Im-Politic: On the Economy, Obama’s Record Looks Stronger than Trump’s

Tags

Barack Obama, CCP Virus, coronavirus, COVID 19, election 2020, Employment to Population Ratio, GDP, gross domestic product, Im-Politic, Jobs, Joe Biden, Labor Force Participation Rate, labor productivity, manufacturing, non-farm jobs, private sector, productivity, real GDP, real private sector, real wages, recession, subsidized private sector, Trump, value added, wages, Wuhan virus

Not surprisingly, as this U.S. presidential cycle gets ever more intense, so has the debate over which boasts a better record in helping steer the nation’s economy: the Obama administration in which Democratic presidential nominee Joe Biden served as second-in-command, or the incumbent Trump administration. I’ve just looked over some key data, and the verdict on most counts goes to the Obama administration. The margin of victory here isn’t huge, but it’s anything but razor thin, either. Moreover, any Obama edge is surprising given that the economy is President Trump’s major advantage in nearly all the polls.

All the same, here are the data. They compare performance during the last three full years of the Obama presidency and the first three full years of the Trump presidency. In my view, these time-frames deserve priority because they’re the ones closest to each other in the same expansionary business cycle, making apples to apples results much likelier.

The time-frames of course leave out the CCP Virus period, during which all the Trump numbers sank like stones. But if you regard the virus’ economic effects as purely artificial, having nothing to do with the economy’s fundamentals (as I do), then you want to strip them out.

Other methodological notes: Although the jobs-focused data come out from the federal government on a monthly basis, and therefore permit comparisons between completely identical (and virus-adjusted) three-year periods, the economic growth and productivity data don’t, so I show Trump results both through the first quarter of this year (affected by the shutdowns that began in March) and through the last quarter of 2019. In addition, regarding the monthly figures, because of the January 20 inauguration date, I peg the end of the Obama administration as January, 2017 and the beginning of the Trump administration as February, 2017.

And off we go, starting with overall employment, which consists of the Bureau of Labor Department’s U.S. employment universe – “non-farm jobs.”

Obama: +5.55 percent            Trump: +4.56 percent

But of course, non-farm jobs include all government jobs, and their status has much less to do with the economy’s underlying strengths and weaknesses than with politicians’ decision. So here are the numbers for private sector jobs.

Obama: +6.56 percent            Trump: +5.04 percent

So advantage Obama again. As RealityChek regulars know, however, not all private sector jobs are created equal. In fact, many barely deserve the term at all, because their circumstances depend so heavily on government spending. Healthcare is of course the leading example. Therefore, it’s useful to examine the employment results in what I’ve called the “real private sector”.

Obama +6.22 percent             Trump: + 4.63 percent

It’s another Obama out-performance. This string is broken when it comes to manufacturing jobs, however.

Obama: +2.38 percent           Trump: +3.78 percent

But Obama comes out ahead on inflation-adjusted wages for the entire private sector.

Obama +3.69 percent           Trump: +2.99 percent

And the margin is even bigger for real manufacturing wages.

Obama: +3.15 percent          Trump: +0.74 percent

One problem with looking at jobs gains or losses, or even the unemployment rate, is that these numbers don’t tell the whole story about the health of the labor market. To fill in the gaps, economists like to examine two performance measures called the Labor Force Participation Rate, and the Employment to Population Ratio.

The former, according to well regarded left-of-center economics think tank, reveals “the number of people in the labor force—defined as the sum of employed and unemployed persons—as a share of the total working-age population, which is the number of civilian, non-institutionalized people, age 16 and over.”

The latter, the same source explains, shows “the number of people currently employed as a share of the total working-age population, which is the number of civilian, non-institutionalized persons, age 16 and over.”

For what it’s worth, this reliable economics and finance website claims that the Employment to Population Ratio provides the best indication of job shrinkage or growth. So let’s begin there.

Obama: 58.8 percent to 59.9 percent       Trump: 59.9 percent to 61.1 percent

Pretty much a standoff.

As for Labor Force Participation:

Obama: 62.9 percent to 62.6 percent       Trump: 62.8 percent to 63.4 percent

Advantage, Mr. Trump.

As previously mentioned, the economic growth figures are only reported quarterly. Keeping that in mind, here’s how the two administrations stack up. The most commonly followed measure of the economy’s size and how it changes is inflation-adjusted gross domestic product (GDP).

Obama: +8.19 percent           Trump: +5.75 percent

These data, though, include shutdown-y March, 2020. Taking the story only through the end of 2019 brings the Trump years’ performance up to 7.11 percent – but he still trails.

Interestingly, even including the first quarter of this CCP Virus-y year, Mr. Trump’s record is slightly better when another metric for economic growth is used – value-added. Its value lies in trying to eliminate the double- and even more overcounting that results when the of the parts and other inputs of a complicated product are counted both when they’re turned out individually, and when they’re contained in that final product.

Obama: +12.09 percent          Trump: +12.24 percent

The Trump presidency’s margin is even bigger in manufacturing value-added, and even including the first quarter:

Obama: +7.09 percent            Trump: +10.58 percent

Importantly, all the above value-added numbers are pre-inflation. After-inflation value-added data are tracked by the federal government, too, but they’re not even measured on a quarterly basis. Only full-year numbers are available. So since these make precise comparisons less possible, I’m skipping them.

