Are paychecks failing to keep up with inflation?

Sen. Kamala Harris, D-Calif., hit a lot of subjects during her campaign launch event in Oakland, Calif., on Jan. 27, from criminal justice to education to health care. At one point in her speech, Harris addressed the state of the economy.

"Let’s speak truth about our economy," Harris said. "Our economy today is not working for working people. The cost of living is going up, but paychecks aren’t keeping up." (Watch it here around 1:21:00.)

Is Harris’s assertion about wages accurate? Broadly, no. Wages haven’t soared over the past 40 years — or over the past five — but they haven’t fallen behind inflation, either.

When we contacted the Harris campaign, they offered news articles and studies that they said supported their position. However, most of this evidence for lagging paychecks was for particular slices of time and doesn’t reflect the overall trend.

Wages, once adjusted for inflation, have gone up both in the recent past and the longer term.

For economists, the primary statistic for measuring wages is median usual weekly real earnings for full-time wage and salary workers, age 16 and up. ("Real" is economic-speak for "inflation-adjusted.")

The following chart shows how that this measurement of wages has risen and fallen every quarter since 1979:

It’s important to note that median wage growth has hardly been robust over the full four-decade span — workers experienced a gain of 6 percent above inflation. The financial crisis of 2008 had a big impact on Americans’ sense of economic security.

But it’s wrong to say that wages haven’t outpaced inflation.

The increase has been particularly clear since 2014, which was when wages finally began climbing again after the losses of the Great Recession.

Between the second quarter of 2014 and the fourth quarter of 2018, inflation-adjusted wages rose by almost 8 percent, the data show. And wage gains have exceeded inflation for lower-income workers as well as higher-income workers, economists said.

Another measurement — average weekly earnings of private-sector production and nonsupervisory employees, adjusted for inflation — shows wages are also up in the shorter and longer term.

It’s also consistent with annual rises after 2014 in median household income, a different statistical measurement.

All in all, various data sources agree that "paychecks are keeping up with inflation," said Jed Kolko, the chief economist for the jobs site Indeed.com.

One subset of the workforce does fit Harris’ description: Male workers in the lower half of the income spectrum. They account for a bit more than a quarter of the workforce.

Featured Fact-check

Instagram posts

stated on October 21, 2024 in Instagram posts

Jussie Smollett is Kamala Harris’ nephew.

A tool created by the liberal Economic Policy Institute allows users to slice and dice federal wage data in a variety of ways. On the suggestion of Brookings Institution economist Gary Burtless, we looked at real hourly wages for working men at or below the median. The following chart shows wages at the 10th, 20th, 30th, 40th and median percentiles.

This chart shows that lower-earning male workers have seen their inflation-adjusted wages fall since 1973. Any real wage gains in 2018, which are not yet available, are unlikely to have been large enough to erase the decline since 1973, Burtless said.

That said, even these workers have seen their wages rise above the rate of inflation since at least 2014, following steep declines from the late 1970s to the early 1990s.

Burtless said that this wage stagnation among lower-income men has been more than balanced out by gains among lower-income working women, which is why median wages overall have been rising.

"Viewed over the long time span, Sen. Harris’s claim is correct for important segments of the working population," Burtless said. "However, for wage earners more generally, the claim is wrong. Workers up and down the wage distribution have seen gains in real hourly pay since 1979, since 2000, and since 2014."

Harris said, "The cost of living is going up, but paychecks aren't keeping up."

Overall, wages have hardly skyrocketed, but they have risen faster than inflation since 1979, and especially since 2014. One subset of workers — men in the lower end of the wage spectrum — has seen their pay fail to keep up with inflation since 1973. However, Harris used general terms in her speech.

We rate the statement Mostly False.

Editor's note: We heard from several readers who disagreed with or had questions about this rating. We've addressed their questions in a follow-up story published Feb. 7, 2019. Read our follow-up story.