Wages falling behind inflation rates: Former Chase economist
Former Chase chief economist Anthony Chan joined FOX Business’ “Varney and Co.” and disagreed with President Biden’s claim that wages are keeping up with inflation but added the issue and its metrics are complex.
ANTHONY CHAN: What we see is that wages are for all workers falling behind the inflation rate, but we really have a tale of two cities when you dig down deeper into the numbers. For example, when you look at the Bureau of Labor Statistics, 80% — the lower-income non-supervisory workers — they’re earning 5.5% year-over-year. So they are keeping up with inflation and doing a little bit better.
But if you all of a sudden add the supervisors — the higher wage employees — then now, wages are rising 4.6%. That’s all the workers, they’re falling behind inflation. But also digging a little bit deeper — you’ll also find a tale of two cities. What you see is if you work in the utility sector, wages are rising by 2.2%. That’s huge underwhelming results relative to the inflation rate. But if you’re lucky enough to work in the leisure and hospitality sector, your wages are rising 10.8% or twice as fast as the overall inflation rate. So it really depends on which sector you look at.
And then finally, if you look at inflation rates that the Federal Reserve likes to target, like the personal consumption deflator or the personal consumption deflator excluding food and energy because those metrics allow people to substitute goods. In that case, wages are in fact exceeding the inflation rate. So it really depends on what measure you look at. But looking at the CPI — wages are not keeping up with inflation if you look at the overall consumer price index.
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