Finally, here are numbers that hardly ever make the news, but might be the most important of all – the productivity data. These various measures of efficiency are widely viewed by economists are crucial to determining how healthy and durable economic growth is and will be, and therefore how strongly and for how long living standards can rise.

Results aren’t up-to-date enough for the broadest measure of economic efficiency – multi-factor productivity. But they are for the narrower measure, labor productivity – which gauges how much a single worker can produce in a single hour on the job – starting with the overall economy

Obama: +3.97 percent           Trump: +3.95 percent

And if you want to remove the first quarter of this year, because of the virus effect in March, overall labor productivity during the Trump period was up 4.02 percent

Labor productivity is monitored for manufacturing, too, and here are those statistics including the first quarter of this year:

Obama: -2.57 percent           Trump: +0.29 percent .

Oddly, if the first quarter is removed, the Trump years’ performance worsens a bit – and even falls to an overall dip of 0.09 percent. But however poor, it still tops the record of the Obama years.

So why are the Trump economy poll numbers so good? One possible answer: The final year of the Obama presidency was feeble by nearly all measures. Real gross domestic product advanced by only 1.70 percent. Total employment grew by a mere 1.64 percent, versuss 2.19 percent in 2014. National manufacturing employment actually dipped by 6,000 from 2015 levels. Real wage growth overall slowed from 1.26 percent in 2014 to 0.56 percent in 2016. And inflation-adjusted manufacturing wages performed scarcely better.

Moreover, as the New York Times article linked above makes clear, the public’s evaluations of the Trump economic record are incredibly partisan – often conflicting with a respondent’s actual situation.

It’s also possible and legitimate, as I’ve noted, to point to some important reasons for this Trump under-performance.  The President’s trade policies clearly disrupted national and global supply chains, and the consequent inefficiencies surely dragged on GDP and employment in the short term.  Boeing aircraft’s safety woes have undercut national economic performance lately, too.  But good luck to you if you think these considerations are going to have any effect on voters.  

I’m hardly naive enough to think that these or other economic facts will be enough to determine November’s outcome. And I have no idea how voters will factor in the deep CCP Virus-induced recession into their thinking. But the facts aren’t a throwaway, either, and although the Obama record didn’t exactly thump Mr. Trump’s, it’ll certainly provide Biden with considerable ammunition.

(What’s Left of) Our Economy: Newest Numbers Show Trump’s Real Wages Problem Continues

Tags

Barack Obama, election 2020, inflation adjusted wages, manufacturing, private sector, real wages, Trump, wages, {What's Left of) Our Economy

The big economic message sent by today’s official U.S. data on inflation-adjusted wages is highly concentrated in the so-called benchmark revisions – which adjust the results going back to 2015. And the big political message sent by these revisions is that President Trump’s economic record still suffers from a serious real wage problem – especially in the manufacturing sector, and especially compared with his predecessor, Barack Obama, whose supposed economic failures Mr. Trump has made a major campaign issue.

To be sure, the newest (and unrevised) January statistics weren’t great news for Trump-World, either. Total private sector pay in real terms inched up only 0.09 percent month-to-month, and the annual increase was a mere 0.64 percent. Between the previous Januarys, constant dollar private sector wages improved by a much faster 1.77 percent. (The Labor Department doesn’t track public sector wages, because their levels and growth are determined overwhelmingly by government decisions, and therefore supposedly say little about the state of the labor market or of the entire economy.)

The story for blue-collar workers (called “production and nonsupervisory workers” by the Labor Department and abbreviated here “N/S”) was only a little better. Their real wages flat-lined on month in January, but year-on-year they were up 0.75 percent – more strongly than overall private sector wages, and thereby in synch with numerous observations that pay at the lower end of the scale is rising faster than it is at the upper end.

In manufacturing, however, that picture is more mixed. Overall after-inflation manufacturing wages dipped by -0.09 percent sequentially in January, though they advanced by 0.74 percent year-on-year. That rise was better not only than that of total private sector workers, but than of its own performance the previous year – which saw zero increase in these wages.

Price-adjusted wages for manufacturing’s blue collar workforce, however, fared only negligibly better than for all manufacturing employees – flat-lining versus a small decline. And year-on-year they increased by less than a third the rate of pay for all manufacturing workers (0.23 percent) and much more slowly than the year before (1.37 percent).

The good news for Mr. Trump – the revisions put more of a shine on his job creation record over the last two years, as shown in the tables below. (Keep in mind that they only take the story through December, 2019 – because today’s January figures haven’t been revised yet.)

                                                                     Unrevised

                                     Total private     N/S private     Total mfg      N/S mfg

Year-on-year, 2019:         +0.64%           +0.75%          +0.74%        +0.45%

Year-on-year, 2018:         +0.56%          +1.63%                0%          +1.14%

                                                                      Revised

                                    Total private      N/S private     Total mfg      N/S mfg

Year-on-year, 2019:        +0.73%           +0.85%           +0.74%        +0.45%

Year-on-year, 2018:        +1.40%          +1.74%                 0%          +1.03%

Interestingly, though, the biggest changes came for all private sector workers. And the updates make the picture for blue-collar manufacturing workers slightly gloomier.

