“Price increases have outpaced compensation growth in 2021, causing real compensation to fall.”
That’s the stark assessment from a noted economist of the inflationary policies of the Biden administration – and just what you’d expect from a Republican wonk eager to score political points against his party’s rivals.
Jason Furman, however, is no Republican. He’s a Harvard economist who served as chairman of the Council of Economic Advisors under Obama.
“Real worker compensation – pay adjusted to reflect changes in prices – increased in the early months of the pandemic,” Furman notes in a report released late last month. “Compensation continued to rise at close to the pre-pandemic trend while prices fell, meaning higher worker pay in real terms. But that trend has since reversed. Real total compensation for civilian workers is now well below its pre-pandemic level, indicating paychecks aren’t going as far as they used to.”
The bottom line is that all the wage increases Americans enjoyed over the last five years have evaporated and they’re now making less, in inflation-adjusted terms, than they were before the pandemic. This translates to an annual $1,000 loss for the average West Virginia household.
U.S. Senator Joe Manchin doesn’t like the trend, which he rightly attributes to the spending excesses of his colleagues in Congress. “I have serious concerns about the grave consequences facing West Virginians and every American family if Congress decides to spend another $3.5 trillion,” he confides.
“Over the past year, Congress has injected more than $5 trillion of stimulus into the American economy – more than any time since World War II – to respond to the pandemic,” Manchin continues. “The challenge we now face is different: millions of jobs remain unfilled across the country and rising inflation rates are now an unavoidable tax on the wages and income of every American. These are not indications of an economy that requires trillions in additional spending.”
No, they’re not. But few of our representatives in Washington have any understanding of economics, or any genuine concern for their constituents.