Our friend Stephen Moore’s must-read Unleash Prosperity Hotline hit our inbox like a thunderclap yesterday morning with this headline and chart: The Biden Inflation Tax? $2,400 A Year Per Worker.
Mr. Moore included a just-updated chart from Andy Puzder, former CEO of CKE Restaurants, that has tracked the monthly inflation numbers for the past 16 months. Over the past year, inflation has outpaced wages and salaries by roughly four percentage points reported Moore. With the average worker wage and salary at roughly $60,000 a year, this means a $2,400 per worker Biden inflation tax.
Steve further reported that Andy Puzder’s number may be low and that Heritage Foundation economist E.J. Antoni thinks the inflation tax is above $3,000 a year.
What Steve Moore, Andy Puzder and E.J. Antoni have done is put a human face on the impersonal government statistics by which inflation is usually tracked – 1.3% over a month sounds like less than the interest many credit cards might charge on your outstanding balance, but $3,000 is real money to a family trying to live on the average worker’s wages.
And as the Wall Street Journal reported, that $3,000 tax (or $2,400 if you’re an optimist) is being tacked on to the prices of necessities, not luxuries:
…price increases were “broad-based,” as the Bureau of Labor Statistics (BLS) put it, especially for food and energy. The price index for food at home rose 1% for the month, the sixth month in a row of 1% or more and 12.2% for the last year. Energy prices rose 7.5% in the month, led by an increase in gasoline prices…
The editors of the Wall Street Journal went on to observe that the greatest tragedy is for American workers, who are suffering the largest reduction in real wages since the 1970s. Real average hourly earnings fell 1% in June alone and are now down 3.6% in the last 12 months. Average real weekly earnings fell even more, 4.4%, because of a decline in the average workweek.
Real wages have fallen in 10 of the last 13 months, and they have now fallen more since President Biden took office than they did during the recession caused by the financial crisis. From December 2008 to a trough in real earnings in February 2012, real average hourly earnings fell 1.8% measured in 1982-1984 dollars, according to BLS. They have fallen 4.8% since January 2021.
And for American workers there’s worse news on the horizon.
The Federal Reserve has recently begun to raise interest rates, which will certainly slow important sectors of the economy, such as housing, and send the jobless rate higher. Such a scenario of high inflation and high unemployment would harken a return to the stagflation and high misery index economy of the Jimmy Carter years.
Given the obvious dangers in the numbers one would think that Democrats would be anxious to tame inflation and avoid the political cost of the looming economic debacle, but they can’t because returning to pro-growth economic policies rooted in stable money, supply-side tax policy, deregulation and fiscal restraint would mean abandoning the Democrat tax and spend policies that got us here in the first place.
Joe Biden Administration
Wages and salaries
Bureau of Labor Statistics (BLS)