But the revisions still left the Obama years’ real wages performance looking better than those of the Trump years – a comparison that might be raised frequently during this election year. The 34-month periods have been chosen because that’s the amount of time Mr. Trump has been in office since his first full month in the White House (February, 2017. Further, the two time periods are right next to each other in the current business cycle.

The bottom line? The gap between the two administrations closed for all private sector workers and blue collar private sector workers. But it widened in the manufacturing sector.

                                                                Unrevised

                                  Total private      N/S private      Total mfg    N/S mfg

1^st 34 Trump months:    +2.53%           +2.72%          +0.65%       +2.77%

last 34 Obama months: +3.50%           +3.97%          +3.05%       +2.97%

                                                                  Revised

                                  Total private      N/S private      Total mfg    N/S mfg

1^st 34 Trump months:    +2.71%            +3.05%          +0.65%      +2.65%

last 34 Obama months: +3.49%            +3.97%          +3.44%      +3.34%

And finally, the impact of the revisions on real wages trends during the current economic recovery, and on the previous two expansions:

                                                                                 Unrevised

                                                             Private    N/S private    Mfg      N/S mfg

1990s expansion (2Q 91-1Q 01):           n/a          +6.37%        n/a       +2.18%

bubble expansion (4Q 01-4Q 07)         : n/a          +0.35%        n/a       -2.77%

current expansion (2Q 09 – present): +6.30%      +6.79%    +1.59%   +3.01%

                                                                                 Revised                      

                                                              Private   N/S private    Mfg      N/S mfg

1990s expansion (2Q 91-1Q 01):            n/a          +6.51%       n/a        +1.81%

bubble expansion (4Q 01-4Q 07):           n/a         +0.35%        n/a        -2.77%

current expansion (2Q 09 – present):  +6.70%     +7.01% +   1.59%    +2.77%

The big takeaways, as I see them: The real wage performance of the current recovery looks somewhat better than previous thought – except for blue-collar manufacturing paychecks. And the widely admired 1990s expansion looks better for blue-collar private sector workers in toto but worse for their manufacturing counterparts.

Several recent polls show Americans to be unusually happy about the state of the economy and their own personal situations. (For the latest, see here.) These real wage figures indicate that it’s not yet entirely clear why.

(What’s Left of) Our Economy: U.S. After-Inflation Wages Could Still Use More Inflation

Tags

Barack Obama, election 2020, inflation-adjusted wages, manufacturing, private sector, real wages, recovery, Trump, wages, {What's Left of) Our Economy

This morning’s real wages figures from the Labor Department (for December) contained an unusually diverse grab bag of results, and with a presidential election year now officially underway, perhaps the most newsworthy are those that could well affect the race for the White House – and which on balance seem unfavorable to President Trump.

In addition, though, some other results undermine a major belief about how after-inflation paychecks have fared during the current (record length) economic recovery versus its two immediate predecessors.

Not that the news was all bad for the President and his supporters (and anyone else rooting for a stronger American economy). Yes, overall, inflation-adjusted wages in the private sector dipped sequentially for the second time in three months – by 0.09 percent. (The Labor Department doesn’t track real public sector wages because their trends say more about politicians’ decisions than about economic fundamentals).

But if these preliminary figures hold tightly enough, the 2019 year-on-year improvement of 0.64 percent will be higher than 2018’s 0.56 percent increase.

At the same time, wage growth decelerated throughout 2019 – from 0.37 percent between January and June to 0.27 percent between June and December.

Real manufacturing wages fared better, continuing a year-long trend. Month-to-month in December they climbed by 0.18 percent, and their year-on-year increase and improvement were stronger than that of the private sector, too. The latest annual rise was 0.74 percent – up from the previous year’s flatline. And throughout 2019, they increased at the same 0.37 percent rates during both halves of the year.

But the results were less encouraging for non-supervisory workers in both the private sector overall and in manufacturing. By certain measures, paychecks for the lowest paid U.S. workers have been improving faster than those for the workforce overall. And using the Labor Department’s methodology of distinguishing supervisory from non-supervisory workers provides some support for that finding.

For example, on an annual basis, in 2019 and 2018, inflation-adjusted wages increased faster for both non-supervisory manufacturing and blue-collar workers than those wages for all workers, as shown here:

                                     Total private     N/S private     Total mfg      N/S mfg

Year-on-year, 2019:         +0.64%           +0.75%          +0.74%        +0.45%

Year-on-year, 2018:        +0.56%           +1.63%                0%          +1.14%

Yet the table also shows 2018-19 deceleration for both groups.

Moreover, on month in December, real wages for these blue-collar workers performed worse in absolute terms than for all private sector and manufacturing workers – actually falling by 0.21 percent for the former (the biggest decline since October, 2018’s 0.22 percent drop) and increasing by just 0.11 percent for the latter.

And deceleration continued through the year. Between the first and second halves of 2019, constant dollar wages increases for the private sector fell from 0.53 percent to 0.21 percent, and from 0.23 percent to 0.22 percent for manufacturing.

