The new February jobs report released Friday by the Bureau of Labor Statistics (BLS) is, at first glance, positive.
The economy added 678,000 jobs last month, and the unemployment rate is down to just 3.8%. But before President Biden starts his victory lap, we need to talk about an undercovered yet crucial data point in this release: Americans’ real wages have declined over the last year.
Just In: The US economy added back 678,000 jobs in February, greatly exceeding expectations and a sign the jobs recovery was on track (at least before Russia invaded Ukraine).
US Unemployment Rate = 3.8%
Wage growth = 5.1%
**Over 90% of jobs lost in the pandemic have returned**
— Heather Long (@byHeatherLong) March 4, 2022
Average hourly wages grew by just 1 cent in February. (Yikes!) Overall, for the year, wages rose 5.1% from February 2021 to February 2022. That’s good news, right?
Not so fast.
We don’t have the final inflation numbers for February yet, but we do have January. And the January Consumer Price Index showed that average consumer prices rose 7.5% from January 2021 to January 2022. So, a rough but fairly accurate comparison suggests that Americans purchasing power—their real wages—has declined by 1-2.4% over the last year.
Still, it’s good news that the labor market is recovering and jobs are being added. But this growth is coming despite Biden’s “stimulus” legislation and other policies, not because of them.
For understanding the economy, there’s a lot more to the story than just top-line job numbers. The low unemployment rate doesn’t factor in the fact that millions of Americans have dropped out of the labor force entirely due to government interventions, restrictions on childcare, and massive expansions of the welfare state. (It only counts those actively seeking work).
And the nominal wage increases Americans have seen over the last year under Biden are, unfortunately, a mirage. The February BLS jobs report suggests that our real wages are ebbing away, not increasing. We can expect that to continue until the federal government’s money-printing and massive spending are finally halted.