In State of the Union, Obama says average wages have 'barely budged' over past 4 years

One of the key themes of President Barack Obama’s State of the Union address was income inequality.

"Today, after four years of economic growth, corporate profits and stock prices have rarely been higher, and those at the top have never done better," Obama said. "But average wages have barely budged. Inequality has deepened. Upward mobility has stalled. The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by - let alone get ahead. And too many still aren't working at all."

Here, we will check Obama’s claim that during the past four years, "average wages have barely budged."

At PolitiFact, one of our core principles is "words matter." So in this item, we will look at average wages -- not the median wage, and not the average (or median) family income or household income.

We found two federal data sets that look at the average wage.

• The Bureau of Labor Statistics’ National Occupational Employment and Wage Estimates

These statistics are based on data collected from employers in all industry sectors and in all types of regions nationwide. The most recent year available is 2012.

Year

Mean annual wage, all occupations

Inflation-adjusted mean annual wage in 2012 dollars

2008

$42,270

$45,076

2009

$43,460

$46,510

2010

$44,410

$46,760

2011

$45,230

$46,166

2012

$45,790

$45,790

So according to this data set, the average annual wage increased by 8.3 percent between 2008 and 2012. (We also looked at the changes between 2009 and 2012, since either date range seems a plausible "four-year" period to us, and the numbers were similar..)

However, this raw wage data doesn’t take into account inflation -- something economists like to consider when determining whether a wage "barely budged."

When you use an inflation calculator, the average wage from 2008 was equivalent to $45,075 in 2012 dollars, meaning that the inflation-adjusted wage rose during that period, but only narrowly -- about 1.6 percent.

By this data, Obama is correct.

• The Social Security Administration's National Average Wage Index

These are the numbers used to calculate Social Security recipients’ benefit levels. Here’s the breakdown:
 

Year

National average wage

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In 2012 dollars

2008

$41,335

$44,079

2009

$40,712

$43,569

2010

$41,674

$43,879

2011

$42,980

$43,869

2012

$44,322

$44,322

According to this data set, the average annual wage increased by 7.2 percent between 2008 and 2012.

After you adjust for inflation, the average wage from 2008 was $44,079 in 2012 dollars. So from 2008-12, the inflation-adjusted wage rose by less than 1 percent.

Whichever data you use, the increases are pretty modest, particularly given that they were spread out over a four-year period.

Our ruling

Obama said that during the past four years, "average wages have barely budged."

Two federal data sets broadly agree: Over the most recent four-year period, the average wage has risen no more than 1.7 percent above inflation. That’s a rising wage -- but by a small amount, about a half a percentage point above inflation per year. We think that’s a reasonable definition for "barely budged." So we rate Obama’s claim True.