Good Policy Matters: U.S. Wage Growth Is Soaring — Fastest At The Low End

Rod Thomson

Good policies result in good outcomes. And bad policies lead directly to bad outcomes. 

So, Obamacare and attendant taxes and penalties as policies were a disaster, and the results of it were terrible for healthcare costs and a wreck for the economy, which saw the slowest recovery after a recession ever in history and general malaise over the American public. And is normally the case with progressive policies, those hurt the most were the ones supposedly meant to be helped.

On the other side, tax cuts and deregulation are good policies and, ipso facto, they are being great for the economy, businesses, the unemployment rate and wages. Yes, wages. An area where Democrats and progressives lecture us unceasingly about how the rich are the only ones benefiting from Trump tax cuts and the little guy is getting crushed while the middle class is shrinking. This is a talking point in every Democratic debate.

Except that was true during the Obama years. And they know this. A close observer will note that when any data is actually used in this discussion, it often encompasses the Bush (recession) and Obama years and stops there. Because bad policies. But in every conceivable metric, things are better in the Trump years because of good policy. It’s not about nice guys or mean guys, or black guys or white guys or presidential guys or non-presidential guys. It’s about policy. And we are in the grand slam realm with the economy.

You frequently hear that black and Hispanic unemployment are at all-time record lows, along with the unemployment rate. That’s true and due to good policy. But more rarely do you hear about the wages — except when Democrats push the $15-per-hour minimum wage, pretending everything is stagnant because they simply cannot run on the truth.

So here is another nail in the coffin of bad policy. Wages across the board are growing much faster than the cost of living, but growing the fastest at the low end. According to Nick Bunker, an Economist at the Indeed Hiring Lab who focuses on the U.S. labor market, writing in September (the numbers have all improved even faster since then, and even these numbers have since been adjusted upward):

Before assuming that the total job growth number in August is skewed because of Census hiring, remember that these are real jobs taken by real workers. Even if you remove government hiring, which accounts for around 34,000 jobs, this is still a number that is high enough to keep up with population growth. This month’s report reflects a slowing labor market but not necessarily one heading straight for a recession.

What’s interesting is that Bunker’s bio shows him to be a man of the progressive left. He was previously a Senior Policy Analyst at the Washington Center for Equitable Growth, a leftwing economics think tank. Prior to that, he was a Research Assistant at the Center for American Progress, a progressive activist think tank founded by Clinton confidant John Podesta. 

But here’s his money paragraph:

In fact, wage growth continues to be strongest for workers in lower-wage industries. Labor force participation grew in the month, signaling a labor market still drawing workers off the sidelines. Job seekers are still benefiting from this job market, but let’s not count on this lasting forever.

So his look at the numbers shows that Trump’s policies are working incredibly well for low-wage workers — the very people that critics of tax reform and deregulation said would be hurt the most. His progressive heart’s spin is that it can’t last. But there’s a pretty good chance he’s been saying that all along. New York Times columnist and economist Paul Krugman has been talking about tanking markets and a recession or depression since the day Trump took office, literally, and still is. Progressives.

At least Bunker is honest enough to publish an accurate study of the numbers. And notice that he includes continued growth in the labor participation rate, which means people who may have given up back during the Obama years have jumped in and found work, and more continue to do so every month. This pool is part of the reason wages have not been rising faster. A lot of people had given up during the Obama years.

This is also shown in the Atlanta Fed’s Wage Growth Tracker. The first chart below shows that the median wage growth for the lowest quartile of wage-earners had been growing slower throughout the 2000s, until just the last few years, and then it began growing faster.

The faster median wage growth for lower-wage workers is also seen in what is called the relative median wage level of these workers. The chart below shows the median wage level for people in the lowest wage quartile (25 percent) relative to the median for all workers in the Wage Growth Tracker dataset. The chart again shows that for “workers in lower-wage jobs, their relative median wage over the 2000s has deteriorated, and that erosion has reversed course only in the last few years,” according to the Atlanta Fed. 

So this shows that the lowest wage earners are moving ahead faster than the rest of the pack since roughly when Trump took office. Much faster. That is crippling to the Democrats’ argument that only rich people are getting ahead and working Americans are falling behind.

To wit, another wages metric is the “real wage,” which Bernie Sanders deplored during the last presidential debate as a lousy 1.1 percent. Sanders used sleight of hand of real wages on purpose to make Democratic voters think he was saying wages, and of course he could count on the media playing along or just being ignorant. 

The real wage increase is the increase in wages minus the increase in costs of living. The goal here is to keep it in positive territory. Since 1980, it has averaged 0.3 percent. So it is actually right now nearly four times higher than the long-term average. Sanders was deceiving, but the reality is that that number shows just how successful good policies are.

Finally, in the 16 years prior to Trump’s presidency, inflation-adjusted incomes rose by about $1,500. In the eight years that George W. Bush was president, median income barely moved, up just $401 due largely to the wipeout by the deep recession of 2008. Taking out the first six months of Obama’s presidency as the recession effects lingered, incomes under Obama over 7½ years moved up only $1,043. 

But in Trump’s less than three years in office, inflation-adjusted incomes galloped forward more than $5,000, according to the Census Bureau Current Population Survey data. In fact, median household income has now reached $65,976 – up more than 8 percent in 2019 dollars under the Trump presidency. And “median” captures the picture accurately because using “average” can be skewed at the extremes.

We play politics on the presentation. If you’re a Democrat, it’s about skin color and gender first, for everyone it is about likability, appearances, and other superficialities. That is about all the media covers in any depth. But it’s really more about creating policies to ensure that all Americans can pursue the dream of liberty in prosperity.

In that category, Trump has been the best president in a long time because his policies have delivered. There is no debating the results. They are astonishingly good for Americans.

Rod Thomson is an author, past Salem radio host, ABC TV commentator, former journalist and is Founder of The Revolutionary Act. 

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