Anyone following the economic news coming from the Biden administration lately probably feels like Dorothy meeting the Wizard of Oz. Whether it’s data being revised from good to bad, the manipulation of statistics or indefensible exaggerations, the White House’s economic record is less impressive than it first appears. Here are three peeks at the man behind the curtain.
The Biden administration’s Bureau of Labor Statistics (BLS) previously estimated that workers’ hourly compensation rose faster than inflation in the last three months of 2022. Real pay (adjusted for inflation) supposedly rose at a 0.7% annualized rate. That came as a surprise to millions of Americans who can afford less despite earning more, because their wages have lagged inflation.
Sure enough, those data from BLS were recently revised down by a wide margin. Instead of real pay rising in the last three months of 2022, it fell 4.7% at an annualized rate. To add insult to injury, real pay in the first three months of this year also fell more than originally estimated, dropping another 1.7% at an annualized rate.
Economic reports are revised routinely, but it’s odd how frequently the revisions are worse than the original estimates from the Biden administration. Furthermore, the White House loudly highlights the initial favorable data, then goes awkwardly silent when the revisions are published.
A second example of the anemic economy behind the propaganda curtain is the oft-cited labor market statistics from BLS. While the headline jobs number continues rocketing higher each month, with the White House claiming the economy added 339,000 jobs last month, considerable evidence indicates that the economy didn’t employ any additional people.
There are actually two surveys used to compile the monthly jobs report, and although the survey of businesses showed large job gains, the survey of households showed 310,000 fewer people employed. Double-counting may explain the discrepancy, because the survey of businesses counts every payroll, not every person employed.
When a person gets a second (or even a third) job, that increases the number of payrolls and the headline jobs number. Conversely, the self-employed with an unincorporated business are not counted in the number of payrolls. But as people lose their businesses and go to work for a big business, they are then included in the number of payrolls.
In these two cases, both of which have been prevalent lately, the number of people employed hasn’t changed, but the headline jobs number rises. This helps explain why the two surveys that constitute the monthly jobs report have experienced an unprecedented divergence in growth of 2.3 million jobs since March 2022.
Yet the White House is all too eager to cherry-pick positive data points from the BLS’s jobs report, without bothering to take a wholistic view of the labor market. Even still, BLS owes the American people and Congress an explanation for some of the statistical anomalies we’ve seen over the last two years.
But the third peak behind the curtain shows that even with relatively reliable data, the White House still resorts to half-truths. President Joe Biden correctly notes that nominal hourly earnings have risen substantially under his tenure—up 11.8%, to be exact. Unfortunately, the story doesn’t end there.
Under Biden, employees’ hours have been getting cut back, and prices have risen 15.9%. That combination means real weekly earnings have fallen 5.1% since Biden’s inauguration.
What does that look like for the average family? They have seen their weekly paychecks grow by about $200, but prices have risen so much faster that it’s been the equivalent of a $100 weekly pay cut. That lost purchasing power is the hidden tax of inflation, which families have been paying in spades under Biden, losing the equivalent of $5,600 in annual income after adjusting for today’s higher prices.
The drop in real earnings has been so bad that, for the first time ever, the annual change in real weekly earnings has been negative for 26 months in a row. That’s 93% of Biden’s presidency thus far.
At least Dorothy could wake up. Americans learning the economic reality behind the curtain have no reason to assume the economic pain they’ve been suffering for the last two years will end any time soon.
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ABOUT THE WRITER
E.J. Antoni is a public finance economist at The Heritage Foundation and a senior fellow at Committee to Unleash Prosperity.
