Low-income voters may have bolstered Democrats’ surprising 2022 performance

Low-income workers who saw a substantial spike in wages amid the pandemic may have helped bolster Democrats in the 2022 midterm elections after they were predicted to endure large losses in Congress.   

From early the first quarter of 2020 to the second quarter of 2022, wages for low-income earners far outpaced inflation, according to a new analysis from University of Massachusetts Amherst. The study, based on census data, showed that gains were highest for the people earning the least. 

For the bottom fifth percentile of earners over that period, nominal wages grew nearly 11 percent, smashing the 6-percent annualized inflation rate by nearly 5 percentage points. 

For the bottom 10th percentile, the nominal gains were 9.5 percent for a 3.5-percent growth in real wages. 

Economists say that this lower-end growth may have contributed to Democrats’ surprising performance in the midterm elections, when control of Congress was expected to flip, and by a large margin.  

Democrats instead will continue to hold the Senate majority after races were called Friday and Saturday for Democratic senators in Arizona and Nevada. If they win a Georgia Senate runoff election on Dec. 6, Democrats could actually increase their majority.

In the House, the results are still too close to call a winner, though Republicans are still seen as favored to win a narrow majority.

“In the last two years, many voters have seen their incomes go up, even after adjusting for inflation. Most of these voters are people who had lower income pre-pandemic. While these voters might still list ‘inflation’ or ‘the economy’ as one of their top concerns in polling, they are still better off than they were two years ago, so the electoral blowback was minimal,” Matt Darling, a fellow in employment policy at the Niskanen Center, said in a message to The Hill. 

Exit polling from Election Day showed that inflation and abortion were the top issues for voters in the midterms.  

But analysts say that the overall condition of the economy, which has a tight labor market that’s generally favorable to workers, shouldn’t be overlooked. 

“There’s a lot of factors in this election, it’s a very unusual election,” Shawn Fremstad, director of law and political economy at the Center for Economic and Policy Research (CEPR), said in an interview.  

“But I would definitely say that the strong recovery, nearly full employment, people moving into higher paying jobs at the lower end — I definitely think that all added up to something that was important in terms of the election.” 

University of California, Berkeley economist Gabriel Zucman said in an online forum that the lower-end wage growth was a big deal. 

“It’s hard to overstate how big of a change this is, compared to the previous 40 years of quasi-stagnation for low wages (and abysmal recovery from the Great Recession),” he wrote. “And, as far as we can tell, this real growth of low wages is continuing to this day.” 

“Growth has been much stronger for the working class: 10.5 percent for the bottom 50 percent,” he wrote, referring to real income growth since January 2021. 

The UMass Amherst analysis also shows that while those at the bottom gained the most over the course of the pandemic, people at the top of the earnings spectrum lost the most, coming in 2 percentage points below inflation. This is a phenomenon called “wage compression,” and it took economists by surprise. 

“We’ve seen an unexpected compression in wages, where those who lost the most jobs during the pandemic saw the biggest wage gains in the past two years,” Dube wrote online. 

Dube also noted that people have been quitting their jobs more readily in response to changes in pay, indicating a higher degree of worker freedom to pursue better jobs. This was especially true for younger workers without a college degree. 

Wage compression “was driven by a sharp rise in quits, and the elasticity of quits to wages, especially for those under 40 without BA degree,” Dube wrote. 

Youth turnout for the midterm was the second-highest in the last 30 years, with an estimated at 27 percent of people aged 18 to 29 casting their ballot, according to the Center for Information and Research on Civic Learning and Engagement (CIRLCE), which is affiliated with Tufts University. 

“… it’s clear that young people had a major impact on the 2022 midterms,” researchers for CIRCLE wrote. 

While wage growth among low earners may have played into the youth vote, CEPR’s Fremstad said that there are many issues in Tuesday’s election that are important to young people.

“You have other factors playing in with young people,” he said. “The abortion issue is an important driver for young people.” 

Other data from the Bureau of Labor Statistics also shows that income levels for lower earners have been surging since the pandemic began. 

Wages for workers in the production and nonsupervisory leisure and hospitality sector — which are typically some of the lowest paying jobs in the economy — have increased around 5 percent in real terms since the pandemic started. 

“So many employers are hiring because it’s so hard to find workers and that’s because they all have jobs. As a result, we’ve been seeing wages bid up. So the longer-term trend of college grads seeing their wages go up, while nobody else’s do — that’s being kind of reversed over the last year, year-and-a-half,” Niskanen’s Matt Darling said.

This story was updated at 8:30 a.m.