President Joe Biden said incomes are up, but that ignores inflation

During a visit to Detroit when he touted growth in electric vehicle manufacturing, President Joe Biden offered some economic highlights from his time in office.

"We started with the American Rescue Plan," Biden said in the Sept. 14 speech, referring to the coronavirus and economic relief bill from early in his presidency. "That’s taken us from economic crisis to economic resurgence. Jobs are up. Incomes are up. People are back to work."

A reader expressed surprise that Biden had said, "incomes are up," and he asked us to fact-check it.

Although wages have increased over the past year, those gains have been eaten away by a 40-year-high level of inflation. The inflation is traceable to coronavirus-related supply shortages and may also have been exacerbated by the economic stimulus payments from the same bill Biden mentioned, the American Rescue Plan. 

In other words, inflation-adjusted wages — what people experience in purchasing power — are decidedly down on Biden’s watch.

Without adjusting for inflation, year-over-year average hourly earnings for all private-sector employees rose by 4.9% between August 2021 and August 2022.

However, once inflation is factored in, those gains melt away.

One common yardstick is median usual weekly earnings, adjusted for inflation, for full-time wage and salary workers, age 16 and older. The figure for the most recent quarter, the second quarter of 2022, is down by 3.5% from the same quarter a year earlier.

And these inflation-adjusted wages have fallen in every quarter that Biden has been president (after starting to fall during the end of Donald Trump’s presidency).

Another metric shows a similar pattern: inflation-adjusted disposable personal income, per capita. Unlike the previous statistic, this one includes payments from the government, which produced short-lived income spikes.

After the last of those spikes, which reflected the stimulus payments from the American Rescue Plan, disposable personal income has generally stagnated, and is down on a year-over-year basis by about 4% between July 2021 and July 2022.

Saying that incomes are up "is misleading," said Douglas Holtz-Eakin, president of the American Action Forum, a center-right think tank. "That implies people are better off, and they’re not, because of inflation."

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Dean Baker, co-founder of the Center for Economic and Policy Research, a left-of-center think tank, cautioned that economic data post-pandemic can be trickier than usual to analyze. Business closures during the pandemic resulted in disproportionate job losses for lower earners. Over time, those employees have come back into the workforce, but the shifting composition of the workforce has complicated point-to-point comparisons. 

Another complication, Baker said, is that as the labor supply has waxed and waned, so too has the typical workweek in hours, which affects weekly pay.

"It rose from an average of 34.4 hours in 2019 to a peak of 35 hours in January and is now back down to 34.5 hours," Baker said. "My story on this is that when employers couldn't find workers, they had their existing workforce put in more hours. Now that labor is less scarce, they have moved hours back down to more normal levels. But fewer hours means less weekly pay."

The White House did not respond to an inquiry for this article.

Biden said, "Incomes are up."

Incomes are up year-over-year if you don’t factor in inflation. But with inflation at 40-year highs, doing so misrepresents the impact Americans feel on the purchasing power of those incomes.

Once inflation is included, wages are down on a year-over-year basis by about 4% between July 2021 and July 2022.

We rate the statement Mostly False.