Economic Policy and the Working Class: An Interview with Oren Cass

Tucker Carlson’s recent monologue on the “Market and the Family,” in which he argued that the contemporary economy has undercut the strength and stability of working-class families, has sparked a major debate among conservatives. Some conservatives—including David French and Ben Shapiro—have taken issue with his argument. IFS senior fellow W. Bradford Wilcox recently spoke to Oren Cass, a senior fellow at The Manhattan Institute and author of the new book, The Once and Future Worker: A Vision for the Renewal of Work in America, about this important debate. The following interview has been edited for clarity.

W. Bradford Wilcox: What is your take on Tucker’s argument about the economy and the working class, and how does your book speak to this debate?

Oren Cass: I agree with a lot of the points Tucker made. We’ve built an economy and a society that just isn’t very conducive to stable families, especially for people with less education who are likely to struggle in the modern labor market. What frustrates me about the response is that they seem to view the debate as either/or. Either the challenges facing the working class can be explained by failure to take personal responsibility or they are the result of policy choices and economic factors. Thus, talking about economics gets interpreted as renouncing the importance of personal responsibility.

But there’s no reason we have to choose between those explanations; to the contrary, the explanations are complementary. Obviously, a lot of people are making bad choices. And we have plenty of examples of people facing similar circumstances who make better choices, which goes to show that personal agency plays a critical role. But I think that the set of choices available to a lot of people has gotten worse and that we’ve made it harder to make good choices. Observing that doesn’t absolve people of responsibility. That said, neither does observing that people need to take responsibility absolve policymakers of responsibility for considering how policies affect people and whether different policies could yield better outcomes.

And note the asymmetry in this debate. Only one side is demanding that we choose one explanation at the exclusion of the other. Folks like me and Tucker, who argue that policy and economic conditions play a role, are not saying that personal responsibility is unimportant or that structural forces have deprived people of all opportunity. We’re just arguing that alongside the traditional conservative emphasis on personal responsibility, we need also to acknowledge that the economic formula of recent decades has not been a good one for a lot of people and that we should hold do better on that front, too. Conservatives need to be able to hold both ideas at the same time.

The argument in my book is that our public policy has overlooked one important factor: work. Our economic models and our policies are built on a premise that the goal is to maximize “consumer welfare” without reference to what happens in the labor market—whether people are able to participate as productive contributors to society and support themselves and their families. So, for instance, we’ve assumed that taxing some person who is getting ahead and then mailing a check to the person who has lost his job can substitute for that person having a job. But that’s not right.

Our economic models and our policies are built on a premise that the goal is to maximize “consumer welfare” without reference to what happens in the labor market—whether people are able to participate as productive contributors to society and support themselves and their families.

When it comes to the foundation of our society, our families and communities, consumption levels just aren’t as important as engagement in productive work and self-sufficiency. Many of our public policies have transformed the labor market in ways that make it much harder for less educated people to find work and support their families. I think we have to acknowledge the role that has played in the challenges we face and focus our public policy conversations toward strengthening the labor market, so people have more good choices and are more likely to make them.

Wilcox: Most people would agree that work is important, but it also seems widely available—especially with the unemployment rate below 4 percent. In his most recent article on the topic, David French writes, “If a person exercises the most basic degree of self-discipline and industry, completes an education, gets married, and has kids, then his or her odds of being poor are vanishingly low.” That doesn’t seem like too much to ask, does it?

Cass: It’s something of an empirical question, whether that’s easily achievable or not. If we have large numbers of people failing to hit those milestones, we should inquire as to why and what has changed. David chalks it up to self-discipline and industry, implying that people who fail to achieve those goals must lack those characteristics and, I suppose, that we’ve seen a collapse in discipline and industry among the population. I believe he attributes this to our national “libertinism.”

Here’s the problem: we all swim, generally speaking, in the same cultural pond. If you want to see some real libertinism in this country, go visit a college campus. Yet somehow, for the minority of Americans who demonstrate the academic aptitude to complete college, the model of stable marriage and steady work remains almost entirely intact. It’s only the people swimming in the portion of the cultural pond with a stagnant labor market who are experiencing these challenges. So, you could say, if you want, that it’s just the people who don’t have college degrees who have lost self-discipline and industry, that it’s happened for cultural reasons, and only by irrelevant coincidence are they the ones facing the economic pressures. But I think it takes an almost willful blindness to assert that.

Wilcox: How have recent shifts in policy undercut wages and stable work among less-educated men (or the working class)? Can you give a specific example?

Cass: It’s not so much that we have seen recent shifts as that we made a series of choices—most dating back to the 1970s—that have imposed ever greater costs over time. In the book, I cover a wide range of examples but let’s take a couple.

For instance, we have built a “college-for-all” system that pushes people as far through the pipeline as they can go, but then pretty much abandons them if they don’t make it out the end. Fewer than one-in-five young people move smoothly from high school to college to career. Yet that’s pretty much the exclusive focus of our high schools, and it’s where we put all of our post-high-school support. We spend more than $150 billion annually subsidizing higher education, but for people not pursuing college degrees, we offer pretty much zero.

Contrast that to how the rest of the world does things. The OECD has shown that in nearly every other developed economy, 40 to 70% of high school students are in some kind of vocational or technical program. Their report actually excludes the U.S. from its chart because we are so out of line. And then we wonder why outcomes are so bad for people who don’t complete college. Non-college pathways into the workforce should be the top priority for our education system and the primary target of subsidies.