The impact of Boeing’s safety-related woes on aircraft manufacturing per se and on the company’s huge domestic supply chain could explain some of these disappointing figures for industry. But so could the uncertainties created either by Mr. Trump’s tariff-centric trade policies, or by their ragged implementation, or both. Further, as the numbers indicate, real wage weakness isn’t simply a manufacturing problem.

Perhaps most important for Mr. Trump, real wages’ performance during the first 34 months of his term in office (starting with February, 2017, his first full month), have lagged their increases during the most comparable period in Barack Obama’s presidency – his last 34 months in office (ending in January, 2017). Here are the results:

                                       Total private      N/S private      Total mfg        N/S mfg

1^st 34 Trump months:         +2.53%           +2.72%           +0.65%          +2.77%

last 34 Obama months:      +3.50%           +3.97%          +3.05%           +2.97%

Finally, the new real wages data show that when it comes to this gauge, the current economic recovery stacks up unexpectedly well with the two previous expansions where a reasonable amount of statistics exist – for non-supervisory workers. The comparison is especially striking between the current expansion and the 1990s expansion – which is widely viewed as an excellent one for both the economy and America’s employees.

                                                               Private    N/S private    mfg     N/S mfg

1990s expansion (2Q 91-1Q 01):             n/a           +6.37%       n/a      +2.18%

bubble expansion (4Q 01-4Q 07):           n/a            +0.35%       n/a      -2.77%

current expansion (2Q 09 – present):  +6.30%        +6.79%   +1.59%   +3.01%

Unfortunately for President Trump and Trump-ers, though, this longer-term picture isn’t likely to impress voters as much as more recent developments. And when it comes to workers’ after-inflation wages, he clearly has more work to do.

(What’s Left of) Our Economy: A New Anti-Trade War Argument Bites the Dust

Tags

BLS, blue-collar workers, Bruce Yandle, Bureau of Labor Statistics, consumers, George Mason University, inflation-adjusted wages, Mercatus Center, private sector, real wages, tariffs, Trade, trade war, Trump, wages, Washington Examiner, work week, workers, {What's Left of) Our Economy

Bruce Yandle of George Mason University’s Mercatus Center has just added a novel claim to the list of catastrophes allegedly triggered by President Trump’s tariff-centric trade policies. In an October 28 Washington (D.C.) Examiner post, He seems to understand that amid rock-bottom rates of U.S. joblessness, it’s getting ever tougher to contend that the trade wars are killing American employment (though the rate of net job gains has certainly slowed in most sectors since the advent of tariffs on steel and aluminum imports in March, 2018).

So Yandle, a former university business school dean, has come up with another reason for the nation’s workers and aspiring workers to hate the curbs on trade: They’re making Americans work too darned hard for the stuff they like to buy. It’s an intriguing idea with just one fatal flaw: It’s not supported by a shred of evidence. P.S.: It takes about 10 minutes of internet surfing and arithmetic-ing to demolish.

Here’s Yandle’s case:

“[T]he occurrence of high employment in the face of a slowing economy can be the result of putting tariff-made rocks in our own harbors to keep out lower-cost foreign goods. When cheaper goods can no longer be imported, we have to work longer and harder to maintain the same level of consumption.

“Low unemployment is something to celebrate but let’s at least note that there are some people who might (quite reasonably) prefer to work a little less with more leisure time and cheaper cars, clothes, and tools, which are some of the goods that have been hit with tariffs.”

I’m unaware of any instances of workers complaining that, “I’d be able to knock off earlier and clean out Walmart if only for those stupid tariffs,” but what I suppose really doesn’t matter. Nor should what anyone supposes matter – because the federal government keeps statistics both on Americans’ hours on the job and their pay.

The results of my research are below. They show hours worked for various major categories of private sector employees, and the change in their hourly inflation-adjusted wages, over two relevant time periods. The first goes from the first full month of the Trump administration (February, 2017) through the latest data month (this September – tomorrow the Bureau of Labor Statistics (BLS) will release the October numbers), and from the first full month of the administration’s first important tariffs (April, 2018, for the steel and aluminum levies) through September. (Government employees’ wages aren’t monitored by BLS because their pay is set largely via politicians’ decisions, and therefore says little about the economy’s fundamental strengths or weaknesses.)

Total private weekly hours since Trump inauguration: 34.3 to 34.4

Total private weekly hours since 1^st (metals) tariffs: 34.5 to 34.4

Total blue-collar weekly hours since Trump inauguration: 33.6 to 33.6

Total blue-collar weekly hours since 1^st (metals) tariffs: 33.8 to 33.6

Total manufacturing weekly hours since Trump inauguration: 40.7 to 40.5

Total manufacturing weekly hours since 1^st (metals) tariffs: 41.0 to 40.5

Total manufacturing blue-collar weekly hours since Trump inauguration: 41.9 to 41.5

Total manufacturing blue-collar weekly hours since 1^st (metals) tariffs: 42.4 to 41.5

Total private real hourly wage since Trump inauguration: +2.53 percent

Total private real hourly wage since 1^st (metals) tariffs: +.1.86 percent

Total blue-collar real hourly wage since Trump inauguration: +3.05 percent

Total blue-collar real hourly wage since 1^st (metals) tariffs: +2.49 percent

Total manufacturing real hourly wage since Trump inauguration: +0.46 percent

Total manufacturing real hourly wage since 1^st (metals) tariffs: +0.83 percent

Total manufacturing blue-collar real hourly wage since Trump inauguration: +2.77 percent

Total manufacturing blue-collar real hourly wage since 1^st (metals) tariffs: +1.25 percent

For every category except two, over both time periods, workers’ weekly hours went down, and their real wages went up. That is, their leisure time and the buying power of their pay both have risen. They’ve been working less and been able to purchase more.

