In February 2024, a NewNation story claimed Americans were starting to “feel better about the economy” because of “higher wages.” In the previous month, per this article, data from the Bureau of Labor Statistics (BLS) revealed that average hourly earnings, when adjusted for inflation, increased by 1.4% compared to last year. According to the piece, this rise in January signifies the ninth successive month of annual growth in real wages, following a two-year span where inflation negated any wage advancements.
According to NewsNation’s piece, from April 2021 to April 2023, rising prices consistently surpassed wage increases. However, the story says that “subsiding inflation” and a job market that is “outperforming expectations” have shifted this dynamic since May 2023. A recent analysis by the Treasury has highlighted “significant wage improvements for workers with lower incomes” compared to the pre-pandemic era.
The analysis pointed out that the purchasing power of a worker’s weekly paycheck now exceeds what it could buy in 2019, even with the current higher prices. During the most challenging period of Biden’s administration, there was a more than 3% annual decrease in hourly wages. However, this rate has seen a slight upward shift, increasing at least 1% for three months.
In terms of actual weekly earnings as opposed to hourly earnings, the increase has been relatively modest, with a 0.8% rise year-over-year in November and a 0.7% increase in December. This is partly due to a reduction in the number of hours worked by employees,
However, it’s a claim that President Joe Biden is desperate for Americans to believe, and it is just a question of skewed data leading to flawed conclusions.
Hourly wage data from the Bureau of Labor Statistics fails to reflect workforce composition shifts. For instance, a surge of 7.7% in inflation-adjusted average hourly earnings during the early pandemic period was not due to a general rise in wages but the result of a disproportionate number of lower-wage earners losing their jobs while higher-wage earners remained employed. Essentially, the higher earners’ continued employment inflated the average wage figures. Conversely, as lower-wage workers began re-entering the job market, a decline in the actual hourly earnings was observed.
Indeed’s wage tracker, which analyzes salary data from job listings, shows a different story than the Biden administration claims, revealing the flaws in the BLS numbers. Recent data from the career platform Indeed indicates a significant slowdown in U.S. wage growth over the last year, hinting at a return to pre-pandemic wage levels.
According to Indeed, there was a 3.3% increase in salaries in February compared to the same month the previous year., but this growth rate is notably lower than the 9.3% increase observed in January 2022.
In February, wage growth for high-income workers decreased from a peak of 8.2% to 2.6%. Similarly, the annual growth rate has declined to 3.9% for those earning middle-range wages from a high of 8.5%.
Nick Bunker, an economist at Indeed, observed that the slowdown in wage growth is significant, with a nearly three percentage point reduction in the past year.
Since March 2022, the Federal Reserve has implemented 11 interest rate hikes to control inflation and moderate the labor market. Still, over the previous year, the labor market has consistently been more robust than anticipated. However, the labor market’s momentum is expected to gradually diminish soon as the effects of increased interest rates permeate the economy. Indications are increasingly pointing to a softening labor market as it contends with rising interest rates and persistent inflation.
The U.S. job market has been unexpectedly strong over the past year, but there are signs it’s starting to feel the effects of higher interest rates and ongoing inflation. Major companies across various industries have begun to cut jobs, signaling a potential shift in the market. This year has seen a noticeable uptick in layoffs, with an expanding roster of companies reducing their workforce. Notable firms such as Amazon, American Airlines, Citigroup, and UPS have eliminated workers and positions in 2024.
In essence, while the job market has been tight, suggesting strong demand for workers, the pace at which wages are increasing has slowed, and the future of the job market is somewhat uncertain due to economic policies aimed at controlling inflation.
The Biden administration paints a rosy picture of a thriving economy by cherry-picking the information it provides. However, a 2023 study revealed that 78% of Americans live paycheck to paycheck, starkly contrasting their reality to Biden’s messaging. For them, the message is clear – buckle up; this ride isn’t over yet.
