At the fourth Democratic debate on Tuesday, billionaire Tom Steyer claims that 90 percent of Americans had not had a raise for four decades. Bureau of Labor Statistics data prove this completely false.
“Ninety percent of Americans have not had a raise for 40 years,” Steyer said. “If you took the minimum wage from 1980 and just adjusted it for inflation, you’d get 11 bucks. It’s seven and a quarter. If you included the productivity gains of American workers it would be over 20 bucks.”
— CNN Politics (@CNNPolitics) October 16, 2019
Steyer’s claim is simply false. According to the Bureau of Labor Statistics, the average hourly earnings of all employees was $22 in January 2009 and $28 in 2019. This past February, average hourly earnings increased 3.4 percent from February 2018. For the first time since 2009, the bottom half of earners benefitted more than the top half, twice as much, according to Goldman Sachs.
Steyer’s reference to the minimum wage was beside the point. Only 2.7 percent of American workers are paid minimum wage or less.
The Pew Research Center acknowledged that Americans’ paychecks are larger than they were 40 years ago (when adjusted for inflation), but argued that purchasing power has not increased much in that time. The Pew Research Center’s finding that average hourly wages increased from $2.50 in 1964 to $22.65 in 2018 disproves Steyer’s claim on its face.
Pew did find that the 2018 average hourly wage had just about the same purchasing power as it did in 1978. “In fact, in real terms average hourly earnings peaked more than 45 years ago: The $4.03-an-hour rate recorded in January 1973 had the same purchasing power that $23.68 would today.”
This purchasing power metric is meaningful, but it fails to capture increasing benefits from new technologies. Millennials are struggling to achieve home ownership, and that is a problem. But smartphones and the gig economy have helped Americans deal with this situation.
Steyer did not say that Americans’ purchasing power had not increased in 40 years. He did say that “90 percent of Americans have not had a raise in 40 years.” That is entirely false.
Follow Tyler O’Neil, the author of this article, on Twitter at @Tyler2ONeil.