The first exception is overall private sector workers. Since Mr. Trump’s administration began, their work week has edged up – a tenth of an hour. Even so, their pay rose faster. So they don’t have much cause to complain about working too hard and enjoying the fruits of their labor less.

The second exception entails the overall blue-collar workforce (called “production and nonsupervisory employees” in BLS-ese). Its work week has stayed the same since the Trump inauguration. At the same time, however, this group experienced the fastest wage increase during this period. And its pay in constant dollars went up even faster after the metals tariffs were imposed – as its workweek dipped.

Moreover, this points to another problem with Yandle’s case:  All four categories of workers saw their workweek fall faster after the tariffs’ imposition than before. And in three of the four (except for manufacturing blue-collar workers) wages rose faster after the tariffs went on as well.

And in case you’re wondering, to create some context, whether American workers recently have been significantly better off in the absence of tariffs and trade wars, the answer is, “Not consistently during the current economic recovery.”

No one’s saying that these results show that the United States is a workers’ paradise, or is becoming one because of the Trump tariffs. But if anyone has a right to be grumpy about the above trends, it’s trade mavens like Yandle, who are pushing fact-free arguments to take the levies down.

Im-Politic: Has Trump’s Record on Real Wages Been Good Enough Politically?

Tags

Barack Obama, China, Im-Politic, inflation-adjusted wages, Labor Department, manufacturing, private sector, real wages, tariffs, Trade, trade war, Trump, wages

Given the on-again-off-again nature of President Trump’s tariff policies (which against China went partly off again yesterday in the form of an announced short delay in the imposition of $250 billion worth of levies originally set for October 1), I figured there was no sense in performing my now-standard analysis of this morning’s new monthly U.S. consumer price inflation figures (for August).

Instead, I’ll focus on today’s inflation-adjusted wage data – which is always released by the Labor Department in tandem with the consumer inflation report –  and here there’s definitely some good news for President Trump, his supporters, and for manufacturing workers. One notable qualification: The shorter the memories of Trump working class voters, the better for his political future.

The table below makes clear what I mean. It shows the price-adjusted wage changes for the last three January-thru-August periods for private sector workers overall, for “blue-collar” private sector workers (that is, those not in management or supervisory positions), for manufacturing workers overall, and for blue-collar workers in general and their manufacturing counterparts. (To remind:  The Labor Department doesn’t track wages for public sector employees, since their pay stems mainly from politicians’ decisions, not economic fundamentals.) 

January thru Aug. real wages                  2019                2018                 2017

private sector:                                 +0.55 percent   +0.75 percent    +0.94 percent

private sector blue-collar:               +1.27 percent   +0.76 percent   +0.76 percent

manufacturing:                               +0.65 percent     -0.19 percent   +0.46 percent

manufacturing blue-collar:            +0.23 percent         0 percent      +1.15 percent

As you can see, manufacturing workers in particular have seen January-through-August constant-dollar wage gains in 2019 that were much better than in the comparable last year – but largely because the 2018 results were terrible. Moreover, for blue-collar manufacturing workers, the 2019 improvement was still much weaker than the 2017 increase. Private sector blue-collar after-inflation hourly wages accelerated year-on-year in 2019 as well, but the 2018 gain was at least identical to 2017’s.

Short blue-collar worker memories will also help Trumpworld if the Obama administration’s real wage record is forgotten. For Mr. Trump’s record trails that of his predecessor for all of these major worker categories (although the advance in inflation-adjusted manufacturing blue-collar wages under both Presidents during comparable periods of their terms in office is pretty similar).

                                                   Last 30 Obama months       First 30 Trump months

private sector:                                  +3.39 percent                      +2.62 percent

private sector blue-collar:               +3.97 percent                      +2.72 percent

manufacturing:                                +3.25 percent                     +0.37 percent

manufacturing blue-collar:              +3.22 percent                     +3.11 percent

Let’s end on a fairly positive note for Mr. Trump and his backers: The table below shows that overall, price-adjusted wages in manufacturing fared better after his tariffs’ advent in March, 2018 (for the most part) than during the pre-tariff phrase of his presidency. Because the two time periods have been of different lengths, I’m presenting the results in terms of average monthly changes in absolute dollars and cents terms.

                                                         Pre-tariffs                            Post-tariffs

Manufacturing:                               -0.31 cents                           +0.50 cents

Blue-collar manufacturing:           +0.85 cents                            +0.75 cents

Again, what these statistics mean for the future of American workers is anyone’s guess, especially in trade-heavy manufacturing, since trade policy decisions seem so ragged. And politically, the key question remains: Have times been good enough for working class and other voters during the Trump era to offset other concerns about his leadership sufficiently to bring him a second term?

