President Donald Trump has fervently placed his reelection prospects in 2020 on a booming economy.
He has taunted Democrats, tweeting in April that they will have to “to run against maybe the best Economy in the history of our Country (and MANY other great things)!”
Wage growth during the last year has stayed consistently above 3% for the first time in 10 years.
Voters give Trump credit for growth in the nation’s GDP but their take home pay packs the biggest punch. Most workers saw an increase in their paychecks as a result of the 2017 GOP tax-cut law and they are now benefitting significantly from a tight labor market.
A low unemployment rate of 3.7 percent, coupled with consistent job growth means employers often have to raise wages to keep their workers from looking elsewhere for higher pay.
Stagnant wage growth over the last decade, which had stumped economists, has surged under President Donald Trump according to data released by the Bureau of Labor Statistics.
The U.S. job market has again delivered strong wage gains in August, a boon for consumer spending which will keep the economy expanding moderately despite the current trade impasse with China.
The employment report showed average hourly earnings gained 0.4% last month, the largest increase since February, after rising 0.3% in July.
But the annual increase in wages dipped to 3.2% from 3.3% in July as last year’s surge dropped out of the calculation. Strong consumer spending is supporting the economy.
Average hourly earnings in April were 3.2 percent higher than a year earlier, the ninth straight month in which growth topped 3 percent, the Labor Department reported in May.
The workweek has also rebounded after dropping to its lowest level in nearly two years in July.
The modest increase in hours worked in August, reverses a pullback in July, alleviating concerns that workers may experience cutbacks and thwarting notions of a looming recession.
The average workweek rose to 34.4 hours in August from 34.3 hours in July. A measure of hours worked, which is a proxy for gross domestic product, increased 0.4% after falling 0.2% in July.
The recent gains are going to those at the lowest rung of the economic ladder. Over the past year, low-wage workers have experienced the fastest pay increases. Earlier in the economic recovery, wage growth was concentrated at the top.
Some of the growth at the bottom might be the result of recent minimum-wage increases in cities and states across the country.
Democrats contend that over the past five years, wages for low-wage workers rose 13 percent in states that raised their minimum wages, compared with 8.4 percent in states that did not, however the GDP and wage growth overall remained stagnant throughout the years former President Barack Obama was in office.
The tightening labor market under Trump, with its emphasis on stricter immigration policies and manufacturing job creation is forcing employers to raise pay even for workers at the bottom of the earnings ladder.
The Trump administration is also optimistic that the president will triumph in his politically hazardous trade war with China. Senior negotiators are expected to meet again, probably in October, which has triggered upward movement in the stock market.
Investors hopeful that the administration can finally craft a trade deal. If successful, prospects for the US economy will lift significantly.