Yes, Americans Are Better Off Under Biden
Ronald Reagan closed his presidential debate with Jimmy Carter in October 1980 urging Americans to ask if they were better off than they were four years ago. Of course, Reagan, like a sharp prosecutor, knew the answer before he asked the question. Inflation and unemployment were soaring. Perhaps the reason why Republicans aren’t posing that question today is that they know the answer. Based on jobs, incomes, wealth, poverty, and health insurance, Americans are better off today, even including inflation.
No one can argue with President Joe Biden’s job record—more than 9.5 million unemployed Americans found jobs over the last 18 months, and the unemployment rate fell from 6.4 to 3.5 percent.
Whether Americans’ incomes are higher is more complicated because the pandemic disrupted the economy in so many ways. First, GDP collapsed in 2020, and unemployment soared—followed by massive public spending that extended into Biden’s term beginning in 2021 and helped us recover. But pandemic-related supply problems ignited inflation and that spending sustained and worsened it. So, while the fast-rising employment has produced a record 14.9 percent surge in overall wage and salary income since Biden took office, how much has the inflation eaten away at those unparalleled gains?
For all of the “pain at the pump” stories, the answer is that wages and salaries have kept pace with inflation since Biden became president—and compared to just before the pandemic and before he took office, Americans are much better off.
The Bureau of Economic Analysis (BEA) at the Department of Commerce provides the best data on the nation’s earnings. It reports that before adjusting for inflation, Americans earned $11,346 billion in wages and salaries in June 2022, a 14.9 percent jump from $9,872 billion in January 2021 and 16.6 percent more than the $9,734 billion total in February 2020, just before the pandemic. Next, we take account of inflation’s impact on those wages and salaries by applying the BEA’s deflator for personal consumption expenditures, a better and more appropriate inflation measure than the Consumer Price Index (CPI). Using that deflator raises the original wage and salary total, now expressed in June 2022 dollars, to $10,673 billion for January 2021 and $10,717 billion for February 2020. Finally, we divide the three results by the number of people earning wages and salaries on each date.
The math is simple: The average working American earned $74,643 in wages and salaries in June 2022, compared to $74,624 in January 2021 and $70,274 in February 2020 in June 2022 dollars. So, even with 9.5 million more people working, the average working person earned as much in June, after inflation, as when Biden took office. And compared to just before the pandemic, when employment was roughly at the same levels as today, the average person earned 6.2 percent more in June, after inflation. The answer to Reagan’s famous question is Yes on wages and salaries as well as jobs, a remarkable achievement given the pandemic’s severe disruptions to employment and prices.
A technical note: Other data from the Bureau of Labor Statistics (BLS) suggest that wages and salaries have not kept pace with inflation. Like most economists, I rely on BEA because its deflator for personal consumption spending is more accurate than the CPI and because BEA’s data on wages and salaries are more complete than BLS’s data. Both agencies depend on the National Compensation Survey (NCS). But BEA adjusts for a number of minor gaps in the survey, including some people who work in private households, some employees of nonprofit and religious membership organizations, and some students employed by public colleges and universities. BEA also adjusts the NCS data for Covid’s impact on the collection of the data using analyses by the Federal Reserve, the National Bureau of Economic Research, and others.
Americans also are significantly wealthier than before Biden took office. The pandemic, along with the jobs boom, was primarily responsible because as the omicron variant spread, government checks to most households enabled more savings while increasing the spending that helped drive up employment. According to Federal Reserve data, the net assets of Americans increased by nearly $2 trillion after inflation from the first quarter of 2021, when Biden took office, to the first quarter of 2022. (We exclude the top 1 percent because their assets are notoriously hard to measure.)
And it’s not the typical case of the rich getting richer because the fastest growth in people’s net assets occurred among low and moderate-income households. From the first quarter of 2021 to the first quarter of 2022, the inflation-adjusted wealth of households in the lowest income quintile jumped 15.2 percent. This was followed by wealth gains of 6.1 percent for households in the second quintile, 4.0 percent for the middle quintile, 2.7 percent the fourth quintile, and just 0.8 percent for those in the top income quintile (again, excluding the top 1 percent).
Americans are also better off in other essential ways. The Center on Poverty & Social Policy at Columbia University reports that the poverty rate, which reached 16.1 percent in December 2020, fell sharply under Biden to 14.1 percent by May 2022. It’s the same story on healthcare coverage: The Department of Health and Human Services reports that from late 2020 to early 2022, the percentage of uninsured Americans fell from 14.5 percent to 11.8 percent among adults (ages 18 to 64) and from 6.4 percent to 3.7 percent among children, both record lows.
An irony here is that but for the pandemic and the policies required to address it, inflation would be modest today; and but for the inflation, Biden would have one of the best records of any postwar president. Of course, but for the pandemic, Biden might not be president today.
Now, imagine how Trump would brag if he could tout record job creation, record low poverty, record health insurance coverage—plus rapid gains in wealth from the bottom up, and wage and salary gains that kept up with unexpected inflation. That’s a message that Democrats should carry into the fall campaigns.
This essay appeared originally in Washington Monthly