Maybe the Last Two or Three Years Were Not So Bad Economically?
Unless you are a Republican and then nothing is good economically.
This difference between the economic negative vibes and the real economic facts is laughable. Even such doubt was evident in the Summer of 2024 when things were improving. The improvement during and after the summer still did not change much doubt of the administration and it still remains. today People are still more inclined to believe the negative propaganda than reality. The old woes-me syndrome.
Bulwark’s Andrew Egger believes the economic outlook has improved so much since this summer; we can legitimately claim it as remarkable now. But, but, this is during Biden’s presidency. How can that be. He is too old to have guided us to this!.
Unfortunately, the news media, the political pundits, and the citizen naysayers are too focused on politics and age to realize what has happened months ago and is still happening today. Democrats are too damn slow to claim credit for it and push back. And they are more interested in flash and shiny.
Brief review with several charts to support this contention.
As Andrew Egger points out, “from the month before the COVID pandemic began to this September, U.S. prices have increased by 21.4 percent, while U.S. wages have increased by 26.3 percent, according to an analysis of Bureau of Labor Statistics data last month by the Center for American Progress (CAP). Wage growth wasn’t clustered at the top, either. The biggest real-wages beneficiaries over the past four years have been low-wage workers.”
Pricing increasing well beyond what is reasonable is another topic. I saw similar in 2009 when electronics and semiconductor suppliers demanded a 20% increase in prices. We paid it as we could not source a new supplier without OEM approval. The process would take weeks to accomplish and production would shut down. We settled later when new business was to be awarded.
So, who received the boost in income? Look for yourself.
Andrew Egger; This wage growth wasn’t clustered at the top. The biggest real-wages beneficiaries over the past four years have been low-wage workers (Figure A-EPI).
Offered up by the Economic Policy Institute EPI: “After adjusting for inflation, an hour of work not only earns workers a higher wage than before the recession, but it also earns a higher wage than at any point in U.S. history. That is aside from an anomalous period, due to compositional effects in the labor force at the onset of the pandemic in February 2020, created a phantom blip in wages.”
Between 2019 and 2023, hourly wage growth was strongest at the bottom of the wage distribution. The 10th-percentile real hourly wage grew 13.2% over the four-year period. To be clear, these are real (inflation-adjusted) wage changes. Overall inflation grew nearly 20%, or about 4.5% annually, between 2019 and 2023. Even with this historically fast inflation, particularly in the immediate aftermath of the pandemic recession, low-end wages grew substantially faster than price growth. Nominal wages (i.e., not inflation-adjusted) rose by roughly 34% cumulatively since 2019.
Across the wage distribution, we see the pace of wage growth declining for each successive wage group until the 90th percentile. Compared with the 13.2% wage growth at the bottom, growth was less than half as fast for lower-middle-wage workers (5.0%) and less than one-third as fast for middle-wage workers (3.0%) between 2019 and 2023. Upper-middle wages grew 2.0% over the four-year period, while the 90th-percentile wage grew 4.4%.
Because wages grew much faster at the 10th percentile than at the other four points we measure within the 20th to 90th percentiles, wage compression has occurred. These findings—disproportionately strong wage growth at the bottom leading to wage compression
This wage compression between 2019 and 2023 is in stark contrast with the experience of workers in the prior four decades. Figure B displays wage growth between 2019 and 2023 compared to wage growth between 1979 and 2019 for the same five wage groupings: low-wage, lower-middle-wage, middle-wage, upper-middle-wage, and high-wage. This time we report annualized wage changes in wages—which allow for comparison across periods which span different numbers of years, e.g. a four-year span versus a forty-year span.
The differences in wage growth between these periods are striking. Whereas in the most recent period wage growth was stronger among each successive lower wage group starting with upper-middle-wage workers on down, the opposite pattern occurs in the earlier forty-year period. Each successive higher wage group displays wage growth at least as fast as the previous one, except for between the lower-middle to the middle-wage group where there’s a small decrease.
In the most recent period, middle-wage workers experience growth nearly two-thirds (63.6%) as fast as high wage workers, but in the 1979-2019 period their wage growth was one-third as fast. The difference is even more extreme for the lowest wage workers: close to zero growth over the forty-year period versus more than 3% annualized growth over the past four years. All wage groups experienced wage growth at least as fast in the most recent period as between 1979 and 2019, and much faster among roughly the bottom half of the wage distribution.