FACT CHECK: Fact Checking Biden’s Claim About Wage Increases Versus Inflation

Christine Sellers | Fact Check Reporter

In a June 4 interview with TIME Magazine, President Joe Biden claimed wage increases have exceeded the cost of inflation.

Verdict: Unsubstantiated

Data shows that while wage growth has outpaced inflation this year, most of Biden’s presidency has been the opposite. Multiple experts shared differing opinions on Biden’s claim with Check Your Fact.

Fact Check:

Swing state polling from Florida Atlantic University and Mainstreet Research reveal Biden is ahead of his Republican opponent, former President Donald Trump in Wisconsin, Michigan, and Pennsylvania, according to Newsweek. Biden won all three states in the 2020 presidential election, the outlet reported.

In the interview, Biden claimed wage increases have exceeded the cost of inflation.

“Wage increases have exceeded what the cost of inflation, which you’re talking about as the prices that were pre-COVID prices. Pre-COVID prices are not the same as whether or not they—you have American, corporate America ripping off the public now. You have everything from shrinkflation to what’s going on in terms of the way in which they’re artificially moving significantly to increase their, their, their, their, their profits. That’s not the same as inflation. That’s price gouging,” Biden said.

Biden made the claim following a statement from TIME Magazine editors Massimo Calabresi and Sam Jacobs on cumulative inflation. Specifically, the editors said, “cumulative inflation means prices are up nearly 20% since you took office and wage increases have not kept pace.”

Biden’s claim requires context. According to data from the Bureau of Labor Statistics (BLS), the average hourly earnings of all employees was $10.98 in January 2020 before the start of the global COVID-19 pandemic. The number then increased to $11.72 in April 2020 after the pandemic hit. Similarly, the average hourly earnings of all employees was $11.40 in January 2021 when Biden was inaugurated as president.

Average hourly earnings of all employees dropped to $11.28 in June 2021 and continued to drop throughout 2022 and 2023. In April 2023, the average hourly earnings of all employees was $11.04, whereas in April 2024, the preliminary number was $11.09. The BLS website indicates the data is seasonally adjusted.

Another set of data from the BLS showing a 12-month percentage change in the Consumer Price Index (CPI) shows a 3.4% change among all items as of April 2024. The same data shows a 2.2% change among food, a 2.6% change among energy, and a 3.6% change among all items, less food and energy, for the same time period. The BLS website indicates this data is not seasonally adjusted.

A spokesperson for the BLS directed Check Your Fact to both sets of data. (RELATED: Fact Checking Biden’s Claim That He Was ‘Appointed’ To The Naval Academy)

Likewise, a May 15 news release from the BLS highlighting real earnings in April 2024 reports an “0.2% increase in average hourly earnings combined with an increase of 0.3% in the Consumer Price Index for All Urban Consumers (CPI-U).” The release was cited in a blog post from the Economic Policy Institute (EPI) published on the same day.

BLS data analyzed by the EPI included via a figure in the same blog post placed real wage growth at 0.6% and inflation at 2.5% in January 2020 compared to 7.7% (real wage growth) and 0.3% (inflation) a few months later in April 2020. The same data shows real wage growth at 3.8% and inflation at 1.4% in January 2021 when Biden was inaugurated. In June 2021, real wage growth was at -1.4% and inflation was at 5.4%. Finally, the same data shows -0.3% real wage growth and 4.9% inflation in April 2023 compared to 0.5% real wage growth and 3.4% inflation in April 2024.

Multiple experts shared their perspectives on Biden’s claim with Check Your Fact.

Dr. Alí Bustamante, the deputy director of the Worker Power and Economic Security program at the liberal Roosevelt Institute, agreed with Biden’s claim.

“Indexing the main indicators for wage growth (average hourly earnings of all private-sector employees) and for inflation (consumer price index for all urban consumers) to pre-COVID pandemic levels of February 2020 you find that wage growth has exceeded inflation by 0.7 percent as of April 2024. Furthermore, wage increases have exceeded inflation growth in 82 percent of the 50 months since February 2020. Notably, wage growth has exceeded the cost of inflation despite the fact that inflation indicators account for price increases that may have been driven by price gouging, higher markups or other dynamics unrelated to increases in the cost of production,” Bustamante said.

