In this article, we focus on one aspect that has formed the crux of a sea-change in U.S. politics, culminating in re-election of Donald Trump as president. Namely, the perceived abandonment of the semi-skilled, middle-class workforce.
A Global Divide
The Trump campaign won a decisive victory in the December elections. In addition to Republican majorities in both houses and a conservative-leaning Supreme Court, Trump also succeeded in securing the popular vote.
On the tide of this victory, Trump has ample support to see through a range of new policies from tariffs to near-shoring and other ‘America First’ initiatives.
Few would also dispute that the former president’s return to the White House has been surrounded by controversy. This controversy extends beyond the U.S. to the global community.
The chart below, based on a poll of 28,549 people across 24 countries, shows a range of opinions. It also shows that it is Western or Western-aligned countries (e.g. South Korea) who take the most pessimistic view of the election outcome.
Source: European Council on Foreign Relations
One potential cause is the perception that the Trump agenda is inherently anti-globalization. Since the end of the Cold War, Western economists (not to mention libertarians and business leaders) have welcomed globalization as a driver of economic growth and prosperity.[2]
Citing Adam Smith’s theories on free trade, which support the free movement of labor and an unobstructed global marketplace, and pointing to the rises in global living standards that have followed the successful implementation of such policies, it is understandable that the return of protectionism and trade wars is seen as a step backward.[3]
The Decline of the Lower Middle Class
Why then does the tide seem to be turning, at least in some quarters?
Lakner and Milanovic’s analysis from 2013, known as the ‘Elephant Curve’, provides a starting point for discussion.[4] In a sentence, it shows that globalization has benefited almost everyone but the ‘middle class’, who have seen incomes grow much slower and even decline in some cases.
Source: World Bank
The trough on the right-hand side, which reaches its lowest point in the 80th percentile of global income, includes the semi-skilled labor class in Western economies (e.g. manufacturing, automotive, electronics), many of whose jobs have been transferred to emerging markets.
Meanwhile, those at the very top of the global economic hierarchy benefited from the higher profitability of a more cost-efficient labor force,[5] deepening the sense that the domestic labor force had been abandoned as the wealth gap widened.[6]
In 1914, Henry Ford paid his workers $5 per day, which amounted to $30 per week (for a six-day workweek)[7], or 1.45 troy ounces of gold.[8] With modern-day prices[9], this is the equivalent of $4,038 per week or $209,991 per year.[10]
In other words, earnings that are now possible only for highly qualified professionals (e.g. law, accounting, medicine)[11], were once standard for semi-skilled factory workers.
Conclusion
The plight of the Western lower-middle class is not an illusion. Addressing it will be the task of governments for decades to come. Meanwhile, the wealth gap is one of various factors giving rise to extreme political ideologies, both on the right and left, exacerbating the problem further.
In the meantime, it is possible for individuals to take their destiny into their own hands. Technology and financial markets have moved on considerably since the days of Henry Ford. Even those from whom wages are the primary source of income can invest capital in the world economy more freely than a century ago.
Not only this, avenues of investing that were previously open only to the ultra-wealthy are also more accessible. One of our main goals at The Family Office is to offer our clients opportunities in formerly exclusive domains (such as private equity and other alternative investments), thus bringing the upper end of the opportunity curve within reach.
Just as a society with greater participation in growth is more stable, a financial future with more options for growth is a brighter one.
[2] Council on Foreign Relations
[3] International Monetary Fund
[8] National Mining Association
[9] JM Bullion - (as of January 25, 2025)
[10] The gold price fluctuates considerably over time and this example should be viewed as illustrative rather than definitive. Directionally, it is intended to show that manufacturing workers had higher earning power than they do today.