Many economists were pleasantly surprised by the Labor Department’s August jobs report Friday morning.
201,000 jobs were added last month when economists only expected a gain of about 190,000 and the unemployment rate remained at 3.9 percent. The number that shocked most experts, however, was that wages grew 2.9 percent faster than last year, making it the fastest growth rate since the recession.
Very exciting to finally see wages hit 2.9% – which we haven't hit since 2009. pic.twitter.com/fLXICf2XYW
— Martha Gimbel (@marthagimbel) September 7, 2018
But there is more than meets the eye when it comes such a glowing jobs report, especially when it comes to wage growth. The White House will likely point to these numbers as tangible evidence that the Trump administration is putting more money into the pockets of everyday Americans.
While on paper 2.9 percent wage growth is impressive, when calculating for 2 percent inflation, it’s still quite slow.
Year-over-year nominal wages grew a more promising 2.9% in August, but still slower than levels consistent with the Fed’s 2% inflation target and long-term potential productivity growth. 1/n@EconomicPolicy #JobsReport pic.twitter.com/Fqc7M9YI7w
— Elise Gould (@eliselgould) September 7, 2018
In what might have been a preparation for the August jobs report, the White House sent out an email Thursday titled: “The latest Trump Economy myth: Wages are stagnant.” In it, the administration goes on the defensive, offering a full-throated defense of the Trump economy and saying the economic results of the Trump presidency are “undeniable.”
The White House specifically calls out ThinkProgress’s reporting in the email: “Looking for a new talking point, the left found one: Jobs, stocks, and economic growth may be soaring, but pay is not. ‘Worker wages remain stagnant,’ ThinkProgress declared in July.”
In this instance, the White House is referring to a July ThinkProgress article which describes the way corporate executives have successfully enriched themselves through stock buybacks, a windfall enabled by the Tax Cuts and Jobs Act of 2017 signed into law by President Donald Trump on December 22, 2017.
As we reported at the time, the White House had been making a strenuous effort to sell that bill “as a game-changer for average working Americans” despite the fact that the “benefits of that bill appear to be going mostly to the people at the top.” This continues to be the case: The average American worker earns around $44,500 a year, not much more than what the typical worker earned in 40 years ago, adjusted for inflation.
The Thursday email coincided with a release of a new report from Trump’s Council of Economic Advisers (CEA), wherein the group claims that actually, wage growth is growing at a faster pace than is being reported, you just have to look really, really hard to find it.
The report suggests wages have actually grown by 1.4 percent over the past year when data on benefits, taxes, a different measure of inflation, and how earnings differ across age brackets are all factored in. For the average American family, however, that only comes out to roughly an additional $1,000 per year.
According to CEA Chairman Kevin Hassett, workers value benefits “just as much as cash,” but surveys by groups like the Society for Human Resource Management have found that while most workers value their benefits, they are rarely asked whether or not they would trade them for higher wages.
At any rate, the upshot is that as impressive as this jobs report looks on paper, it nevertheless fails to deliver much in the way of tangible, real-world benefits for workers. The 2.9 wage growth reported, while noteworthy from a post-crash historical perspective, really doesn’t mean much to the 15 million American households struggling to put food on the table.