Obama Administration’s Microscopic ‘Real’ Wage Growth

Will Work for Love (eddiedangerous / Flickr / CC)
eddiedangerous / Flickr / CC

The most glaring economic failure of the Obama administration’s supposed economic recovery is seven consecutive years of microscopic “real” wage growth.

President Obama has been trumpeting achieving 82 months of U.S. economic growth as one of the longest recoveries on record. But the administration fails to mention the U.S economy only grew by an average of 2.1 percent since the recovery began in November 2009, versus an average annual growth of 3.2 percent since 1948.

During this period of low economic growth, annual wage growth averaged 2.3 percent. But after subtracting the 1.9 percent average increase in inflation as measured by the rise of the consumer price index, “real” wage growth shrinks to just 0.4 percent.

From WWII to the beginning of the Obama administration, the share of corporate-sector income received by workers tended to fall after recessions to about 77 percent, because employers could find lots of unemployed workers willing to work for lower wages. But in each of the recoveries, as companies expanded and the unemployment rate fell, workers’ bargaining position improved and the share of corporate-sector income received by workers rose back to about 83 percent.

During the Obama administration, the share of corporate-sector income received by workers plunged to a recession low of 74.9 percent by July of 2010, and then started to recover and rose to about 77.1 percent by January 2011. But unlike any recovery since WWII, the share of corporate-sector income tanked again to a new low of 73 percent range and stayed there for the next the next 2.5 years.

In April of 2016 (the most recent data available), the share of corporate income received by workers has only risen back to 76.9 percent. The current level is below the average of the recession lows for workers’ share of corporate income since WWII and serves as hard evidence that workers’ bargaining position is extremely weak.

Despite candidate Barack Obama’s 2008 message that as president he would rebuild the middle-class, the Obama administration’s policies of higher taxes, an expanded regulatory state, and huge deficit spending appear to have been counter-productive to increasing “real” wages for average American workers.

According to Princeton University history professor Julian Zelizerto, as quoted by LifeZette, Obama has never been viewed as anti-union, “but his brand of liberalism prioritized blending the interests of coastal elites with those of minority groups.” Zelizer suggests that the interests of white, blue-collar union workers have largely been crowded out during the Obama years by the interests of “environmentalists, internationalists and gay activists.”

As an example of the extent of its anti-worker environmentalist agenda, the Obama administration led the charge in the 2014 lame duck session, following the Democrats’ loss of U.S. Senate control, to block passage of the Keystone XL pipeline. Killing the project cost at least 42,000 new high-paying union jobs, by some estimates.

Despite opposition by both the Republican and Democrat presidential candidates, and only 35 percent public support, the Obama administration on August 29 said it still believes it can win congressional approval of the Trans-Pacific Partnership (TPP) trade pact in the 2016 “lame duck session.”


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