This is an adapted excerpt from the Aug. 23 episode of “Velshi.”

For more than 40 years, we’ve been sold a myth: that America’s rich and powerful were under siege — over-taxed, over-regulated and carrying the weight of the economy on their shoulders.

We were told that if you ease up regulations on the rich, they will prosper and the benefits will trickle down to the rest of the population. But the reality is that economic policy has only succeeded in rewarding the rich — and it’s done so at the direct expense of the middle class, the working class and the working poor.

Let me explain the root of the problem: According to the Economic Policy Institute, largely due to new technology, U.S. worker productivity grew 59.7% from 1979 to 2019, meaning workers have become almost 60% more productive at their jobs in the past four decades.

However, a worker’s reward for all that extra output over the same period has only been a 13.7% wage increase. That’s a gap of 46% between what workers are being underpaid relative to their output. In more practical terms, that’s about $9 an hour in lost potential earnings for the typical worker.

Let’s focus on just the middle class for a moment: From 1979 to 2019, middle-income workers saw just 13.7% growth in wages, adjusted for inflation. America’s lowest-paid workers fared worse, gaining just 3%. But the already high earners, the top 1%, their income grew by 160% over the same period. For the top 0.1%, their income grew by a staggering 345%.

Consider all the income earned by households in the U.S. in a given year. The share of that total U.S. household income going to the middle class was 62% in 1970. By 2022, it had dropped to 43%. The upper-income share did the opposite: It was 29% in 1970 and rose to 48% in 2022, according to the Pew Research Center.

Right now, our current politics is focused heavily on trade, and trade has been a major culprit in this inequality, as America made choices to be the world’s consumer rather than the world’s factory floor. Trade deals like NAFTA, which Donald Trump renegotiated into the U.S.-Mexico-Canada Agreement, displaced nearly 683,000 U.S. jobs, most in manufacturing.

In industrial towns, that wasn’t just job loss — it was economic identity loss.

The theory was that displaced workers would — somehow, magically — find new jobs. But according to the U.S. Bureau of Labor Statistics, those who did often saw their annual pay drop by an average of $7,900 when forced into new, lower-wage work.

Take Youngstown, Ohio. Once a steel powerhouse, it lost about 50,000 manufacturing jobs in 1977. The U.S. steel industry had over 500,000 manufacturing jobs in the 1970s. By 2015, fewer than 142,000 remained.

Now, here’s the thing: We are still making steel, and productivity in steelmaking has soared in the U.S. In 1980, it took more than 10 labor hours to make one ton of steel. Today, it takes about one and a half hours. That productivity earned the steelmakers billions, but workers didn’t get paid more because of it.

Play

Robert Reich: ‘Trickle-down economics is a hoax’ August 23, 2025 / 06:56

This wasn’t inevitable, it was policy: tax codes that favor capital gains over wages, deregulation that strips workers of protections and trade agreements that prioritize corporate margins over community stability. Every one of these decisions tilted the playing field toward the top.

There is a way that the corporate profits from these trade deals could have been shared by workers, and some of the extra revenue the government earned from them could have gone to retraining and relocating workers to places where jobs were better. But we didn’t do that. We just let the rich get richer and our industrial towns dwindle into nothing.

The steel industry aside, America has, for better or worse, left its position as a global manufacturing titan behind. We are increasingly an information economy. That means we need to lean away from trade wars with no objective and into policy choices that would tilt us back toward regular, working people.

Recommended

Latest

Austerity is for emergencies. What Trump is doing is economic gaslighting.

Ali Velshi, Amel Ahmed, Allison Detzel

MS NOW Opinion

As inflation rises, Trump is making the same mistake that sank Biden

Helaine R. Olen

If we want to reverse this, we have to make deliberate, systemic choices, like universal health care, which would end the tie between jobs and health insurance. Countries with universal systems spend 30–50% less per person than we do and get better outcomes. This reduces the economic insecurity that forces workers to cling to bad jobs for the sake of benefits.

We could also implement universal and subsidized child care. Affordable child care would free millions, especially women, to fully participate in the workforce. Quebec’s subsidized child care model increased female labor force participation and paid for itself in new tax revenues from mothers joining the workforce.

We could also use a national affordable housing infrastructure plan: launch a public-private housing initiative to build millions of affordable units and combine that with zoning reform and incentives for mixed-income development. That could be paired with strict anti-speculation measures to keep homes in the hands of residents, not investment funds.

Right now, individual home-buyers are largely being locked out of the housing market because of high home prices and interest rates. But those high prices aren’t scaring away investors who have the money to spend and are dominating the market. According to property analytics firm Cotality, investors who buy homes to flip or rent out have made up about 30% of purchases of both existing and newly built single-family homes this year.

But what if the U.S. worked toward building resilient, clean energy infrastructure? What if we invested massively in modernizing the grid; expanding solar, wind and battery storage; and hardening systems against climate shocks? That would create good union jobs while reducing our vulnerability to extreme weather events.

The government could also implement targeted climate policy, like a national carbon price and reinvest revenues into transition assistance for workers in fossil fuel industries. And fund large-scale reforestation, wetland restoration and urban heat-island mitigation projects.

For decades, we’ve been told that prosperity trickles down. But it hasn’t, it’s been sucked upward. While the top 1% have thrived, everyone else has been told to work harder, retrain, move somewhere with better opportunities, and wait their turn.

An economy that works for everyone isn’t a fantasy; it’s a choice. We’ve just been making the wrong one. These policies aren’t radical; they’re a return to the basic American deal: If you work hard, you should share fairly in the prosperity you help create.

Now it’s time for America to choose better.