See how pay cuts contributed to Trump’s victory – Boston Herald

The decline in the purchasing power of American wages has helped supply Donald Trump is back in the Oval Office.

To gauge the economic impact of Trump’s victory over Vice President Kamala Harris, my trusty spreadsheet compiled a power index by salaries. It combined three key business indicators for the 50 states and the District of Columbia – eight years average weekly salary leaders of private industry, unemployment rate and national inflation, measured Consumer Price Index .

Wage increases were measured against unemployment to approximate how many people received a pay increase. These increases were then offset by rising costs of living.

Then, to create a national vote-based index, purchasing power results were weighted by state Electoral College votes. This gave this criterion, like the presidential elections, a connotation of favoritism for small states. Here’s how this metric works.

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First, note that in the four years ending in September (roughly speaking about the economy of President Biden, whose record is politically tied to Harris, his vice president), typical U.S. wages rose 17%. That’s slightly better than the 14% increase during the previous four years of Trump’s presidency.

Second, the Biden/Harris unemployment rate averaged 4.2% versus 4.8% during the Trump years.

Finally, and perhaps the deciding factor in the election, consumer prices have risen 21% over the past four years, compared with an 8% rise in the previous four years.

So when you combine these three measures, adjusting for the quirks of the Electoral College, the wage power index fell 4% during the Biden-Harris era after rising 5% under Trump.

This is quite a gap. Exit polls show one-third of voters said the economy was their top issue – with 80% of concerned people voting for Trump.

Salary fluctuations

Now let’s look at the index that actually decides the presidential election – at the state level.

When comparing these periods, the purchasing power of a typical salary increased in only two states: Idaho and North Dakota. Regardless of the economy, liberal Harris never stood a chance in any conservative state.

However, note the decline in this wage measure in the seven 2024 swing states—all apparently won by Trump.

Nevada: Purchasing power has fallen 5% over the past four years, compared with a 9% rise in the previous four years. This is the eighth-largest decline among states.

Arizona : A decline of 1% over the past four years, compared with a previous increase of 8%. 26th largest gap.

Georgia: 5% discount over the last four years versus the previous 3% increase – No. 27.

Michigan: 3% discount over the last four years versus the previous 4% increase – No. 32.

• INFLATION TRENDS: How are you? Which is cheaper? What’s next? CLICK HERE!

Pennsylvania: 5% discount over the last four years versus the previous 2% increase – No. 31.

Wisconsin: A 1% discount over the last four years versus the previous 4% gain – No. 38.

North Carolina: A 1% discount over the last four years versus the previous 4% gain – No. 40.

Warning

Now think about the decline in purchasing power in three giant economies with very different political preferences. Pocket books clearly did not influence every voter.

In California, wages have fallen 8% over the past four years, compared with a 9% increase in the previous four years. This fourth-largest margin did not prevent Harris from easily winning the state.

Meanwhile, the wage index in Texas has fallen 1% over the past four years, compared with a 1% increase previously, the fourth-largest decline. And Florida’s recent decline of 1% compared with a 6% increase from 2016-2020 is the 17th worst.

However, this pair of states easily went to Trump’s side.

Bottom line

In the previous column I noted that Inflation and the labor market have been historically strong predictors of presidential elections. The only problem this year was that they were pointing in opposite directions: jobs favored Harris while inflation favored Trump.

Harris and her supporters argued that the economy was performing admirably. My salary index is usually the same.

• HIRING TRENDS: Who is adding workers? Where are the layoffs? CLICK HERE!

Consider the recently completed third quarter. Weekly wages in the US rose 3.2% annually, slightly below the 3.6% average since 2016. Meanwhile, unemployment rose 3.9% against the norm of 4.5%.

And pesky inflation has cooled, rising 2.6% a year compared with the eight-year average of 3.4%.

As a result, my salary index for the quarter increased by 0.4%. This was the first increase in the purchasing power of American workers since the beginning of 2021.

So was this rise too little, too late? Wasn’t the economy a hot issue for swing voters?

Or were many Americans unwilling to forgive the holes in their wallets left by the worst inflationary surge in four decades?

Jonathan Lansner is a business columnist for the Southern California News Group. He can be contacted at [email protected]

Originally published: November 7, 2024 12:58 pm EST