Joe Biden: “Take home wages for workers going up.”
PolitiFact solution: half true
That’s why: President Joe Biden answered reporters’ questions on Jan. 12 about the discovery of classified documents at his think tank office and his home in Delaware. But instead, he sought to announce the positive development of the problem that plagued him during his presidency: inflation.
“You know, and as inflation comes down, workers’ wages go up,” Biden said. “Wages for workers are now higher than they were seven months ago, adjusted for inflation.”
Over the past two quarters, wage growth has outpaced inflation. Before then, however, wages had lagged far behind inflation, and recent improvements have not yet dug that hole.
Non-inflation-adjusted raw wages rose in front of Biden. They have risen every quarter of his presidency and generally at a faster rate than wages rose under his predecessor, Donald Trump.
But once you adjust for inflation, a lot of that income disappears. Real wages — that is, wages adjusted for inflation — fell or remained flat during the first six quarters of the Biden presidency.
However, over the past two quarters, real wages have changed dramatically.
In the third quarter of 2022, real wages increased by about 10% year on year. (The annual rate multiplies the monthly growth rate by 12 to project growth throughout the year.)
While this real wage figure was not released for the fourth quarter of 2022, year-on-year raw wages rose nearly 13% this quarter as inflation rose less than 2% over the same period.
Thus, over the past two quarters, wages outpaced inflation. This is what the White House brought to the attention when we requested this article.
But by the time of this reversal, wages had fallen into a big hole in Biden’s eyes — a hole from which recent gains are only now beginning to crawl out.
Over the past year, the average hourly earnings of all private employees have increased by 4.7%. But inflation rose by 6.4% over the same period. Thus, wages gave way to inflation.
And over the past two years—the entire time of Biden’s presidency—wages have collectively risen by 10% and inflation has collectively risen by 14%. Thus, wages during this period also followed inflation.
Dean Baker, co-founder of the liberal Center for Economic and Policy Research, said there is a factor that complicates any such comparison. During the pandemic, real wages skyrocketed — not because workers were getting a raise, but because lower-wage workers were more likely to lose their jobs, and people who were still working were getting extraordinarily good compensation.
When low-wage workers returned to their jobs in 2021 and 2022, it slowed wage growth, Baker said. But exactly how much is difficult to determine.
Our solution
Biden said: “Workers’ wages are rising.”
The data shows that over the past two quarters, wages have outperformed inflation. However, this increase is just beginning to offset wages that were eaten away by inflation at the start of the Biden presidency.
In Biden’s two years in office, cumulative wage growth has outpaced cumulative inflation growth.
We evaluate the statement half true.
Our sources
- Joe Biden, Remarks on the Economy and Efforts to Fight Inflation, January 12, 2023
- Federal Reserve Bank of St. Louis, “Average hourly earnings of all employees, all private”, accessed January 12, 2023.
- Federal Reserve Bank of St. Louis, “Employment Cost Index: Wages and Salaries: Private Sector Employees”, accessed January 12, 2023.
- Federal Reserve Bank of St. Louis, “Full-Time: Average Regular Weekly Real Earnings: Employees: 16 and Over,” accessed January 12, 2023.
- Federal Reserve Bank of St. Louis, “Consumer Price Index for All Urban Consumers: All Goods U.S. City Average”, accessed January 12, 2023.
- New York Times, December Inflation Report: Consumer Price Growth Continues to Decline, January 12, 2023.
- Email interview with Gary Burtless, economist at the Brookings Institution, January 12, 2023.
- Email interview with Dean Baker, co-founder of the liberal Center for Economic and Policy Research, January 12, 2023.
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