The economic system in the United States was broken well before Trump started to run for President. For decades going back at least to the Clinton presidency, the Democratic Party has failed to prioritize improving the lives of working people. Since the Democrats were not working to make their lives better, nobody was, and their lives became harder and harder. The fact that the Democratic Party was not fighting for working people and the resulting negative impact on their lives were two of the primary reasons that working people turned against the Democrats and helped elect Trump in 2016 and again in 2024.
Since the economic system has been rigged against working people and in favor of the rich and powerful for decades, policies aimed at returning to the way things were before Trump does not solve the problem. Democrats must propose dramatic and transformative policies to improve the lives of working people, reverse the movement of wealth to the top 1% and seek equity for all. Small and incremental changes to get back to the status quo ante Trump will just lead to even worse economic conditions for working people and yet another defeat for Democrats and even more claims by the Republicans and the oligarchs that authoritarianism is the only thing that can help working people.
Working people have suffered in many ways because of our broken economic system. Their share of household income and wealth has fallen well behind those on the top of the economic ladder.
While household incomes at all levels of income have risen over the last 50 years, the incomes of the top 10% have risen at a much higher rate than those of the bottom 50%. According to a study by the Economic Policy Institute, the median household income from 1973 to 2023 rose 16.6% while the household income for the top 10% rose 50.0%.
To give you an idea of how much income the various levels have, Census Bureau data indicates the following for 2023
Top 5% $526,200
Top quintile $297,300
2nd quintile $129,400
Median $80,730
4th quintile $47,590
Bottom quintile $17,650
A Federal Reserve study on household wealth from 1989 to 2025 demonstrates that during that period
· the wealth of the top 0.1% increased 67%
· the wealth of the rest of the top 1% increased 22.5%
· the wealth of the rest of the top 10% decreased by 4%
· the wealth of the 50% to the 90% decreased 18.2%
· the wealth of the bottom 50% decreased by 26.5%
In my view there are many reasons for this deterioration of the financial wellbeing of working people. I will discuss several important ones – income tax rates, estate tax rates, decline of union membership and the increase in monopolistic power.
The maximum individual income tax rate has fallen over time, and the amount of income it applies to has also fallen.
In 1950 the maximum rate was 91%, and it applied to income over $400,000 ($5.4 million).
In 1975 the maximum rate was 70%, and it applied to income over $200,000 ($1.8 million).
In 2000, the maximum rate was 39.6%, and it applied to income over $288,350 ($542,659).
In 2025, the maximum rate was 37%, and it applied to income over $751,600 ($751,600)
The dollar amounts in parenthesis are the amount expressed in 2025 dollars. As you can see the wealthy are not paying anywhere near their fair share, if you define fair share as what they were paying in 1950 or even 1975.
The same is true for estate tax rates and exemption amounts.
In 1954, the maximum rate was 77% on amounts over $10 million ($118 million).
In 1977, the maximum rate was 70% on amounts over $5 million ($27 million)
In 2009, the maximum rate was 45% on amounts over $3.5 million ($5.3 million)
In 2025, the maximum rate was 40% on amounts over $14 million ($14 million)
Once again, the rich are not paying their fair share and more and more generational wealth is moving to the very, very rich due to government policies.
A report issued by the Library of Congress in 2023 discusses union membership from the 1880s to 2022. The percentage of the workforce that were union members reached a peak in 1945 at 34.2% and stayed above 30% until 1961 when it dropped to 29.2%. During the 1960s and 1970s, it dropped steadily but slowly. In 1980 22.2% of the US workforce were members of unions. After that the rate of union membership dropped faster to just 9.4% in 2022.
While I cannot say that there is a direct causation, there is certainly a correlation between the decline of union membership and fact that working people have fallen behind in the share of household income and wealth.
The increased monopolistic power within the US economy has also had an adverse impact on the economic condition of working people. As an October 2016 report from the Council of Economic Advisors states:
There is also growing concern about an additional cause of inequity—a general reduction in competition among firms, shifting the balance of bargaining power towards employers (Furman and Orszag 2015). Such a shift could explain not only the redistribution of revenues from worker wages to managerial earnings and profits, but also the rising disparity in pay among workers with similar skills. These trends also have broader implications for the economy as a whole: instead of promoting growth, forces that undermine competition tend to reduce efficiency, and can lead to lower output, employment, and social welfare.
Since that report, Trump has essentially stopped all anti-trust enforcement. Unfortunately, even during times when Democrats controlled the White House, anti-trust enforcement has not been a priority.
Consequently, the Democrats have an opening to regain the votes of working people by enthusiastically embracing a platform of government policies that will improve their lives. The word of the day is “affordability” and that is critical to improving working people’s lives, but it doesn’t stop there. High quality childcare, education, health care, food, unemployment benefits and retirement benefits are not just affordability issues they are also quality of life issues. Of course, part and parcel of all these issues is to reclaim our democracy where working people share equally and fully in the power and prosperity of our country. Their voices must be heard. The oligarchs cannot be permitted to continue to buy our elections and politicians.
In later posts, I will discuss what policies the Democrats should embrace to enhance the lives of working people and save our democracy.
Thanks for reading and please comment,
The Unabashed Liberal