A completely different example is international trade. Let’s get this out of the way first: trade can be great. Even when trade causes layoffs and factories moving overseas, it can be a major boost to the economy if it allows us to specialize and gain scale in the things we do best. So, you lose one set of jobs to foreigners who now send some products into America, but you gain another set of jobs as foreigners start buying more of some other product from America.

The problem arises when the trade is imbalanced. If we start importing massive amounts of stuff that we used to make or could make here, and the countries making that stuff don’t reciprocate by importing massive amounts of stuff that we start making here, then the effect on our labor market is sharply negative. Even worse, if other countries start picking and choosing the most attractive industries to dominate, and we let the expertise and supply chain in those industries vanish overseas, our economy becomes far weaker. 

That’s exactly what happened with China. We lost literally millions of jobs as Chinese imports replaced things we used to make domestically, and we got very little offsetting increase in things that China could buy from us. The seminal research on this is from David Autor, but others like Peter Schott have found similar effects. And I highly recommend reading the recent report from by Senator Rubio and the Senate Small Business Committee, documenting the extraordinary challenge posed by the “Made in China 2025” program. 

This is actually a pretty obvious point—that trade deficits are bad for workers—but it’s one that our policymakers overlooked for a very long time because they were focused only on consumer welfare. From that perspective, a trade deficit was great: China sent us lots of cheap electronics, and we didn’t even have to make anything to send back in return! But if we care about workers, that sentiment is absurd.

Folks who argue that the problem is entirely cultural seem to fear that any discussion of our economic problems marches us irrevocably toward “big government.” That’s not true. Our problems haven’t arisen because we lacked big government programs, nor are such programs the solution.

Wilcox: How and why have changes in contemporary work affected working-class families? 

Cass: First and foremost, our economy has become one in which it is much harder for less-educated men to support their families as traditional breadwinners. The Census Bureau reports that in the 1970s, only one-quarter of young men were earning less than $30,000 per year. Now that figure is above 40 percent. Among those without a college degree, the picture is even more dire. Joining the workforce at all becomes less attractive, so we have a much higher share of men who aren’t working full time. And even among those who are, we have many more who can’t achieve the financial security to build a family around.

Men who can’t play the breadwinner role are less attractive as marriage partners, and under those conditions, fewer marriages form. That’s partly for straightforward economic reasons, but also because with declining economic prospects comes higher rates of destructive behaviors like substance abuse. Likewise, unemployment for men is an incredibly strong predictor of divorce. 

Meanwhile, from the other direction, our ever-expanding safety net has made what one can assemble from government benefits come closer to approximating what one can achieve by working. That has a concrete economic effect because getting married and attaining self-sufficiency seems less worthwhile, and it also has a cultural effect because doing those things now seems like less of achievement.

And then there’s the intergenerational effect: kids do better when they grow up with role models who are working, both in their own families and their communities. The data point I found most striking in Charles Murray’s Coming Apart was that, among the working-class households he studied, only half had even one full-time worker by 2010. Which gets back to the earlier question of why we can’t just expect everyone to exhibit some purportedly simple level of self-discipline and industry? Where and how do people learn those things? If desirable cultural norms and expectations have economic underpinnings, then what looks like a cultural problem can turn out to be an economic one as well.

Wilcox: What specific public policies would help to revive the economic fortunes of the working class, and connect working-class men to the labor force?

Cass: There are lots of things we could be doing better. Folks who argue that the problem is entirely cultural seem to fear that any discussion of our economic problems marches us irrevocably toward “big government.” That’s not true. Our problems haven’t arisen because we lacked big government programs, nor are such programs the solution. What we’ve done is made a series of policy choices that biased our economy against less-educated workers who are struggling the most. We choose the conditions in which our labor market operates, and we’ve chosen some bad ones.

We talked already about how our education system focuses exclusively on college completion. We should instead offer a non-college pathway that, for less than we spend on trying to get someone through college, could get him to age 20 with on-the-job experience, an industry credential, and earnings in the bank. As far as I know, no one is saying we should get rid of our education system. So, if we all agree we should have one, I’d hope we could all agree that the one we have is ill-serving exactly the population in need of investment, and it is within our power to change that.

I also think we should reorient our safety net toward work, by creating what’s called a “wage subsidy.” Just like we have payroll taxes that take money out of every paycheck on that line labeled “FICA,” we should have a wage subsidy that puts money into low-wage paychecks on a line labeled “Work Credit.” So, someone working a $9-per-hour job, say, could get an additional $3 per hour from the government. This would make entry-level jobs more attractive to workers. Some portion of the subsidy would end up benefiting the employer, but that’s a good thing, too—it would make employing entry-level workers more attractive. And then finally, it would boost take-home pay for low-income households in a way that is attached to work.

We could fund this by reallocating a portion of the money we already spend on our safety net that we’re spending today in ways that ignore or discourage work. Of course, we still need our traditional safety net for those who can’t work. But if we could shift some portion of our poverty alleviation efforts toward getting people into jobs and earning a paycheck, that could go a long way toward addressing short-term economic problems and rebalancing the equation so that working to support your family becomes, not just a good choice, but an easier one.