Shortly before Christmas last year, President Trump announced that Republicans in Congress had finalized their proposed overhaul to the tax system.
“Congress has reached an agreement on tax legislation that will deliver more jobs, higher wages and massive tax relief for American families and for American companies,” Trump said. He and his administration had been hammering on these benefits for weeks: Slashing corporate taxes would spur hiring and prompt businesses to increase wages and hiring. Sure, most of the benefit of the tax bill went to the wealthy and to corporations, but average Americans would see benefits, too — an increase of $4,000 to the average family income.
Those claims were treated with justifiable skepticism at the time. (The average-income claim, for example, includes the gains seen by enormously wealthy households, which skews everything upward.) But on Tuesday, we got a reminder that those promises haven’t been realized in even small ways.
It’s true that wages have gone up, as Trump has repeatedly noted since the tax bill passed. But wages — or, to use the specific governmental metric, hourly earnings — have gone up steadily for years. The question is what those hourly earnings get you, the buying power. To assess that, the Bureau of Labor Statistics compiles the real average hourly earnings: the average hourly earnings divided by the consumer price index for urban consumers. In other words, it’s a measure of hourly wages as a function of inflation.
On Tuesday, the BLS released a sobering report: Year-over-year, the real average hourly earnings number has dropped by 0.1 percent.
After the recession, that figure has generally increased. Over the past year, though, it has been flat — despite the signing of that bill in December. The tax bill, which Trump promised would serve as “rocket fuel” for the economy, hasn’t led to any liftoff whatsoever in real average hourly earnings. Since December, the number hasn’t gone up; year over year, it hasn’t gone up.
There was a surge after Trump was elected, but after a peak in July, the figure has settled lower.
Real average weekly earnings have increased year over year, albeit subtly. In May, the increase over April was a function of the number of hours worked increasing: The same hourly wage plus more hours means a higher weekly income.
But that increase also has been essentially nothing since the passage of the tax bill.
It can be tricky to evaluate the number of new jobs created, given that the population is growing, as well. Since the end of the recession, though, the number of employed Americans as a percentage of the number of people ages 15 to 64 — the working-age population — has risen steadily. That rise has included the period since the signing of the tax bill and year over year.
It’s worth noting that the year-over-year changes from May 2017 to May 2018 are smaller than in each of the preceding year-long periods, despite the passage of the tax bill.
Sure, the most recent data about earnings is from only five months after the tax bill was signed into law. Perhaps these things just take a bit more time.
Perhaps. But the administration was eager to tout the short-term bonuses that corporations offered immediately after the bill was signed. Trump also made sure to announce that benefits would be seen from payroll tax reductions in February. (Republicans say they noticed them. Democrats say they didn’t.)
It’s worth noting, too, that Trump’s verbiage on wage increases hasn’t changed since the bill became law. In April, he bragged about how “wages for the first time are rising at the fastest pace in many, many years — 18, 19, 20 years.” Two weeks before he signed the bill, he said at a rally, “By the way, wages starting to go up. First time in 20 years, starting to go up.”
Even to hear Trump tell it, the tax bill hasn’t done much.