(What’s Left of) Our Economy: The New Jobs Report’s Wage Details are Mixed, Too – Economically and Politically

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inflation-adjusted wages, Jobs, manufacturing, Obama, private sector, real wages, Trump, wages, {What's Left of) Our Economy

The latest U.S. government report on the nation’s employment picture (for August) produced unusually mixed jobs results. (See, e.g., this report.) Maybe that’s why analysts seem to have missed one of its more encouraging takeaways: Hourly wages in the manufacturing sector, which have remained weak throughout the current economic expansion and into the Trump era, have picked up notably so far this year.

Yet the new data also make clear that, when it comes to the gap between U.S. blue-collar workers’ in the private sector overall and those of their better paid white-collar counterparts, the former have lost some ground under the Trump administration, even though their hourly wages are up in absolute terms.

So for a President who’s going to run for reelection largely as a populist champion of forgotten Americans, the August results were unusually mixed as well. 

That manufacturing-specific pickup has taken place in pre-inflation wages, and we won’t get the latest constant dollar figures until this coming Thursday. But the progress before adjusting for price changes (and don’t forget – inflation has been awfully low lately) has been so notable that, for now, manufacturing wages’ performance is no longer worsening in comparison with the trends in the overall private sector. Indeed, the gap has narrowed a smidge.

Chiefly, from this January through August, current dollar manufacturing wages are up 2.09 percent. That’s the best such increase since 2008 (2.44 percent) – when the economy was still mired in recession, and employers’ tendency to jettison less experienced and thus more poorly paid workers produced a statistical wage increase for the remaining manufacturing workforce.

Moreover, this improvement was slightly faster than the two percent rise achieved by the private sector overall – also the best such performance since 2008 (2.36 percent). (This Labor Department wage series only goes back to 2006.)

The story is similar for blue-collar workers in both manufacturing and the private sector overall. (Data for these wages in the overall private sector goes back all the way to 1964 and for manufacturing to 1939.) For blue-collar manufacturing workers (called “production and nonsupervisory employees” by the Labor Department), January-through-August pre-inflation hourly pay is up 1.74 percent. That’s of course less than for the manufacturing workforce as a whole, but it’s the best such number since 2016 (1.98 percent) and, perhaps more important, the second best since 2006.

For the overall private sector, current-dollar blue-collar wages have advanced by 2.08 percent between January and August of this year. That’s their best such performance since 2008’s 2.48 percent.

As a result, from the beginning of the current economic recovery (mid-2009) this August, overall pre-inflation private sector wages had risen 1.2906 times faster than comparable hourly pay in manufacturing. That’s ever-so-slightly slower (but still slower) than the ratio through last August (1.294 times faster).

Manufacturing’s relative improvement was greater for blue-collar workers. From the mid-2009 beginning of the current economic recovery through this August, private sector nonsupervisory etc current dollar hourly wages have risen 1.2131 times faster than blue-collar manufacturing wages. That’s a smaller gap than the 1.228:1 ratio from the recovery onset through last August.

Nonetheless, the data show that, after narrowing slightly under former President Obama, the pre-inflation hourly wage difference between blue-collar and white-collar workers overall has been growing slightly again under President Trump.

When the recovery began, in mid-2009, private sector production and non-supervisory workers’ hourly wages were 83.83 percent of the wages earned private sector workers overall. By January, 2017 – the last Obama month in office, this figure had grown to 83.99 percent. As of this August, however, it’s back down to 83.92 percent.

Interestingly, the Trump record looks better when only the manufacturing trends are examined. In mid-2009, blue-collar manufacturing wages stood at 78.93 percent of manufacturing wages overall before inflation. By January, 2017, the share had dipped to 78.25 percent. The latest statistics show that it’s grown to 79.88 percent.

None of these changes is anywhere close to dramatic – a timely reminder, as a presidential campaign year rapidly approaches, that the U.S. economy really is akin to a supertanker, and barring sudden catastrophes or windfalls, typically takes a frustratingly long time to turn significantly.

(What’s Left of) Our Economy: The Trump Effect on U.S. Manufacturing Workers

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blue-collar workers, election 2020, inflation-adjusted wages, Jobs, manufacturing, Obama, real wages, Trump, wages, {What's Left of) Our Economy

There’s no question that President Trump has compiled a solid record when it comes to boosting American manufacturing employment, and the numbers look especially good compared with that of his predecessor, Barack Obama.

Wages, though? They remain another story entirely, and keep raising the question of how convincingly during his reelection campaign the President will be able to portray himself as a godsend to U.S. industry’s workers.

According to the most valid comparison that can be made to date, during the 29 months since Mr. Trump settled into the Oval Office (February, 2017), overall manufacturing employment and blue-collar manufacturing employment are both up considerably faster than during the last 29 months of the Obama administration. Here are the specific percentage gains for the manufacturing sector overall, and for industry’s non-supervisory and production workers – often informally dubbed “blue-collar workers”:

                                                Last 29 Obama months        First 29 Trump months

Manufacturing:                            +1.31 percent                        +3.86 percent

Blue-collar manufacturing:         +0.92 percent                         +3.40 percent

But the average hourly wage figures adjusted for inflation actually flip these results on their head:

                                              Last 29 Obama months          First 29 Trump months

Manufacturing:                           +3.05 percent                           -0.09 percent

Blue-collar manufacturing:         +3.22 percent                          +2.31 percent

It’s true that manufacturing’s blue-collar workers during the Trump era so far have been faring far better than their supervisors (who remain better paid in absolute terms). But the price-adjusted paychecks are growing significantly more slowly than they were during the final Obama years.

