I slightly agree and slightly disagree with him here.
What has happened is that as we have seen demographic shifts take place, the working class has become increasing diverse. This has led to an intersection of working class issues and diversity issues. When a inner city black community asks for better schools, they're looking for the same type of government intervention that all working class families are asking for. Except that when I type "inner city black community", most people don't equate that to "working class community" so they don't see the 2 issues as identical.
Both parties have screwed this up. The Democrats have focused on the working class issues but their messaging is primarily through the lens of diversity issues. It also buries that black and Hispanic working class issues are working class issues, rebranding them as inclusion issues. This naturally alienates the white working class. They perceive themselves as having similar issues to the black people who are getting all of the attention, while they get ignored (and they're not wrong). And so long as the "working class" and "diversity issues" are seen as broadly different, the Dems will not be able to bridge the messaging gap.
The GOP has gone in the opposite direction. Fighting so aggressively against these diversity issues without realizing that the solutions to the diversity issues are identical to the solutions to the working class issues. This manifests itself in trying to craft solutions for the working class that don't also cater to the diversity issues. But since those two issues have significant overlap, stymieing issues that satisfy the diversity groups means stymieing issues that benefit the working class as well.
So I disagree with Yang in a specific sense. That he also unintentionally frames the working class as white and middle of the country when the cities and urban coasts are also filled with working class people. Mechanics, garbage truck drivers, janitors, waiters, etc. All working class people who are as prevalent on the coasts as the factory workers in the middle of the country.
And that's the real problem.