In a November 10 appearance on CNN’s State of the Union, United States Senator for Vermont Bernie Sanders dismissed a question from host Dana Bash about whether Democrats’ poor showing in the 2024 election came down to messaging over policy.
“It’s not messaging, Dana,” Sanders said. He said the economy has been weak for average Americans for decades.
“It has to be put into an overall context where, in the last 50 years, if you could believe it, inflation-accounted-for weekly wages are lower today than they were 50 years ago, a massive transfer of wealth from the bottom 90 percent to the top 1 percent,” he said.
However, this is a cherry-picked statistic. Most data show that US wages have gained ground above the inflation rate compared with five decades ago.
The measure economists most commonly use for inflation-adjusted wages, which they call “real wages”, is known as “median usual weekly earnings” for full-time wage and salary workers, age 16 and older. If the wage in this measure is higher now than 50 years ago, then wages have kept pace with prices, or exceeded them, over that period of time. If the wage in this measure is lower than 50 years ago, wages have lagged the rise in inflation.
So what do these “real wage” numbers show? They show wages outpacing inflation by a cumulative 10.7 percent over 50 years, beginning with their level in the first quarter of 1979, which is the earliest data available. (That’s almost 46 years ago.)
Inflation-adjusted wages have risen over the past 50 years, but not dramatically
It is not a dramatic increase; it works out to wages increasing roughly two-tenths of a percent faster than inflation per year. Still, this data shows that wages have risen beyond inflation.
Economists advise ignoring the COVID-19-era spikes in wage data; those don’t come from wage gains but from the phenomenon of lower-wage workers in industries such as hospitality being laid off during the pandemic. That left higher-wage workers, including those able to work from home, in the workforce, boosting the average or median wage.
We also looked at another data set maintained by the Economic Policy Institute, a liberal think tank. The group looks at inflation-adjusted wages through the lens of incomes, such as the lowest 10 percent of earners, the second-lowest 10 percent, the top 10 percent and the top 5 percent.
The Economic Policy Institute data show that every slice of the income spectrum earned wages in 2023 above their 1973 level.
Over the past 50 years, wages have risen beyond inflation for every part of the income spectrum but faster for higher-earning Americans
Wages in the top tiers of the income spectrum have risen faster than wages for the lowest tiers during that period. But even the lowest-paid workers’ wages beat inflation over the past 50 years.
When we asked Sanders’s office for his evidence, a spokesperson pointed to a different set of wage data: average weekly earnings of private-sector production and nonsupervisory employees. This data focuses on a more blue-collar segment of the workforce.
Sanders points to nonsupervisory wages being lower today, but relies on a blip 52 years ago
Sanders’s office told PolitiFact the senator is comparing now with February 1973, almost 52 years ago. Normally we would not quibble with a two-year difference, but in this case, choosing that particular date has a big impact on the comparison.
In 1971 and 1972, wages for private-sector production and nonsupervisory employees rose by 6 percent, an increase never matched before or since. Sanders’s calculation uses the wage peak, in February 1973.
Dean Baker, co-founder of the liberal Center for Economic and Policy Research, said this unusual rise in wages was attributable to then-President Richard Nixon’s policy of price controls, which involved a 90-day freeze in prices, followed by price increases that required approval by a “Pay Board” and a “Price Commission”.
But starting in early 1973, when Nixon ended price controls, this same wage metric fell even more rapidly than it had risen, crashing by almost 9 percent over two years.
If you compare today’s wages with the February 1973 peak, as Sanders did, wages are 3.8 percent lower for the subset of earners that includes private-sector production and nonsupervisory employees.
But if you look back exactly 50 years before the most recent data for September 2024, today’s wages are 2.8 percent higher than in September 1974.
“This really does feel like cherry-picking the data,” said Douglas Holtz-Eakin, president of the centre-right American Action Forum. “No real result should be that sensitive to a few data points.”
Again, 2.8 percent is not a big increase, especially over 50 years, but it is an increase beyond the rate of inflation, and it is not a decline, as Sanders said.
Baker added: “Workers definitely have not gotten their share in the last half century, but it is ridiculous to say that they have made no gains.”
He offered another reason for scepticism about Sanders’s statistics.
“The average work week is almost 10 percent shorter now than 50 years ago,” Baker said. “Workers have chosen to take part of their gains in more leisure .”
Our ruling
Sanders said inflation-adjusted weekly wages “are lower today than they were 50 years ago”.
Two measures that economists most commonly use for inflation-adjusted wages show higher wages now compared with five decades ago.
Sanders cited a different data set for nonsupervisory workers, showing wages lower now than in February 1973. However, that month represented an unusual high point in wages because of Nixon-era price controls. When price controls were lifted, wages plummeted.
The 50-year comparison, using September 1974 as the starting point, shows wages up by 2.8 percent beyond inflation.
We rate the statement False.
https://www.aljazeera.com/news/2024/11/12/fact-check-are-weekly-wages-in-the-us-lower-than-50-years-ago?traffic_source=rss
