SPEECH LIGHT ON WAGES SPELLS TROUBLE FOR BIDEN
President Biden devoted much of his State of the Union address to making his case to a country that is deeply dissatisfied about the economy. He touted the job growth that has occurred on his watch, the infrastructure bill he signed, and the plans he has for cutting drug prices and ending “junk fees.” On all of those points, the public likely agrees with him. But he barely touched on the reasons for the public’s unhappiness.
Americans are well aware of the post-OVID jobs recovery. According to Gallup, in late January nearly two-thirds of the public rated it a “good time to find a quality job.” The numbers on that question are almost as good as they were before the pandemic. In those early 2020 days, though, more than 60% of Americans considered the economy “excellent” or “good.” Only 17% say that now.
Evidently it takes more than job growth to make us pleased — something the last 30 years of that Gallup polling confirms. Majorities considered the economy “excellent” or “good” for only two stretches during these decades: from late 1997 through early 2001, and then again from mid-2018 until March 2020. Bill Clinton was in the White House for most of that first period, and Donald Trump for most of the second.
One lesson from that history: Biden has company when he boasts about employment even as voters pan the economy. George W. Bush and Barack Obama saw job growth for most of their presidencies without getting majority approval for the economy. Not even job growth plus low inflation did the trick.
What distinguishes the two happy moments from the rest of the past three decades: They are the only times we had both rising employment and rising real wages.
Wages, adjusted for inflation, stagnated through the 1990s for most workers until they started to rise in 1997. They kept rising until the dotcom bust of mid-2001. It wasn’t until mid-2016 that we again started setting records for both real wages and employment.
It makes sense that people would judge the economy this way. Most people are always able to find or keep employment, and knowing that other people are finding jobs is not much consolation when your own paycheck isn’t keeping up with your bills.
That standard helps explain why the economy has been getting such low marks — and Biden along with it. Real wages have been dropping for most of Biden’s time in the White House. Even with a recent upward trend, they are still well below their January 2021 level. They’re not as high as they were before COVID.
Biden’s speech mentioned the inflation that has caused much of the decline in real wages, but he said almost nothing about wages themselves. He used the word “wage” once, in calling Congress to legislate a “living wage” for low-income workers.
He blamed the inflation on global supply trends made worse by Vladimir Putin. Whether voters agree or disagree with that analysis, it’s unlikely to make them feel better about paychecks falling behind bills.
If the recent improvement in real wages continues and the economy keeps expanding, people might start to feel better. If wages start falling behind prices again, though — or, worse, a recession begins — there is no economic message, however well crafted, that is likely to fix Biden’s political problem.