Is the economy under President Trump producing outsized wage gains for working- and middle-class Americans, as the chief executive claims? Or have his policies betrayed the workers who gave him so many votes in the 2016 race for the White House, as his critics charge? (See this piece for typical views from both vantage points.)
The latest data say loud and clear that there’s some evidence that every day Americans are faring better in the Trump years. But it’s far from a slam dunk.
The first set of figures comes from this morning’s Employment Cost Index (ECI), a quarterly measure of worker compensation trends published by the Labor Department and the second is the Department’s newest monthly wage numbers.
One complication that emerges right away is that the middle class and the working class are two different groups each of whose composition is anything but homogeneous and each of whose definitions can vary widely. For example, manufacturing includes employees at opposite ends of the skills and therefore wages levels. And managers in numerous service industries earn pretty modest salaries. (See, e.g., here.) Moreover, don’t forget gaping gaps among different regions of the country. In many major metropolitan areas, families earning six-figure incomes arguably are hard-pressed financially.
In this post, I try to distinguish between “the rich” and the rest by comparing trends for managerial and executive-type workers on the one hand (including professionals and keeping the above qualifications in mind), and non-supervisory workers on the other. As usual with compensation reports, I exclude government workers, because their wages, salaries, and benefits stems from politicians’ decisions, as opposed to the private sector, where compensation has much more to do with the economy’s fundamentals. And in the first table below, presenting calculations from the ECI data, I zero in on wage and salary costs. The reason? The ECI doesn’t directly measure what workers’ receive – instead, it gauges various costs businesses incur to keep them on their payrolls. And unlike benefits costs, wage and salary costs are much likelier actually to wind up in workers’ pockets.
What’s presented here is a number that shows the degree to which increases in wages and salaries for various classes of workers have been rising at a faster or slower pace (or actually fell) between the last nine quarters of President Obama’s administration and the first nine quarters of President Trump’s administration. (I chose these periods because they’re as close as possible to each other in the nation’s current economic cycle.) Call this figure the “wage and salary acceleration rate.” So for example, if a group of workers’ wages and salaries grew by 10 percent during the Obama period used and by 15 percent during the Trump period, the acceleration rate would be 50 percent.
And just FYI, I identify the last quarter of 2016 as Mr. Obama’s final full quarter, and the first quarter of 2017 as Mr. Trump’s first full quarter (since he took office on January 20).
Obama-Trump acceleration rate
All workers: +31.09 percent
Management/professional/related: +15.05 percent
Management/business/financial: -15.78 percent
Professional & related: +32.06 percent
Office/admin support: +15.51 percent
Construction/extraction/ +9.05 percent
installation/maintenance/repair: +25.57 percent
Production/transportation/ +25.55 percent
Production: +18.26 percent
Transportation & material moving: +33.33 percent
To me, these result are a wash, in large part because the spreads between the results for the second, third, and fourth categories (the upper income categories) and those for the remaining, lower income categories are both pretty wide. Interestingly, only one group within each of these broad categories beat the workforce average of 31.09 percent – professional and related workers, and transportation and material moving workers.
The second table, presented below, compares the hourly earnings (including salaries calculated on an hourly basis) Obama-Trump accelerators for the entire private sector workforce, and for the non-supervisory portion of that workforce. Because these data come out monthly, the two time periods are the final 26 months of the Obama administration (ending in December, 2016) and the first 26 months of the Trump administration (starting in January, 2017).
These results look more clear-cut, with hourly pay for the non-supervisory workers increasing faster during the Trump presidency so far than during the final slightly more than two years of the Obama presidency.
Obama-Trump acceleration rate
All workers: +20.54 percent
Non-supervisory workers: +27.16 percent
As election 2020 so far makes clear, inequality and middle- and working-class-related trends are shaping up as major campaign issues. So far, the bottom line is that neither backers or opponents of President Trump deserve to make major political hay of them.