President Biden presided over massive job growth, which, according to the jobs report released Friday, is still advancing. This is simply a fact, although stating it (like pointing out that we’re not in a recession right now) means I’ll get a truckload of hate mail. By Biden’s second Labor Day Monday, the U.S. economy had created substantially more jobs under his command than in the first 37 months of the Trump administration — that is, before Covid-19 put the economy in a temporary coma.
To be fair, many job gains under Biden likely reflected a natural recovery from lockdowns, and it’s generally easier to add a lot of jobs when you start, as Biden did, from a depressed employment position. On the other hand, employment recovered faster than most people expected. At the end of 2020, professional analysts had expected average unemployment in 2022 to be 5.2%; so far, the average has been just 3.7%.
But if the Biden boom was and is real, has it been good for American workers? Ask many of them, and they will likely answer in the negative. After all, hasn’t inflation eaten up all your salary gains and then some? (Although your answers might be a little different now that gasoline is back to less than $4 a gallon.)
Well, inflation has definitely been a big issue. And if controlling inflation ends up requiring a long period of high unemployment — I don’t think so, but I could be wrong — workers could be worse off despite the current job boom.
So far, however, Bidenomic [apelido dado à atual polÃtica econômica dos EUA] has been good for American workers whether they know it or not.
There are two major conceptual issues to grapple with when assessing the impacts of increased employment on American workers.
First, do we only look at the wages of fully employed workers, or do we consider the gains for Americans who would have been unemployed or working short hours had it not been for the Biden boom? Second, how much of the inflation the US economy has suffered since Biden took office can we attribute to growth, as opposed to things that would have happened regardless of his policies?
If we include the wage gains due to the growing share of Americans in employment and increased hours worked, the Biden boom was unmistakably good for workers’ incomes. Thomas Blanchet, Emmanuel Saez and Gabriel Zucman of the University of California at Berkeley have a new website, Real Time Inequality, which tracks Americans’ income by source and monthly. They found that overall labor income per working-age adult, adjusted for inflation, increased by 3.5% from January 2021 to July 2022.
Also, the biggest gains went to the lowest paid workers. So the Biden boom not only increased overall income; reduced inequality.
But what about workers who already had jobs when Biden took office? Haven’t they seen the purchasing power of their wages fall, thanks to inflation? The answer is yes, but.
Look at the hourly wages of workers who are not supervisors—that is, workers who are not managers. Adjusting for consumer prices, these workers’ wages fell by about 3% from January 2021 to June 2022.
But that decline was entirely driven by rising food and energy prices, which have a lot to do with global forces and little, if anything, with US policy — even if right-wing commentators like to point out how cheap gas was. during the Trump years. (Oil tends to be cheap when the world economy is upside down.) And real wages have stopped falling for now; in fact, they rose by about half a percentage point in July, largely thanks to falling gas prices, and likely rose again in August.
If you want to assess Bidenomic’s impacts on wages, you should probably compare wages to prices excluding food and energy. And on that basis, real wages have basically been stable since Biden took office.
So yes, the Biden boom was good for workers. More Americans — many more — got jobs, and while those who were already employed suffered a decline in real wages, that decline reflected developments in global food and energy markets, not US policy.
Furthermore, a strong labor market appears to have helped to reduce inequality. And the Biden boom could also have knock-on effects that will raise wages and further reduce inequality in the future. For the labor market may have helped revive the long-dying US labor movement.
There has indeed been an increase in attempts to organize workplaces, although it has not yet been successful enough for it to appear in the general union membership statistics. Still, attitudes have clearly changed, and not just among workers. Gallup recently reported that public approval for unions has reached 71% — its highest level since 1965.
So it is at least possible that Bidenomic will lead to a revitalization of unions in the US. And yes, unions raise wages, especially for low-skilled workers.
Once again, whatever gains American workers may have made will be lost if controlling inflation requires the economy to experience a prolonged period of high unemployment. But so far Bidenomic has really helped workers.
Translated by Luiz Roberto M. Gonçalves
