Fmr. Obama Treasury Counselor Rattner: Wage Gains Aren’t Keeping up with Inflation Like Before Pandemic and They’ll Have to Fall Farther

On Monday’s broadcast of MSNBC’s “Morning Joe,” Steve Rattner, who served as counselor to the Treasury Secretary in the Obama administration, stated that while we saw wages growing at a faster pace than inflation before the pandemic, inflation has subsequently overtaken gains in wages, and this is a problem because in order for inflation to reach the desired target rate of 2%, wage growth has to fall to 3% or 4% and it’s currently running at around 5% despite its small drop in September.

Rattner said that we saw “before the pandemic, that wages were outpacing inflation. The economy was doing really well. Americans’ real income was going up. And then you can see…that inflation…kind of took over, and got above…wage increases. And so, this is — that gap in there…is the extent to which Americans are falling behind because of inflation being higher than wages. The problem is the only way we know to tamp down inflation is to get wage growth to come down a bit. It came down a tiny bit last month. It’s still running at about 5%. We generally like that. The problem is that for inflation to get to 2%, wage growth has to get down to 3% or 4%.”

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