It’s official: America’s real wages are up under Biden-Harris

With inflation easing, the wages of working-class Americans are finally moving into the plus column. Average hourly pay for production and nonsupervisory workers — who make up four-fifths of employees — hit $30.27 in August, according to the latest report from the Bureau of Labor Statistics. 

According to my organization’s analysis, working-class Americans’ wages, adjusted for inflation, have just edged higher than they were on Election Day, 2020. The average working-class American can now answer “Yes” to the question, “Are you better off now than you were under Donald Trump?”

That’s obviously important for political symbolism. But the milestone for real wages also explains a lot about why Americans have felt so badly oppressed by inflation up to now. The price of food and housing matters, but they matter more if price increases exceed wage gains. 

Inflation-adjusted, or “real,” wages are an important measure of economic health because they summarize the balance between rising prices and rising pay. 

Part of the reason President Biden’s campaign was fighting an economic headwind was the drop in average real wages in 2021 and 2022 due to the burst of inflation. No wonder voters didn’t trust Biden on the economy, despite the low unemployment rate and strong GDP growth. 

But the wage story has turned favorable just in time for the coming election. Private sector weekly wages in the first quarter of 2024 hit $1,527 per week, according to figures released by the Bureau of Labor Statistics on Aug. 21. Adjusted for inflation, that’s the highest first-quarter weekly wage in at least two decades, and the biggest year-over-year rise in inflation-adjusted wages since 2021.

The real wage gains are widespread across industries and regions. 

For example, the food service and accommodations sector has shown strong real wage gains for production and nonsupervisory workers since Election Day 2020. So has the warehousing industry, which includes e-commerce fulfillment facilities, widely distributed across the country. 

Swing states such as Georgia, Michigan, Nevada, North Carolina and Wisconsin showed average weekly wage gains exceeding 3.5 percent over the last year, faster than the national pace of inflation.

Why are real wages rising? One key is the revival of U.S. productivity. Output per hour actually fell during the 2021-22 inflationary period, in part because of supply chain bottlenecks. That falling productivity made it harder for employers to pay higher wages.

The latest figures, however, show that nonfarm business productivity in the U.S. has now climbed well above 2020 levels. It’s not simply the end of post-pandemic disruptions. Rather, the rise in productivity and real wages is being driven by a combination of strong government and corporate investment. 

The Biden-Harris administration devoted a large amount of political capital to a pro-investment policy agenda. Propelled by legislation such as the Infrastructure Investment and Jobs Act, the CHIPS and Science Act and the Inflation Reduction Act, federal nondefense investment in physical, human, and research and development capital has soared to over 2 percent of GDP, the highest four-year average since the 1980s.  

Meanwhile, domestic investment by large corporations was soaring as well. 

According to our Investment Heroes report, in 2021-2023, the first three years of the Biden-Harris administration, the top 25 U.S. companies, ranked by domestic capital spending, invested more than $900 billion in the U.S. economy. That’s almost 40 percent more than the comparable total in the first three years of the Trump-Pence administration.

More investment means more jobs, higher productivity, and rising real wages — not just now but in the years to come. And that’s the surest route to ensuring rising prosperity for all.

Michael Mandel is chief economist and vice president at Progressive Policy Institute.