Wage growth is going to catch up with inflation by the end of the year, President Trump’s top economic adviser predicted Monday.
“I’ll be very surprised if that 3 percent wage growth doesn’t turn into 4 percent by December,” said Kevin Hassett, chairman of the White House Council of Economic Advisers, responding in an interview on MSNBC to criticisms that wage growth has sputtered in recent months.
Democrats and liberal groups have cited recent weak wage growth as a sign that Trump’s agenda of tax cuts and regulatory relief is not helping families. In the past few months, inflation has risen at about the same rate as wage gains, meaning that workers’ purchasing power has stagnated. Over the past year through July, inflation-adjusted average hourly earnings have fallen, the Bureau of Labor Statistics reported last week, with earnings growing at 2.7 percent but consumer prices growing at 2.9 percent.
But Hassett took issue with some of the numbers used during the interview, saying that certain people who were previously unemployed are now working. Because the newly-employed are disproportionately low-skilled workers with lower wages, these entrants are dragging down the average growth of wages, he said. He pointed instead to the median wage tracker, which is at about 3.2 percent growth.
“The average wage gets biased because you’re averaging over a different group,” he said.
