Obama trumpets rising U.S. wages; data has a more somber tone

Reuters News
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Posted: Jan 21, 2015 12:05 AM

By Jason Lange

WASHINGTON (Reuters) - When President Barack Obama called attention on Tuesday to rising U.S. wages, he noted employers had not planned so many raises in years. But what he left out is that government data suggests actual wage increase are stuck in low gear.

"Today, thanks to a growing economy, the recovery is touching more and more lives," Obama said in his annual State of the Union address.

The president was not entirely triumphant in his speech, calling on Washington to help lift more Americans out of poverty by raising the minimum wage. He also said reforms to the country's education system were needed to help more people get high-paying jobs.

But in making a case that America had broken out of the economic doldrums, he said: "Wages are finally starting to rise again."

While it is true that earnings are rising, the problem with that statement is that multiple government surveys suggest income growth remains much slower than before the 2007-09 recession.

Average hourly earnings in the private sector rose just 1.7 percent in the year through December, according to the U.S. Labor Department.

On the eve of the recession, which began in December 2007, earnings were growing more than 3 percent every 12 months. Since 2010, they have averaged about 2 percent growth.

Obama also noted that a bigger share of small-business owners planned to raise wages than at any time since 2007.

That was an apparent reference to data from the National Federation of Independent Business from December, which genuinely lifted hopes workers were poised to get a pop in their paychecks.

But even relatively upbeat data on actual earnings suggests workers are not getting much in the way of raises.

A separate Labor Department survey on employment compensation showed wages growing 2.1 percent in the third quarter compared with a year earlier. That was the fastest pace since 2009, but still well below growth rates in 2007, when they were consistently above 3 percent.

(Reporting by Jason Lange; Editing by Peter Cooney)