White House Touts Wage Gains for Voters

Job applicants wait in line at the Seminole Hard Rock Hotel & Casino Hollywood during a job fair in Hollywood, Fla., on Thursday. Wilfredo Lee/AP
Wilfredo Lee/AP

The White House is touting government data showing strong pay raises for Americans heading into an election year.

“The Trump Economy is delivering incredible results for the blue-collar workers who need it most,” said the August 12 tweet.

Wage data from the Bureau of Economic Analysis shows that after-inflation “disposable personal income” rose by 2.9 percent in 2017, by 4 percent in 2018, and is on track to rise more than 3 percent in 2019. Those numbers add up to a 10 percent rise in three years — giving many voters a reason to stick with President Donald Trump in November 2020.

The White House tweet touted a Wall Street Journal article which spotlighted the pre-inflation numbers

The Bureau of Economic Analysis (BEA) on Tuesday published its annual revisions to personal income data, and the surprise was the huge jump in disposable income and employee compensation.

The revisions show that employee compensation rose 4.5% in 2017 and 5% in 2018—some $4.4 billion and $87.1 billion more than previously reported. The trend has continued into 2019, with compensation increasing $378 billion or 3.4% in the first six months alone. Wages and salaries were revised upward to 5.3% from 3.6% in May year over year. And in June wages and salaries grew at an annual rate of 5.5%, which is a rocking 4.1% after adjusting for inflation.

Corporate profits declined 2.9% in the first quarter of 2019 even as wages grew at an annual rate of 10.1%. This sure sounds like an economy that is benefiting the 99%.

Americans are saving more too, said the WSJ, “The personal savings rate was revised upward to 8.1% from 6.1% in May, which is much higher than the roughly 5% before the last two recessions.”

The good news was tweeted by the White House’s Twitter account, and was later retweeted by Donald Trump’s personal account:

The good news is true — but there are many ways in which the new wealth is earned, divided, and shared.

Wages for college graduates have stalled, partly because companies are importing a huge number of foreign visa workers and college graduates. That white-collar, cheap labor outsourcing leaves many graduates with large college debts, little prospect of buying a house or having several children, and much less interest in supporting Trump in 2020.

The best wage gains have gone to people in the lower third and the very top of the wage scale, while mid-income college graduates show few gains. “On the wage growth by industry tier, in low-wage industries, it is now 4.6%(!), whereas in high-wage industries it’s only 2.5%,” said an August 2. tweet from Martha Gimbel, an economist at Indeed.com.

Wages rose faster for low-wage workers, even though the economy created more jobs for higher-wage workers, she reported.

Women are also gaining wages, USAToday reported:

In the past three years, white-collar workers, the sector that the Bureau of Labor Statistics classifies as “Management, Professional, and Related Occupations” and which encompasses 40% of the workforce, have seen their wages grow by nearly 7.5%. During the same period, all other workers, a group composed almost entirely of noncollege grads, have seen their paychecks grow by about 10 percent.

Moreover, that wage jump has reached not just traditional working-class mainstays, where men make up the majority. It also has reached many workers in women-dominated blue-collar jobs — for example, health support workers and personal care workers.

Trump’s “Buy American, Hire American” stance likely has helped to raise wages by blocking demands from business for more foreign labor to suppress wage growth.

But his agencies have not managed to reduce the flow of wage-cutting migrants or legal visa workers. For example, especially in the last year, both Democrats and Republicans have indirectly encouraged the huge influx of Central American migrants which has likely suppressed blue-collar wages.

Also, wages are being held down by business groups that use computer technology to create and manage cost-cutting networks of American subcontractors. The Associated Press reported August 12:

An example is the hotel industry. Weil’s research found that many major brands have sold nearly all their real estate and shifted to a franchise system. The properties — now owned by private equity firms, investor groups and real estate investment trusts — pay a franchise fee to brands such as Hilton, Marriott and Hyatt.

They often then contract with a third-party management company to run the hotel. That company might hire staffing firms to provide housekeeping, maintenance and food service. In some cases, Weil said, it’s possible that not a single worker in a Hilton hotel is actually a Hilton employee, though they must adhere to Hilton’s standards.

“You might have 10 different employers, sometimes with overlapping authority, all in that building,” he said.

The recent wage gains have not nearly made up for almost 30 years of near-zero wage gains after the passage of the President George H. W. Bush’s 1990 immigration act, which doubled the government-delivered supply of immigrant labor to investors.

Since the 1990s, salaries and income for CEOs and investors have spiked far above income for ordinary Americans, partly because the investors moved jobs into two vast oceans of cheap labor — legal and illegal immigrant workers in the United States and free trade workers in China and the Pacific Rim.

The widening gap between ordinary wage-earners and the leadership class of CEOs and investors have steered perhaps $.37 trillion in cash from employees to employers since 2009, according to the left-wing Economic Policy Institute.

So far, few college graduates have realized why their salaries are flat, but there is some evidence even left-wing graduates are worried about the impact of visa workers and immigration on their paychecks:

Immigration Numbers:

Each year, roughly four million young Americans join the workforce after graduating from high school or university. This total includes about 800,000 Americans who graduate with skilled degrees in business or health care, engineering or science, software or statistics.

But the federal government then imports about 1.1 million legal immigrants and refreshes a resident population of roughly 1.5 million white-collar visa workers — including approximately 1 million H-1B workers and spouses — and about 500,000 blue-collar visa workers.

The government also prints out more than one million work permits for foreigners, tolerates about eight million illegal workers, and does not punish companies for employing the hundreds of thousands of illegal migrants who sneak across the border or overstay their legal visas each year.

This policy of inflating the labor supply boosts economic growth for investors because it transfers wages to investors and ensures that employers do not have to compete for American workers by offering higher wages and better working conditions.

This policy of flooding the market with cheap, foreign, white-collar graduates and blue-collar labor also shifts enormous wealth from young employees towards older investors, even as it also widens wealth gaps, reduces high-tech investment, increases state and local tax burdens, and hurts children’s schools and college educations.

The cheap-labor economic strategy also pushes Americans away from high-tech careers and sidelines millions of marginalized Americans, including many who are now struggling with fentanyl addictions.

The labor policy also moves business investment and wealth from the Heartland to the coastal citiesexplodes rents and housing costsshrivels real estate values in the Midwest, and rewards investors for creating low-tech, labor-intensive workplaces.

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