to see this is in the decline in the percentage of men in the U.S. labor force:
The dramatic Democratic loss in the Midwest in the 2016 election should be a wake-up call. The Democrats have been the party of the social safety net, and have long wondered why so many working-class Americans don’t seem to appreciate those benefits.
[These benefits did not make up monetarily for what was lost. Even if Democrats tried to do so, the republicans would block it.]
Trump, meanwhile, sailed to victory in the Midwest, in part by railing against globalization. Economists David Autor, David Dorn and Kaveh Majlesi have found that regions that experienced more Chinese import competition were much more likely to vote for Trump. Other studies by Autor and Dorn have found that that same import competition was responsible for throwing lots of Americans out of work and that nothing else replaced those jobs. So it seems that many voters in the Midwest didn’t want checks in the mail -- they wanted work. And they voted for a candidate who promised them jobs, even if he was very vague on his plans for doing so.
[See link above for possibilities for tackling this problem.]