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Tuesday, January 28, 2014

Politifact: Wages Have Barely Budged Over Last Four Years


The Truth-O-Meter Says:
Obama

During the past four years, "average wages have barely budged."

Barack Obama on Tuesday, January 28th, 2014 in the State of Union address

In State of the Union, Obama says average wages have 'barely budged' over past 4 years

One of the key themes of President Barack Obama’s State of the Union address was income inequality.

"Today, after four years of economic growth, corporate profits and stock prices have rarely been higher, and those at the top have never done better," Obama said. "But average wages have barely budged. Inequality has deepened. Upward mobility has stalled. The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by - let alone get ahead. And too many still aren't working at all."

Here, we will check Obama’s claim that during the past four years, "average wages have barely budged."

At PolitiFact, one of our core principles is "words matter." So in this item, we will look at average wages -- not the median wage, and not the average (or median) family income or household income.
We found two federal data sets that look at the average wage.

The Bureau of Labor Statistics’ National Occupational Employment and Wage Estimates
These statistics are based on data collected from employers in all industry sectors and in all types of regions nationwide. The most recent year available is 2012.

Year
Mean annual wage, all occupations
Inflation-adjusted mean annual wage in 2012 dollars
2008
$42,270
$45,076
2009
$43,460
$46,510
2010
$44,410
$46,760
2011
$45,230
$46,166
2012
$45,790
$45,790

So according to this data set, the average annual wage increased by 8.3 percent between 2008 and 2012. (We also looked at the changes between 2009 and 2012, since either date range seems a plausible "four-year" period to us, and the numbers were similar..)
However, this raw wage data doesn’t take into account inflation -- something economists like to consider when determining whether a wage "barely budged."
When you use an inflation calculator, the average wage from 2008 was equivalent to $45,075 in 2012 dollars, meaning that the inflation-adjusted wage rose during that period, but only narrowly -- about 1.6 percent.
By this data, Obama is correct.
• The Social Security Administration's National Average Wage Index
These are the numbers used to calculate Social Security recipients’ benefit levels. Here’s the breakdown:

Year
National average wage
In 2012 dollars
2008
$41,335
$44,079
2009
$40,712
$43,569
2010
$41,674
$43,879
2011
$42,980
$43,869
2012
$44,322
$44,322

According to this data set, the average annual wage increased by 7.2 percent between 2008 and 2012.
After you adjust for inflation, the average wage from 2008 was $44,079 in 2012 dollars. So from 2008-12, the inflation-adjusted wage rose by less than 1 percent.
Whichever data you use, the increases are pretty modest, particularly given that they were spread out over a four-year period.
Our ruling
Obama said that during the past four years, "average wages have barely budged."
Two federal data sets broadly agree: Over the most recent four-year period, the average wage has risen no more than 1.7 percent above inflation. That’s a rising wage -- but by a small amount, about a half a percentage point above inflation per year. We think that’s a reasonable definition for "barely budged." So we rate Obama’s claim True.
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About this statement:
Published: Tuesday, January 28th, 2014 at 9:22 p.m.
Subjects: Economy, Jobs
Sources:
Barack Obama, State of the Union address, Jan. 28, 2014
Social Security Administration, National Average Wage Index, accessed Jan. 28, 2014
Bureau of Labor Statistics, inflation calculator, accessed Jan. 28, 2014
Bureau of Labor Statistics, National Occupational Employment and Wage Estimates, 2008, 2009, 2010, 2011, 2012
Written by: Louis Jacobson
Researched by: Louis Jacobson
Edited by: Angie Drobnic Holan
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