Rising Income Inequality and Stagnant Wages Fuel Support for Trump’s MAGA Movement
A new Institute for New Economic Thinking paper argues that decades of growing inequality and weak wage growth have driven the popularity of Donald Trump’s MAGA movement, and that the Biden administration did not reverse these trends.
The Institute for New Economic Thinking released a working paper that links the surge of Donald Trump’s MAGA movement to persistent economic discontent among working- and middle-class Americans. By analyzing real hourly wages, weekly earnings, and median family income, the authors find that the Biden administration’s “Bidenomics” failed to alter the long-standing decline in wage growth and labor’s share of GDP. Income inequality, measured by 90-10 and 80-20 ratios, has risen steadily since the late 1970s, unaffected by changes in party control.
Meanwhile, personal consumption grew faster after 2020, driven largely by wealth concentrated among the super-rich and amplified by Federal Reserve quantitative easing and an AI-focused investment boom. The paper attributes these patterns to a bipartisan neoliberal agenda that prioritized inflation control, shareholder returns, and deregulated, insecure jobs over stable employment and social safety nets. Consequently, potential economic growth has waned, business investment has fallen, and the United States faces a “private opulence and public squalor” scenario that fuels widespread voter frustration.
Why it matters
Understanding the economic roots of MAGA's rise reveals how inequality shapes political polarization and policy debates.
In this story
