Biden’s claim that wage growth has outpaced inflation not supported by data
Maria Wheeler
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While at the United Nations Climate Change Conference, President Biden made a surprising statement suggesting that wages have grown more than inflation during the past year.
“Last Thanksgiving, you know, I — as I said, this year, we’re working on the supply chain issue,” Biden said. “But last Thanksgiving, I sat down with my wife, my daughter, and my son-in-law. This Thanksgiving, we’re all in a very different circumstance. Things are a hell of a lot better, and the wages have gone up higher — faster than inflation. And we have generated real economic growth.”
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‘Verify’ analyzed a combination of inflation measures and data to determine the accuracy of Biden’s claim by comparing the rise of inflation versus the rise of wages since last November.
The consumer price index (CPI), produced by the Bureau of Labor Statistics, and the personal consumptions expenditures (PCE) price index, produced by the Department of Commerce’s Bureau of Economic Analysis, are the “two most widely followed measures of consumer prices,” according to the Federal Reserve Bank of Cleveland.
“The CPI reflects out-of-pocket expenditures of all urban households, while the PCE price index also includes goods and services purchased on behalf of households,” the Federal Reserve Bank of Cleveland explained. “In the case of medical care outlays, for example, the PCE price index would not only include the out-of-pocket expenses paid for by households, but also the medical care services paid for by an employer and by the government.”
Although The Federal Reserve tracks the CPI, it primarily measures inflation by the PCE price index. The Federal Reserve aims for a 2% inflation rate.
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Per the Bureau of Labor Statistics, wages rose from $29.61 per hour in November 2020 to $30.85 per hour in September 2021, which is a 4.18% increase.
Data also shows that the CPI grew from 260.927 in November 2020 to 274.138 in September 2021, which is a 5.06% increase.
The PCE price index went up from 111.790 in November 2020 to 116.631 in September 2021 – a 4.33% increase, according to the Bureau of Economic Analysis.
Using those measurements, it’s evident that the rise of wages has not kept pace with the rise of inflation, contrary to Biden’s claim.