Recent figures published by the U.S. Bureau of Labor Statistics contradict President Biden’s claim Tuesday that wage growth for American workers has outpaced inflation in recent months.
Biden made the claim during his press conference at the 2021 United Nations Climate Change Conference (COP26) in Glasgow after he was pressed to explain when Americans could expect the cost of everyday items such as gas and food to decline. Inflation rose to 5.4% in September compared to one year earlier, matching its highest rate in 13 years.
“Things are a hell of a lot better,” Biden said. “The wages have gone up higher, faster than inflation and we have generated real economic growth. It doesn’t mean these dislocations aren’t real. They do affect people’s lives.”
Companies big and small are raising wages to attract workers and hold onto employees as the economy revs back into gear.
But those fatter paychecks aren’t going as far, thanks to rising inflation.
In fact, compensation is now lower than it was in December 2019, when adjusted for inflation, according to an analysis by Jason Furman, an economics professor at Harvard University.
The Employment Cost Index — which measures wages and salaries, along with health, retirement and other benefits — fell in the last quarter and is 2% below its pre-pandemic trend, when taking inflation into account. (Wages and salaries are growing at a faster pace than benefits.)
“The hot economy is heating prices more than it is heating wages,” said Furman.
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