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Trump's claims on income growth challenged by data, 'wage trap'

President Donald Trump boasted on Tuesday about the growth of the U.S. economy since he took office, but some of his claims are challenged by official data.

At a speech at the Economic Club of New York, the president stated that he was able to raise median household income by nearly $10,000, while former presidents Barack Obama and George W. Bush only managed to do so by a couple hundred. 

“Incomes are rising very fast. Median household income is now at the highest level in the history of our country,” Trump said.

“The average median income under President Bush rose only $400 over an 8 year period, under President Obama it rose $975 over an 8 year period. And under my administration it rose over $5,000 over slightly more just 2 and a half years. That’s a big difference,” he said.

He even went further and inflated the $5,000 figure he stated. “In addition to the $5,000 we have to add, $2,200 for the average tax cuts, and $2,000 to $3,000 for regulatory and energy cuts. So that would be a total of almost $10,000.” 

Yet as several observers pointed out, official government data does not back up Trump’s claims. According to Census Bureau figures, median household income rose $1,601 from 2017 to 2018. That gain lagged gains seen during the tenures of both Obama and Bush.

‘The wage trap’

President Donald Trump speaks during a meeting of the Economic Club of New York in New York, Tuesday, Nov. 12, 2019. (AP Photo/Seth Wenig)

Trump also talked about quickening wages for lower-income workers, pointing out that  “since the election, real wages have gone up 3.2% for the median American worker, but for the bottom income group real wages are soaring. A number that’s never happened before: 9%.”

Yet according to the Federal Reserve Bank of Atlanta, median wages for workers rose about 3.4% a year. Adjusted for inflation, real wage growth was closer to 4% between October 2016 and 2019, according to Brookings analysis of Federal Reserve Bank of Atlanta data.

And while low wage workers have seen faster wage gains than the median wage earner, their wages grew by 4.7% between 2016 and 2018 according to a Brookings analysis.

Trump characterized job gains and wage growth as “a great thing for our country. When you talk about equality this is a great thing for our country. Our tight labor market is helping them the most.”

However, what Trump failed to mention is that low wage workers are stuck in what some economists have called a wage trap — one that’s fueling a fierce debate about income inequality and capitalism in general.

According to new research from Brookings, nearly half of the U.S. workforce - approximately 53 million people - are stuck in a situation where switching jobs in pursuit of higher wages often results in the exact same wage —  or worse — a pay cut.

“When workers who earn wages in the low-wage quintile switch occupations, they have the highest likelihood of any wage group to remain in the same wage quintile and not see any wage mobility,” writes Brookings senior fellow Marcela Escobari, author of a new report entitled “Realism about reskilling: Upgrading the career prospects of America’s low-wage workers.”

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