September 02, 2023
The New York Times had a piece today on how the Biden administration is trying to turn around public opinion on its handling of the economy. At the end of the article, it cites Jason Furman, a Harvard professor and head of the Council of Economic Advisers under President Obama.
“Now he said it was difficult for the Biden administration to take victory laps over slowing inflation because wages haven’t kept pace, leaving a typical worker about $2,000 behind compared with before the pandemic.”
This is not true. Wages did fall behind inflation in 2021 and the first half of 2022, but since then they have regained lost ground and are now slightly higher than they were before the pandemic, after adjusting for inflation. (The spike at the start of the pandemic is a composition effect. Essentially, the lowest-paid workers all lost their jobs, raising average pay of those still working. We need to compare the current pay with the pre-pandemic pay to get the full story.
It is worth noting this is an average. Pay has been rising more rapidly for those at the bottom, so they are even further ahead of inflation.
FWIW, Furman knows these data as well as anyone, so it is likely that the article misrepresented his comment.