Of course, this politics-centric post on manufacturing wouldn’t be complete without discussing how President Trump’s tariffs have affected the picture. And here the script is arguably flipped once again to some extent, at least during the Trump years alone. The table below shows the average monthly jobs gains recorded for manufacturing and blue-collar manufacturing before the first metals tariffs were imposed (March, 2018) and after. Since the time frames differ somewhat, I thought the monthly averages would illustrate the trends more clearly.

                                                   Pre-tariffs                                  Post-tariffs

Manufacturing:                            17.38K                                       15.07K

Blue-collar manufacturing:         11.54K                                           8.6K

After the tariffs, the pace of manufacturing employment increases slowed somewhat, but it slowed much faster for blue-collar manufacturing workers.

Now for the wages results, presented as the average monthly changes in absolute (dollars and cents) terms:

                                               Pre-tariffs                                     Post-tariffs

Manufacturing                        -3 cents                                         +2 cents

Blue-collar manufacturing    +8 cents                                          +5 cents

In sum, after-inflation hourly pay rose slightly after the trade curbs came on after having fallen beforehand. Real wages for blue-collar manufacturing workers rose during both periods, but more slowly after the tariffs.

These results indicate that the President can make a decent case that his administration, and even his tariffs, have helped manufacturing workers on balance. But on the pay front in particular, the story gets complicated – and the kind of rhetorical precision Mr. Trump will need to display to date in order to tout these achievements credibly doesn’t seem to be one of his strong suits.

(What’s Left of) Our Economy: Weak Real Wage Increases Under Trump Now Look Only a Little Less Weak

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Bureau of Labor Statistics, Democrats, election 2020, inflation adjusted wages, manufacturing, private sector, real wages, Trump, wages, {What's Left of) Our Economy

Those same new official U.S. inflation statistics that reveal how President Trump’s tariffs have or haven’t affected consumer prices can also show whether American workers’ paychecks have been keeping up with the (slowly) rising cost of living. And the latest Bureau of Labor Statistics (BLS) data contains some good news for the nation’s employees, for its manufacturing workers in particular, and as a result for President Trump – although mainly in comparison to inflation-adjusted wages’ lackluster previous performance during his administration.

According to the new real wage figures (which bring the story up to June), price-adjusted pay for workers in the private sector overall rose by 0.18 percent sequentially last month – about in line with the results for the last few months. The year-on-year numbers, though, were much better. Price-adjusted wages improved by 1.49 percent between June, 2018 and June, 2018 – compared with their bare 0.09 percent increase between the previous Junes. (The BLS doesn’t look at government workers’ pay because that’s largely the result of politicians’ decisions, and thus says little about the state of the national labor market.)

The only fly in this ointment: This year so far, annual advances in private sector wages have lost some momentum. The June year-on-year rise was somewhat lower than its January counterpart (1.68 percent).

Real wages in manufacturing lately have made better progress, reversing a trend that’s held until very recently. On a monthly basis, they were up 0.19 percent in June, slightly better than the increase for the private sector generally. The June annual rise of 0.64 percent was less than half the overall private sector figure, but was much better than the change between June, 2017 and June, 2018. Yet that’s only because during that period, real manufacturing wages actually fell by 1.10 percent.

And over longer time periods, the manufacturing results have been similarly mixed compared with the trends for private sector wages generally. For instance, during this calendar year so far, the advance in real manufacturing wages has been more than twice as fast as that for all private sector workers – 0.37 percent to 0.18 percent. Alternatively put, whereas the annual gains in real private sector wages have slowed since January of this year, the 0.64 percent June figure for manufacturing represents a major acceleration from January’s 0.09 percent rate.

Constant dollar manufacturing wages have even closed the immense gap that opened earlier during the current economic recovery with overall private wages.

From the mid-2009 beginning of the ongoing economic expansion (American history’s longest ever) to this June, after-inflation manufacturing pay is up only 1.03 percent in toto versus the 6.01 percent increase for the overall private sector. In other words, the real private sector wage improvement, however modest in and of itself, has been 5.83 times faster.

As of the previous June, however, the gap was 12.05 to one – more than twice as great.

Nevertheless, when it comes to real wages, President Trump still faces a big political problem: Under his administration so far, they’ve risen much more slowly than during the most comparable Obama administration period, both for the private sector overall and especially for manufacturing.

Specifically, during the first 28 months of President Trump’s tenure, after-inflation private sector wages have increased by only 2.25 percent in all, and real manufacturing wages have inched up only 0.09 percent. During the last 28 months of the Obama administration, these numbers were 3.09 percent and 3.52 percent, respectively. If the real wage increases and the private sector-manufacturing gap don’t start getting considerably better soon, expect to hear a lot about such numbers from smart Democrats as the 2020 election approaches.

