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  • Oren Levin-Waldman

The Roots of Polarization Lie in the Labor Market

In his new book, The New Class War, Michael Lind suggests that American society could best be divided into the managerial elites who are well educated and employed in higher paying occupations, and everybody else. Everybody else would be considered ordinary workers, many of whom do not possess an abundance of skills. The managerial elites, which he sometimes refers to as the managerial overclass are technocrats who also believe in a global economy.


Most of this group are highly educated workers armed with university educations, and many are doing quite well in the financial and high-tech sectors. This is the group that has discretionary income to spend on luxury goods, and this is the group that exercises considerable influence over the political leadership. That is, this is the group of more affluent voters that the political class tends to be more responsive to.


We can see these managerial elites over-represented in blue states while more skilled blue-collar workers are over-represented in red states. The blue state/red state distinction which has come to characterize a polarized nation between liberals and conservatives has been around for some time now. It has long been assumed that red states are simply more ideologically conservative while blue states are more ideologically liberal. But as I have suggested previously in this space, these ideological differences may also be driven in part by differences in these states’ respective labor markets.


Polling data, of course, tells us respondents’ opinions on a wide range of issues. The standard polls have Biden leading Trump now based on Trump’s handling of COVID-19, the resulting recession, and race relations in the wake of protests in response to high profile incidents of police brutality. And yet, when it comes to the economy, most polls will only measure how respondents feel about it and whether they are confident that it will be good in the future.


It is easy to miss the extent to which respondents might be anxious because the standard metrics of economic health don’t really tell us anything. Republicans, and maybe even some liberals in blue states, would have us believe that a rising stock market means the economy is doing well. President Trump in the first debate even said that the economy is in great shape and will rebound quickly because the stock market is performing well. But one really has nothing to do with the other.


The stock market merely measures investor confidence. If Main Street is not doing well, it will no doubt be reflected in stock market declines, but gains in the market do not necessarily mean that jobs are being created on Main Street. Whereas market gains reflect growth, it is actual job creation that speaks to economic development.


The real divide between blue states and red states is that the decline in the manufacturing base of the country has been greater in blue states than in red states. In red states, there are more skilled blue-collar workers working in manufacturing, and hence there may be greater anxiety among red state voters about where their economies could be headed due to globalization. That is, there may be greater fear that their jobs will disappear.


Unless pollsters are aware of these transformations and/or serious demographic differences, they may not be framing any number of polling questions correctly. We can learn quite a bit from national census data from the Current Population Survey (CPS).


Regression analyses show that workers in blue states were more likely to be Professional/Managers, i.e, members of the managerial elite; to be unskilled blue-collar workers; to be living in states where there was higher wage inequality than in the nation as a whole; to be employed in the Financial/Real Estate industry (again members of the managerial elite); to be employed in Personal Services; which may speak to lower skilled and lower paid workers; and more likely to have Graduate and/or Professional Degrees, who are also members of the managerial elite.


Blue states are not likely to have people working in manufacturing, whereas red states are. Blue states are also not likely to have workers working in the mining industry, whereas they are more likely to be in red states. Workers in red states are also not as likely to have advanced degrees or be members of the Professional/Manager class and working in Finance. Perhaps what is interesting about Manufacturing is that it had a positive effect in 1990, but by 2016 it was negative in blue states. This change may speak to its greater decline in blue states than in red states. Relative to red states, manufacturing in blue states is almost non-existent.


That you have the Professional/Manager class more concentrated in blue states may also suggest that there is a greater gap between skilled and unskilled workers in blue states. That there is less wage inequality in red states means that there are more skilled workers in the middle of the distribution and overall less dispersion. But it may also suggest that those in blue states, especially the managerial elites cannot possibly comprehend whatever anxiety workers in red states have.


As an example, let’s consider the issue of fracking. How workers in red states answer a polling question about green energy will depend on how it is framed. To ask if workers support it is not the same thing as asking whether they would still support it even if it entailed the elimination of mining jobs. If workers are less likely to be employed in mining in blue states, it follows that blue states will be more supportive of green energy whereas red states will tend to be less supportive. They are more likely to be resistant to changes that in any way could cost them their jobs.


That greater numbers of workers are more educated in blue states may have something to do with a greater tendency towards a more liberal ideology. But that tendency may also be a function of more workers being among the managerial elite, and as such they have a different perspective and/or world view.


The polarization we see between blue and red states, or perhaps parallel universes, is a function of big differences in their respective labor markets. These same managerial elites that are predominant in blue states are also the money managers who, because they placed greater emphasis on increasing shareholder value, effectively exported millions of jobs under the guise of an increasingly globalizing economy. Is it any wonder, then, why voters in red states might view those with blue states with suspicion and even hold them responsible for the loss of their jobs? Perhaps this question alone tells us all that we need to know about why the country is so polarized.

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