Neither the Best nor Good

The Facts of the Trump Economic Record in Context

BY JOHN MILLER | May/June 2024

This article is from Dollars & Sense: Real World Economics, available at http://www.dollarsandsense.org

This article is from the
May/June 2024 issue.

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A funny thing, actually a deadly serious thing, happened on the way to a factoid: the pandemic-induced recession. And it makes all the difference for evaluating President Donald Trump’s economic record as well as President Joe Biden’s economic performance.

For starters, Trump was the only president since before World War II to leave the economy with fewer jobs than when he took office, just as Factcheck.org has corroborated. Only in presidential candidate Donald Trump’s upside-down world could a president with that kind of jobs record claim to have “the greatest economy in the history of our country.” Still, to determine just where Trump’s jobs record actually falls between the best and the worst requires looking closely at the impact of the pandemic recession on the economy.

Similarly, without accounting for the effect of the pandemic recession, it is impossible to know what to make of the seemingly stunning increase in average wages even after correcting for inflation during the Trump years. But one thing remains clear. Trump’s economic record was neither the best nor especially good.

Nothing to Write Home About

In addition to the ineptitude of Trump’s public health policies, it was the pandemic-induced recession during his last year in office that transformed Trump’s mediocre jobs record into a catastrophic one.

Even after excising the pandemic from his record, Trump’s economy was far from outstanding. When Trump took office, the economy had been growing for more than seven years. He then oversaw the remaining three years of the longest economic expansion of the U.S. economy. Nonetheless, the economy grew slowly from 2017 to 2019: 2.7% a year. That was far less than the 4.8% growth rate of the nine-year expansion of the 1960s, and the 3.6% rate during the 10-year expansion of the 1990s.

Prior to the pandemic, the Trump economy created jobs more slowly than either his predecessor or his successor. From 2017 to 2019 the number of jobs increased 1.3% a year. That was slower than the 1.9% annual rate during President Barack Obama’s last three years (2014 to 2016). The Trump job creation numbers also fell far short of the 3.3% rate during the 1960s expansion and even the 2% rate during the 1990s expansion. The pandemic hit the following year, the economy shed jobs, and by the end of 2020 there were far fewer jobs than when Trump had taken office.

During President Biden’s first three years in office the economy grew 3.4% a year—quickly in 2021 as the economy recovered and then more slowly in 2022 and 2023 as the Federal Reserve Board increased interest rates, slowing spending. From 2021 to 2023, the number of jobs increased 3.3% a year, an average of 406,000 jobs a month. Both numbers were more than twice those in Trump’s first three years—1.3% a year and 178,000 jobs a month.

Not What It Appears to Be

After factoring in the economic effect of the Covid-19 pandemic, the rapid increase in average real wages during the Trump years is far less impressive than what it appears to be. Factcheck.org reports that, “The average weekly earnings of all private-sector workers, in ‘real’ (inflation-adjusted) terms, rose 8.7% in Trump’s four years.” It looks to be an impressive figure. Average real wage gains of nearly 2.2% a year are faster than the average increase in real hourly wages in the 1960s expansion (1.7%) and the 1990s expansion (0.7%).

But it was a spike in the average of real wages caused by the unusual character of the pandemic recession that explains much of the large gains in average real wages—not Trump’s policies. Fully 5.1 percentage points of Trump’s 8.7% gain in the average of weekly real wages happened in 2020.

What explains such a large jump in real wages during a recession year? That prices declined for three months in spring 2020 when the pandemic shuttered businesses, and inflation increased just 1.4% for the year, is part of the reason. But the jump in the average wage rate did far more than the slowing inflation rate to boost the average of real wages. The average of weekly wages (not corrected for inflation) increased more than twice as quickly as it had during the three previous years.

That much faster increase in average nominal weekly wages was due to the change in the composition of the labor force brought about by the pandemic—not employers handing out large raises. During the pandemic, workers in industries and occupations that paid low wages and required face-to-face encounters—disproportionately women workers, workers of color, and workers without a college degree—lost their jobs more often than workers with a college degree, who were more likely to be able to work remotely. After the pandemic hit, these better-paid workers with more years of education made up a larger share of the workforce. And that boosted the average of the weekly wages of those who remained in the workforce. Economists at the Dallas Federal Reserve Board estimated that without the change in the composition of the workforce, the increase in real wages in 2020 would have been no higher than it was in 2019.

Without the pandemic year, the average gain in real weekly earnings during the three Trump years from 2017 to 2019 was 1.2%. Trump’s real wage gains are hardly different than the 1.18% average real wage gains during the last three Obama years, from 2014 through 2016. And Trump’s 1.2% real wage gains doesn’t measure up to the 1.7% gain during the long 1960s expansion.

So much for even the real wage gains during Trump’s years being the best ever. Still, Factcheck.org is right: Average real wages in the Biden years have fallen 3.4% from their post-pandemic peak (as of January 2024). Nonetheless, average real wages never fell below their pre-pandemic level. Inflation has outpaced wage gains for much of the Biden years, even though average (nominal) weekly earnings for production and nonsupervisory workers increased 4.7% a year from January 2021 to January 2024. The largest increase went to low-wage workers. For instance, the weekly wages of leisure and hospitality workers increased 7.2% a year, which was 2.5% after correcting for inflation.

In 2023 average wages increased more quickly than inflation. From April 2023 to February 2024, weekly wages of production and nonsupervisory workers went up at a 1.04% annual rate. While more and yet larger increases in real wages are needed, the increase in the weekly real wages of production and nonsupervisory workers in 2023 more or less matched the 1.08% increase in the Trump years from January 2017 to January 2020.

Writing in January 2024, The Economist, the pro-market weekly, concludes their comparison of the Trump and Biden records on earnings with these words, “If you follow the pre-covid trend line, the performance under Mr. Biden looks like a continuation of the gains under Mr. Trump. Let’s call this a draw.”

Making a Difference

Matching Trump’s earnings record, even if that was the most impressive aspect of his economic record, is not good enough. In February 2024 the real weekly wages of production and nonsupervisory workers were greater than they had been in February 2020, on the eve of the pandemic. But the real wages of those workers remained no higher than they had been at their peak in 1973. In effect, some 81% of private-sector workers have gone five decades without an increase in their purchasing power.

Wage gains since the pandemic have reduced wage inequality. Economists David Autor, Arindrajit Dube, and Annie McGrew report for the National Bureau of Economic Research that the real hourly wages of a low-wage worker at the 10th percentile increased 8%, while the real wages of a middle-wage worker at the 50th percentile remained about the same, and the real wages of a high-wage worker at the 90th percentile fell by 2%. And U.S. income and wealth inequality decreased from 2019 to 2022. But none of this was enough to reverse the worsening inequality that has plagued the U.S. economy for decades. In 2022 income inequality was far greater than in 1990, and wealth inequality was more than twice what it had been in 1989.

Yet more and larger wage increases that outpace inflation with the greatest gains for low- and middle-income workers are imperative to correct the economic record of the last five decades. That requires a sustained strong labor market with rapid job creation and low unemployment rates that empower workers, along with policies to support workers’ organizing efforts, and tax policies that attack income and wealth inequality.

JOHN MILLER is a professor of economics at Wheaton College and a member of the Dollars & Sense collective.

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