(What’s Left of) Our Economy: Real Wages Remain a Trump Economy Weakness

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Barack Obama, blue-collar workers, Employment-Population ratio, inflation adjusted wages, Labor Force Participation Rate, manufacturing, non-supervisory workers, private sector, production workers, real wages, slack, Trump, wages, {What's Left of) Our Economy

As I’ve written repeatedly, I’m convinced that the economic data conclusively show that the U.S. economy on numerous fronts has kicked into a higher gear during the Trump years. But last week’s inflation-adjusted wage figures are an important reminder of one big exception: American workers’ price-adjusted take- home hourly pay.

Indeed, by every relevant measure, these real wages during Mr. Trump’s first 27 months as President have been rising at a pace slower than that during his predecessor Barack Obama’s final 27 months in office. Ditto for manufacturing workers, whose fortunes have been such a Trump focus.

And the comparison flatters Obama even when the data for blue-collar workers – generally the lowest paid members of the American workforce – are stripped out, although in absolute terms the Trump-era performance here has been somewhat better.

Here are the percentage changes through May. (In the lingo of the Bureau of Labor Statistics, which tracks these numbers, blue-collar workers are “production and non-supervisory workers.”  And as usual, public sector workers are excluded because their pay levels are overwhelmingly determined by politicians’ decisions, and thus say little about the fundamentals of the economy or the job market.)

                                     m/m        y/y   1^st 27 Trump months  last 27 Obama months

private sector:            +0.18     +1.30              +2.06                         +3.00

manufacturing:          +0.28     +0.46               -0.09                         +2.96

private production:    +0.32     +1.73              +2.29                         +3.27

mfg production:        +0.23     +1.03              +2.08                          +2.73

These results continue to be especially surprising given overall unemployment rates that have been at multi-decade lows – which should be forcing wages up, as employers find themselves forced to offer higher pay in order to compete for increasingly scarce workers. And although, as I’ve written, it’s possible that manufacturers in particular have held the line on wages because they’re not able to find workers with anything close to the skills they need, I wonder how understanding such workers will be about this explanation when it comes time to vote for President in 2020.

At the same time, here’s what’s not open to debate: Despite the plunge in the unemployment rate, other measures – notably the Employment-Population ratio and the Labor Force Participation Rate – show that there’s plenty of slack left in the U.S. labor market. If politicians and business leaders really want to see real wages rise healthily again, they’ll need to figure out how to lure able-bodied Americans still on the sidelines back to work.

(What’s Left of) Our Economy: Real Wages are Still Far from Great Again – Especially in Manufacturing

Tags

election 2020, inflation adjusted wages, manufacturing, private sector, real wages, wages, {What's Left of) Our Economy

No doubt about it – this week’s government report on U.S. real wages was a dog. (No offense to canine lovers – of which I’m one!) And the news, as usually the case, was particularly bad for manufacturing workers, as their inflation-adjusted hourly pay in March dipped back into technical recession territory. That is, their real wages are down on net since January, 2016 – a much longer time-span than the two straight quarters of cumulative growth contraction that comprise most economists’ definition of a recession.

Manufacturing’s real wage recession returned thanks largely to a sizable 0.65 percent sequential drop between February and March. That was the worst such deterioration since November, 2011’s 0.95 percent. The only consolation for manufacturing workers – the decrease followed a 0.56 percent monthly improvement in February. That was the best such performance since August, 2015’s 0.57 percent.

But underscoring manufacturing’s real wage problems was the March year-on-year decline. It was only 0.09 percent. And the rate of decrease was slower than that between the previous Marches – 0.46 percent. All told, however, such price-adjusted hourly compensation in industry is now down by that 0.09 percent figure for more than three years.

Moreover, manufacturing’s real wage performance remains much worse than for the private sector as a whole. (These after-inflation wage analyses omit the numbers for public sector workers’ because their pay largely reflect politicians’ decisions, not the workings of free market forces. In fact, the Bureau of Labor Statistics, which compiles and publishes these figures, doesn’t even track real wages for government employees.)

Private sector workers overall didn’t enjoy a great hourly pay month in March, either. Their constant dollar wages fell sequentially by 0.27 percent – the first such decline since October’s 0.09 percent, and the biggest since February, 2013’s 0.49 percent. Moreover, the private sector’s monthly wage performance can’t be explained by good February numbers – since that month they were only up by a so-so 0.18 percent.

Yet private sector real wages in March were 1.21 percent higher than in the previous March, which continued a solid run for this indicator. And the new March year-on-year figure was considerably better than that between the previous Marches – 0.47 percent.

The manufacturing-private sector real wage comparison looks even worse when their changes during the course of the current recovery are examined. Since mid-2009, after-inflation private sector hourly wages are up 5.72 percent. That’s hardly gangbusters. But it’s a pace more than ten times faster than that for manufacturing – a barely detectable 0.47 percent.

More discouraging for the manufacturing sector: That gap has been widening. From the onset of the current recovery through March, 2018 overall real private sector wages had risen about 7.8 times faster than real manufacturing wages. Through this past March, the exact size of that growth difference was 12.2 times faster.

I’m still convinced that at least some of manufacturing’s relatively bad recent real wage performance (despite strongly growing payrolls) stems from the unusually low quality of workers the sector has needed to attract lately. But as the next presidential election approaches, what I think matters even less than usual, at least politically. The big question is whether the manufacturing workers who turned out for President Trump will be satisfied with this explanation.