Jai Kedia, a research fellow who studies monetary economics and macro-finance at the libertarian Cato Institute’s Center for Monetary and Financial Alternatives, told Check Your Fact the data “easily disproves [Biden’s claim].”

“As for the wages outpacing inflation claim, the data easily disproves President Biden. Real hourly compensation, i.e., inflation-adjusted wages, have fallen from 110.56 in Q1 2021 when Biden was inaugurated to 106.61 in Q1 2024—a decline of almost 4%,” Kedia said via email.
“The more serious claim is that corporate America is responsible for post-pandemic inflation, usually dubbed ‘greedflation.’ It is well past time for the administration to stop parroting this talking pointit is not true and reflects a lack of understanding of basic economic concepts,” he continued.
Kedia also directed Check Your Fact to a June 2023 article he authored for the Cato Institute on “greedflation,” where he writes that “the problem with the greedflation theory is that it is not an explanation for inflation.”
“Additionally, I want to point out that fixating on the greedflation theory absolves politicians from looking at their own stimulus packages and the adverse effects it has had on prices following the pandemic. It is not a coincidence that historic inflation occurred immediately after the government handed out historic amounts of cash,” Kedia explained further to Check Your Fact.
Bilal Baydoun, director of policy and research at the progressive non-profit Groundwork Collaborative, commended Biden for calling out “corporate price gouging.”
“Corporate profits drove 53% of inflation in Q2 and Q3 of last year – the president is absolutely right to call out the corporate price gouging that is keeping costs high for families,” Baydoun said.
Brian Riedl, a senior fellow at the conservative Manhattan Institute, took issue with various aspects of Biden’s claim.

“There’s a lot of nonsense to unpack. First, actual inflation-adjusted hourly worker compensation is still slightly down from early 2020 when the pandemic began—and down nearly 5% from when Biden took office. This is especially frustrating when inflation-adjusted compensation should be rising annually, and being nearly flat for four years is not an achievement worthy of bragging. Furthermore, fixed-income retirees do not always receive ‘worker compensation raises’ and have thus suffered under inflation,” Riedl said.

“Next, virtually all economists agree that the price gouging narrative for inflation is silly. Corporations have always been greedy and profit-maximizing, even when inflation was low. They didn’t all suddenly decide to become greedy in 2021 and 2022. Corporate behavior has not changed, but rather trillions of stimulus dollars were pumped into the economy by the Federal Reserve and President Biden that predictably drove inflation. As for ‘shrinkflation,’ the BLS inflation data already adjusts for changes in package sizes,” he added.

A White House official defended Biden’s claim in an email to Check Your Fact.

“Compared to pre-pandemic, real wages are up by 0.8% for all workers and 2.8% for low and middle income workers,” the official said, citing an October 2023 article from the center-left Brookings Institution, which stated real wages are higher now than prior to the pandemic based on multiple measures, including average hourly earnings, CPI, total compensation, and more.

“We believe a timeframe of pre-pandemic to present is the better timeframe because the composition of the workforce was different in the midst of the pandemic when President Biden took office than it was in January 2020 and now. Lower-wage workers disproportionately lost their jobs during the pandemic and higher-wage workers remained employed—leading the average wage per worker during the heights of the pandemic to be artificially high. As more lower-wage workers were hired back into the workforce, one would expect the average wage per worker to decline somewhat,” the official added.

The White House official directed Check Your Fact to a December 2023 Treasury Department report.

“Real wages have risen since before the pandemic across the income distribution. In particular, middle-income and lower-income households have seen their real earnings rise especially fast. And in the past 12 months, real wages overall have grown faster than they did in the pre-pandemic expansion.”

TIME fact checked Biden’s claim indicating the BLS data “shows hourly wage growth topping inflation for the past 12 months.” “In April, nominal hourly earnings were up 3.9% from a year ago; inflation held at 3.4%. But cumulative inflation has outpaced wage growth for most of the Biden presidency,” the magazine added.

Christine Sellers

Fact Check Reporter