The speed at which wages are growing is a speed that hasn’t been seen in about a decade.
According to the Daily Caller’s “Check Your Fact” site, Washington Rep. Cathy McMorris Rodgers made that very claim, which the House Republican’s Twitter account proudly tweeted out.
.@CathyMcMorris: In just 6 months, 1 million jobs have been created. Wages are growing at their fastest rate since 2008. Consumer confidence is up. Our small business owners are more optimistic, and we have…low unemployment at 3.8 percent. pic.twitter.com/Z1olnbl2aA
— House Republicans (@HouseGOP) June 24, 2018
According to the Daily Caller, this statement is quite true, and a lot of the credit goes to the GOP tax cuts passed late last year, and the results have been a vastly improving economy:
Rodgers, who serves as chairwoman of the House Republican Conference, built upon these remarks by listing off some of the ways in which the economy has improved.
“In just six months, we’ve had over a million jobs created, wages are growing at the fastest rate since 2008. Consumer confidence is up. Small business owners are optimistic, and we have record low unemployment – 3.8 percent.”
But how can that be measured? According to the Daily Caller, there are multiple ways to check this:
But wage growth can be thorny, if only because there’s no single way to measure it.
A common way is using the employment cost index, and by that measure, Rodgers is correct. Year over year, wages and salaries for all civilian workers grew 2.7 percent in the first quarter of 2018, according to the Bureau of Labor Statistics – the fastest growth rate since Q4 2008.
But while this may seem like great news, inflation is almost canceling out these gains:
It’s also common to measure the annual change in hourly and weekly pay for private sector workers. These metrics have risen over the last year as well, but the growth rates aren’t record setting.
Average hourly earnings increased 2.7 percent from May 2017 to May 2018, in line with wage growth for the last two and a half years. On average, weekly earnings cracked 3 percent compared to last year.
These growth rates are nominal, meaning they don’t account for inflation. The picture looks quite different when put in real terms.
Even though average hourly earnings grew 2.7 percent over the last 12 months, inflation virtually cancelled out those gains.
The rub here is that tax breaks do indeed help the economy, but rising prices due to inflation aren’t going to let some see a major difference in their lives.