Professor Robert Cherry argues at National Review Online that 2018 should end up being a good year for wage growth.
The liberal media has been replete with pronouncements that the Trump tax cuts are a giveaway to the top 1 percent and provide only meager benefits to working-class households. Trump’s economic advisers, by contrast, claim the new law will boost wages significantly across the board. The administration’s claim is very likely to prove correct. …
… This past experience helps explain why we should have guarded optimism that the Trump tax cuts will have a substantial positive impact on working-class wages in the coming year. First, despite being weighted heavily to high-wage earners, like the Reagan tax cuts, they will significantly stimulate consumer spending; further, corporate capital spending will increase owing to more generous expensing of equipment, deregulation, and the increased financial benefits of producing domestically. In addition, as was the case in the Clinton era, stock-market growth has created a wealth effect that will further stimulate consumer spending, and tight labor markets will put upward pressure on wages.
Finally, unlike Reagan (and Bush 43), Trump has significantly reduced corporate taxes. While a lion’s share of the money may go to executive bonuses and stock buybacks, there is evidence that some will find its way into workers’ pockets as either wage gains or lower consumer prices. Once more workers will gain.
