Are wages rising? Brat and Spanberger disagree

Dave Brat and Abigail Spanberger disagreed on whether wages are rising during an Oct. 15 debate.

When it comes to paychecks, the major-party congressional candidates in Virginia’s 7th District offer opposite views.

"Wages are going through the roof," said Dave Brat, the Republican incumbent, during an Oct. 15 debate.

"Wages, real wages, are stagnant," said Abigail Spanberger, the Democratic challenger.

Which candidate is right? Well, they both made defensible statements using different economic measures.

Brat, a former economics professor, was describing the wage trend in terms of nominal dollars - money that has not been adjusted for inflation.

He said during the debate, "In August, wages were up 3 percent." To back his claim, Brat’s campaign sent us a Sept. 7 article in The Washington Post reporting wages had grown 2.9 percent during the last year, the "fastest rate in nine years." The news came from a Bureau of Labor Statistics report showing average hourly earnings of all workers - in unadjusted dollars - rose from $26.39 in August 2017 to $27.16 in August 2018.

Spanberger, in contrast, described the trend in terms of real dollars - money that has been adjusted for inflation. The BLS also measures wages in constant dollars set by consumer prices in 1982-84. Those statistics show an increase of only 0.2 percent (two-tenths of 1 percent) from August 2017 to August 2018.

Spanberger’s campaign sent us a handful of articles saying wages, when adjusted for inflation, have been flat for decades. An August 2018 article by the Pew Research Center said, "today’s real average wage...has about the same purchasing power it did 40 years ago."

BLS statistics show the median weekly wage at the start of 1979 was $232 and $893 at the end of September 2018. Unadjusted for inflation, as Brat has offered, that’s a 285 percent increase. Adjusted for inflation, as Spanberger does, it’s  a 6 percent boost.

Are wages going through the roof, as Brat says?

Under either measure, weekly median wages hit historic highs during the financial quarter that ended this year on Sept. 30, according to the BLS. As we mentioned, the median was $893 in unadjusted dollars. The median was $355 a week when adjusted for inflation with 1982-1984 dollars.

But Spanberger points to research showing the bulk of salary gains have gone to the highest earners and others are missing out. The Pew article, for example, said, "Since 2000, usual weekly wages have risen 3 percent (in real terms) among workers in the lowest tenth of the earnings distribution and 4.3 percent  among the lowest quarter. But among people in the top tenth of the distribution, real wages have risen a cumulative 15.7 percent, to $2,112 a week – nearly five times the usual weekly earnings of the bottom tenth."

So who’s right, Brat or Spanberger?

We asked to two economists and they both said it’s standard to use adjusted dollars, as Spanberger does, to evaluate financial growth over time.

Terry Rephann, a regional economist at the Weldon Cooper Center for Public Service at the University of Virginia, said both candidates are giving "extreme" descriptions of wages. He said data from recent show wages are not "going through the roof," as Brats says, or "stagnant," as Spanberger contends.

"What it shows is a modest increase in hourly earnings," Rephann said.

The rise began in late 2015, when Barack Obama was president, and has continued during the Trump administration. Leslie Stratton, chair of the Department of Economics at Virginia Commonwealth University, told us in an email that there has been a "slight upward trend" in wages in recent years.

Stratton added a caution about statistics. "One can play with numbers and tell the story one wants," she wrote.

 

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