Americans are told the affordability crisis is all about prices. Groceries cost too much. Rent is too high. Healthcare is unaffordable. Naturally, the solution is assumed to be lower prices—cheaper imports, cheaper labor, cheaper production.
But this approach also cheapens one of the most important things in the American economy: wages.
For decades, policymakers promised globalization would make life more affordable. That promise quietly assumed lower prices could substitute for rising incomes—an assumption that proved false once domestic production and wage growth stalled. It delivered some cheaper goods, but over time it failed to make Americans richer. Workers were told to celebrate lower prices while their paychecks stayed flat, their bargaining power eroded, and their economic security weakened. Inflation did not create this crisis. It merely exposed a deeper, long-running problem.
Policymakers also justified trade liberalization by claiming export growth would offset job losses and wage pressure. In reality, exports have never been large enough to carry that burden. U.S. exports only account for only about 11% of GDP [1], while the remaining economy depends on domestic production, employment, and investment. Trade agreements expanded import access far more than export opportunity, masking a national giveaway behind promises of export-led growth that never materialized for most workers.
The true cause is straightforward: real wages have been flat, income inequality has surged, and trade policy is a central reason why. When pay stops rising, every price increase becomes a crisis—and no discount can fix that.
The data tell a stark story. For much of the post–World War II era, American workers shared in the gains of economic growth. Rising productivity translated into rising wages, and living standards improved broadly. That relationship began to fracture in the early 1990s and deteriorated rapidly by the late 1990s.
The divergence first accelerated in the 1990s, coinciding with the implementation of NAFTA and China’s rapid opening to foreign direct investment through export-processing zones and liberalization reforms. It then widened sharply in the early 2000s, just as China’s accession to the WTO and MFN status drove tariffs down to near-duty-free levels across most manufactured goods, intensifying offshoring and import competition.
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