Wages Are Up for Low-Income Workers, No Thanks to Donald Trump

Are wages going up more for low-income workers than for the middle class? It’s a little hard to see in the data unless you zoom way in. For example, here are hourly wages for all workers vs. blue-collar workers, who make up roughly the bottom 70 percent:

If these two curves look the same to you, give yourself a gold star. Blue-collar wages are up 23.8 percent since 2010 while all wages are up 24.5 percent. That’s as good as identical. So let’s take a closer and more precise look at just the past couple of years:

In the past two years, earnings of the first and third quartiles have continued to grow at the same rate. However, folks at the very bottom of the income ladder have seen their earnings grow faster. What does this mean?

Average earnings for the bottom decile come to about $11 per hour, which is very much in minimum wage territory. A couple of years ago CEPR took a look at how the minimum wage affected earnings, and what they found is that raising the minimum wage had very little effect on workers who earned median wages or above. However, it did have an effect on the very lowest-paid workers, like those in the leisure and hospitality industry:

The orange line shows earnings in the 22 states that raised their minimum wage between 2014-16. The blue line shows earnings in states that didn’t. The effect is obvious: for very low-income workers, their earnings depend largely on state changes to the minimum wage.

CEPR doesn’t have a more recent study, but 23 states raised their minimum wage between 2017-18. If the effect is the same as in the earlier years, you’d expect higher earnings growth among very low-wage workers but not among ordinary low-wage workers. And that’s exactly what we see in the more recent data. So, yes, it’s true that earnings have gone up for very low-income workers, but this is largely because of minimum wage increases in blue states, not because of anything that Donald Trump or the Republican Party has done.

They could help these people if they wanted to. For example, they could raise the federal minimum wage. But they refuse to. They just don’t care about low-wage workers.

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