Surprise! Wages Are Declining After GOP Tax Cuts

JM Ashby
Written by JM Ashby

Trump and the GOP repeatedly claimed that their corporate tax cuts would increase wages for average Americans during the campaign to pass them, but you may want to sit down before reading this because you're about to be shocked.

Wages for average working people have not increased and, in fact, they've actually declined.

According to official figures from the Bureau of Labor Statistics (BLS), average weekly earnings have slightly increased, but hourly earnings have decreased.

From May 2017 to May 2018, real average hourly earnings decreased 0.1 percent, seasonally adjusted. The decrease in real average hourly earnings combined with a 0.6-percent increase in the average workweek resulted in a 0.5-percent increase in real average weekly earnings over this period.

In other words, people are working longer hours but making less money per hour.

A decrease of 0.1 percent means someone who was making $10 per hour is now making $9.99, which is a very small decline, but it's still a decline during a period when corporate executives and shareholders are raking in hundreds of billions of dollars in buybacks and dividend payments. It's a decline that comes after Republicans promised their tax cuts would increase wages.

According to the Bureau of Labor Statistics, inflation and the resulting higher prices are eating up any possible gains the average worker might have seen from the GOP's tax cuts an the increased cost of food and gasoline appear to be the likely culprit.

U.S. inflation accelerated in May to the fastest pace in more than six years, reinforcing the Federal Reserve’s outlook for gradual interest-rate hikes while eroding wage gains that remain relatively tepid despite an 18-year low in unemployment.

The consumer price index rose 0.2 percent from the previous month and 2.8 percent from a year earlier, matching estimates, a Labor Department report showed Tuesday. The annual gain was the biggest since February 2012 and follows a 2.5 percent increase in April. Excluding food and energy, the core gauge was up 0.2 percent from the prior month and 2.2 percent from May 2017, also matching the median estimates of economists.

The pickup in headline inflation partly reflects gains in fuel prices, though the annual gain in the core measure -- seen by officials as a better gauge of underlying inflation trends -- was the most since February 2017.

You know what's about to get even more expensive as a result of Trump's policies? Food and energy.

Trump's trade war is going to wreck American agriculture and his decision to abandon the Iran nuclear deal is going to send gasoline prices soaring this summer and probably through the next year.

  • katanahamon

    Yep. I was in an industry represented by a union, but a specialized one, and we were constantly threatened with concessions. Turns out the union only went so order to preserve themselves, we always were forced to concede, yet made to feel like the union was doing a great job. Don’t get me wrong, if we didn’t have a union, we would have been really screwed, but, ppl nowadays are extremely self absorbed, have to constantly analyze what’s happening. The flip side is you have to stand up and be willing to fight for what you deserve, and that’s hard. Management always has an excuse..and they want all the money for themselves. Unions need to better represent their members, members need to be more involved in their unions, and unions need to educate Americans on their benefits. We also need to preserve public dollars being diverted to Christian academies and private schools must stop.

  • Badgerite

    I’m shocked.

  • Aynwrong

    Anyone who remembers the Bush Administration…

  • muselet

    It’s time to revive a bitter joke from the Reagan years: a rising tide lifts all yachts.

    The R tax deform legislation worked exactly as planned, shoving yet more money upward, and we can expect blame for falling wages to be distributed among the usual suspects (Ds, tax-and-spend liberals, welfare, furriners).

    Kevin Drum has it right: the Federal Reserve will never let wages rise again because of inflation fears. The Fed’s target maximum inflation rate is 4%, but it moves to slow the economy when the rate approaches 2%.

    Get used to a gradually-declining standard of living, kids.


    • JMAshby

      a rising tide lifts all yachts

      I am stealing that.

      • muselet

        For the record, the expression looks to have originated with Walter Mondale in August of 1984, right after the Republican convention:

        “The idea behind Reaganomics is this: a rising tide lifts all yachts.”

        Sadly, it’s still relevant.


      • katanahamon

        It works for shit, too..