Drawing on the fact-free politics of Donald Trump, Republicans are selling the meme that Americans are much worse off economically under President Joe Biden and the Democrats. That is demonstrably untrue. But the Democrats’ main response has been to mumble an apology for the inflation they didn’t cause—and then try to change the subject.
That approach won’t work, because every national election is a platform for voters to express their disappointment or satisfaction with the economy. And this year, the economic facts on jobs, wealth, and incomes largely favor Democrats. So let’s distill them into three talking points for Democratic candidates to recite over and over again for the next three weeks.
We start with jobs, an issue that Republicans never raise. Here’s the first talking point: Over the 21 months that Biden and Democrats have run Washington, the economy has created a record 10 million new jobs. That’s a monthly average of 476,200 new jobs, or 300,000 more per month, than during the first 21 months when Trump and Republicans were in charge in 2017 and 2018.
Let’s turn to what happened to wealth under Biden and the Democrats. The Federal Reserve tracks the net assets of Americans by income, including changes in the value of their homes, less their mortgages. It also counts the shifting value of people’s pension assets, stocks and bonds, and personal savings, less their other debts. The Fed’s accounting shows that American households across the board have become significantly richer, especially those with low, moderate, and middle incomes.
From January 2021 to mid-2022, the net wealth of the bottom 20 percent of U.S. households jumped $1.23 trillion, translating into an average of roughly $43,000 per household after inflation. The net assets of the next 40 percent of households similarly increased by more than $2.04 trillion, which translates into an average of nearly $35,900 per household after inflation. How did it happen? The paychecks from 10 million new jobs, the administration’s pandemic relief, and elevated saving rates in 2020 and 2021.
Sure, more affluent Americans also have done well. The net assets of the top 40 percent of households—less the top 1 percent—increased by an average of nearly $52,500 after inflation. And per usual, the rich got richer: The average wealth of the top 1 percent has jumped $562,700 under Biden.
But for the first time in memory, the wealth of households with relatively less income grew much faster than their higher-income counterparts. Here’s the Fed’s data: The value of the net assets of the lowest 20 percent of households by income jumped 36.2 percent, compared to 17.4 percent gains for the next 20 percent. The middle 20 percent enjoyed a 12.4 percent increase, while the top 60 to 80 percent saw a 4.6 percent wealth increase, and the top 80 to 99 percent witnessed a 3.5 percent increase in wealth. And the storied top 1 percent saw the value of their wealth grow 2.4 percent, a sliver of the percentage gains made by the poorest one-fifth of households.
Here is the next economic talking point: Under Biden and a Democratic Congress, Americans at every income level are wealthier today, with lower-, moderate-, and middle-income households making the most significant gains.
Finally, we come to the Democrats’ vulnerability: inflation. The Heritage Foundation, a conservative Washington messaging group with impeccably anti-Democratic views, issued a broadside this week claiming that “the average worker has lost the equivalent of over $3,000 in income under Biden because prices have risen much faster than wages.” Remarkably, Heritage neglects to mention what data was used or how it was analyzed. We redid the analysis and, lo and behold, found very different results.
Bureau of Economic Analysis (BEA) data tells us that, under Biden, the total wage and salary income of Americans increased from $9,860 billion in January 2021 to $11,302 billion in August 2022. That comes to a 14.6 percent gain before inflation. Of course, the number of people earning wages and salaries increased sharply over those 21 months. Taking account of that rising employment, we found that Americans’ average wage and salary income rose from $68,943 to $73,988. That’s an increase of $5,045 per working person, or 7.3 percent.
The BEA also tells us that the GDP deflator for personal consumption expenditures—the inflation in what everyone buys—increased 8.3 percent from January 2021 to August 2022. Most of that inflation came unexpectedly from OPEC, supply chain shortages, and other snarls left over from the pandemic. Even so, the wages of average working Americans nearly kept pace with the rising prices.
The difference between what people on average earn today and what they would earn if their wages and salaries had precisely tracked the sudden inflation comes to just $667—that’s less than 1 percent and a very long way from Heritage’s guess of $3,000.
Democrats, here’s a third talking point on the economy: Under Biden, on average, people’s wages and salaries rose more than $5,000. While inflation has modestly outpaced that increase, more importantly, increases in most people’s assets are more than 50 times that shortfall. And on top of that, 10 million more people have jobs.
It’s no secret that most Americans find economic facts and analysis boring, apparently including the operatives writing speeches and ads for this year’s candidates. But voters care about their jobs, paychecks, and wealth. Democrats, wake up—your record is a strong case for keeping you in charge. It’s time to let the voters know.
Author: Robert J. Shapiro