The Economist - USA (2020-02-01)

The EconomistFebruary 1st 2020 United States 23

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in Vermont, as in San Francisco. Constrain-

ing Burlington’s growth weighs on the

economy. People find it hard to move there

because it is too expensive, so they are

stuck in less productive jobs elsewhere.

Yet it is wrong to blame Vermont’s wage

woes on policy alone. The state has raised

its minimum wage by 36% since 2009. The

higher pay floor has supported earnings at

the bottom—apparently with little nega-

tive impact on jobs. Vermont’s unemploy-

ment rate is below America’s average. The

most important reason why Vermont has

missed out on wage gains may be the struc-

ture of its economy.

Low-paid folk have lately done fairly

well out of America’s labour market. Since

2015 the wages of high-school dropouts

have risen twice as fast as those of workers

with advanced degrees as firms in service

industries have competed for workers and

minimum wages have risen. Pay-packets in

blue-collar jobs have also swelled. The

booming energy sector, in particular shale

oil, takes much of the credit for that. The

top five oil-producing states contributed

23% of America’s gdpin 2009, but have ac-

counted for 30% of countrywide gdp

growth since then.

Vermont’s minimum wage rises have

affected relatively few people, however.

And the state lacks blue-collar workers.

Highly educated but not high-income, it is

often seen as a destination for hippies try-

ing to get away from it all. Montpelier, the

capital, is bursting with hot-yoga studios

and shops selling “Eat More Kale” t-shirts.

Production of more traditional types of en-

ergy is scarce. In 2014 a big nuclear plant

closed. And the state produces no oil.

Could its wage growth pick up? If the

jobless rate continues to fall, complaints

about labour shortages are likely to get

louder. Activists are pushing for faster in-

creases in the minimum wage. But Ver-

mont is ageing rapidly. Meanwhile, one of

its big industries, education, faces growing

competition from other states. Like an en-

thusiastic yogi, Vermont’s wages could stay

floorbound for some time. 7

A green mountain to climb

Sources:BureauofLabourStatistics;

BureauofEconomicAnalysis

*Three-month

movingaverage

Private-sectorwages,$ perweek*, 2019 prices

2009 11 13 15 17 19

800

850

900

950

1,000

Vermont

Recession United States

T

he weekbefore Iowans caucus is inev-

itably frenetic. Candidates leave no

hand unshaken and no corner of the state

unvisited. Over bowls of (surprisingly deli-

cious) Spam risotto, Kurt Meyer, the Demo-

cratic Party chairman of three rural coun-

ties in northern Iowa, needs two hands to

count the candidates who have held events

at his lovely riverside home, near the Min-

nesota border and precisely nothing else.

Six days before the caucus, in the coun-

ty two west of Mr Meyer’s, a Bernie Sanders

house party felt like a quiet church revival.

The field organiser, referring frequently to

“this movement”, asked the roughly 15 peo-

ple attending to introduce themselves and

tell the rest of the room what attracted

them to Mr Sanders. More than half of them

praised his “authenticity” and “consisten-

cy”. A truck driver preparing to caucus for

the first time—like several others there—

said that Mr Sanders “campaigns on the

same principles every time...We can believe

what he’s saying.”

Two days earlier in Cedar Rapids, a rally

with Elizabeth Warren had the feel of a

policy seminar delivered by an enthusias-

tic teacher to an engaged crowd. Organisers

raffled off the right to ask questions. (They

were deeply on-brand: “When we call your

number, shout, ‘Persist!’, and we’ll get you a

microphone.”) After a stump speech about

her modest upbringing in Oklahoma, Ms

Warren fielded questions about health

care, energy policy and her viability, giving

paragraph-length answers to each of them.

Like Mr Sanders, she railed against “the

most corrupt administration in history”.

Unlike him, she also praised capitalism

and free markets. For all the overlap be-

tween the two candidates, they differ

markedly in their strengths, appeal, go-

verning philosophies, bases of support and

the implications of their success for the

Democratic Party.

Last autumn, Ms Warren nearly over-

took Joe Biden in national polls. But since

releasing her “Medicare for All” plan, she

has stumbled. Mr Sanders’s recent rise ap-

pears to have come at her expense. Still,

they have a pragmatic detente. While Amy

Klobuchar struggles to conceal her con-

tempt for Pete Buttigieg, and Kamala Harris

(now retired) kicked Mr Biden for opposing

school busing, Mr Sanders and Ms Warren

have consistently praised each other. They

realise that if one falters, the other wants to

pick up those voters with as little lingering

bitterness as possible.

Although their voter pools overlap, they

are not identical. Ms Warren does better

among better-educated and older voters;

Mr Sanders leads the Democratic pack

among voters under 30, which explains his

campaign’s focus in Iowa on first-time cau-

cus-goers. Their support among black and

CEDAR RAPIDS AND FOREST CITY

Assessing the promise and appeal of Elizabeth Warren and Bernie Sanders

The Iowa caucus

Progressives’ dilemma

Same side of the aisle, remarkably different styles