It’s a good thing House Speaker Nancy Pelosi delivered her first speech as the newly reelected speaker of the House the day before the Bureau of Labor Statistics released its latest jobs report.
That report undermined a key theme of Pelosi’s message, which has been a Democratic theme for the last decade: that the middle class is struggling because of stagnant wage growth.
“We must be champions of the middle class, and all those who aspire to it …” she told the assembled House on Thursday. “To increase paychecks by rebuilding America with green and modern infrastructure—from sea to shining sea.”
Um, those paychecks are already increasing, and not because of Democrats’ redistributionist efforts. According to the BLS, “over the year, average hourly earnings have increased by 84 cents, or 3.2 percent.”
That’s real wage growth, though Pelosi might consider it real “crumbs.”
But that’s not all. CNBC reported in January of last year:
“Workers looking for fatter paychecks had their best year in 2017 since before the financial crisis, according to a government report Wednesday.
“The Employment Cost Index, a measure of salary and benefit costs, registered a 2.6 percent gain for the full year, tied for the best since 2007, the Bureau of Labor Statistics reported.”
By contrast, wage growth was stagnant for most of President Barack Obama’s eight years in office. And he used that stagnation to justify massive government spending, including billions of dollars on green energy projects, just like Pelosi wants. Those efforts utterly failed to boost average workers’ incomes.
The “Tax Cuts and Jobs Act of 2017,” passed in December of 2017, played a major role in recent gains by cutting the corporate income tax rate from 35 percent to 21 percent, among other changes. Companies immediately began repatriating billions of dollars that were sitting offshore. Bonuses and raises were handed out, and now we are seeing the result of that law: fatter paychecks.
Many Democrats want to repeal that tax cut legislation and some want to raise taxes even higher than they were. For some reason they believe when corporations pay higher taxes they also pay higher wages.
But while the wage-growth news is good, we can’t end without a warning. Trump’s trade wars could undermine the economic progress. Disrupted markets can lead to lower profits and reduced hiring, as Apple recently realized. It is imperative the administration find a workable solution if we want job growth and wage increases—and the recent solid economic growth—to continue.