Low-income workers who have seen substantial wage increases amid the pandemic may have helped bolster Democrats in the 2022 midterm elections after they were predicted to suffer heavy losses in Congress. .
From the start of the first quarter of 2020 to the second quarter of 2022, wages for low-income earners far outpaced inflation, according to new analysis from the University of Massachusetts Amherst. The study, based on census data, showed that earnings were highest for those earning the least.
For the bottom fifth percentile of wage earners during this period, nominal wages rose nearly 11%, crushing the annualized inflation rate of 6% by almost 5 percentage points.
For the bottom 10th percentile, nominal gains were 9.5% for real wage growth of 3.5%.
Economists say that lower growth may have contributed to the Democrats’ surprising performance in the midterm elections, when congressional control was set to swing, and by a wide margin.
Democrats will continue to hold the majority in the Senate after races are called on Friday and Saturday for Democratic senators from Arizona and Nevada. If they win a Georgia Senate runoff on Dec. 6, the Democrats could actually increase their majority.
In the House, the results are still too close to call a winner, though Republicans are still seen as the favorites to win a narrow majority.
“Over the past two years, many voters have seen their incomes increase, even after adjusting for inflation. Most of these voters are people who had lower incomes before the pandemic. While these voters may still cite “inflation” or “the economy” as one of their top concerns in the polls, they are still better off than they were two years ago, so the election backlash has been minimal,” Matt Darling, an employment policy fellow at the Niskanen Center, said in a post to The Hill.
Exit polls showed inflation and abortion as the top concerns for voters midterm.
But analysts say the general state of the economy, which has a tight labor market that is generally favorable to workers, should not be overlooked.
“There are a lot of factors in this election, it’s a very unusual election,” Shawn Fremstad, director of law and political economy at the Center for Economic and Policy Research (CEPR), said in an interview.
“But I would certainly say the strong recovery, near full employment, people moving into better paying jobs at the bottom – I really think that all of that has contributed to something big in terms of election.”
University of California, Berkeley economist Gabriel Zucman said in an online forum that low-end wage growth was a big deal.
“It’s hard to overstate the magnitude of a change, compared to the previous 40 years of near-stagnation in low wages (and abysmal recovery from the Great Recession),” he wrote. “And, as far as we can tell, this real growth in low wages continues to this day.”
“Growth has been much stronger for the working class: 10.5% for the bottom 50%,” he wrote, referring to real income growth since January 2021.
The UMass Amherst analysis also shows that while people at the bottom have gained the most during the pandemic, people at the top of the income spectrum have lost the most, sitting 2 percentage points below the l ‘inflation. It’s a phenomenon called “wage compression,” and it took economists by surprise.
“We have seen an unexpected squeeze on wages, where those who have lost the most jobs during the pandemic have seen the largest wage gains over the past two years,” Dube wrote online.
Dube also noted that people quit their jobs more easily in response to wage changes, indicating a higher degree of freedom for workers to seek better jobs. This was especially true for young workers without a university degree.
The wage squeeze “was driven by a sharp increase in quits and the elasticity of quits to wages, especially for those under 40 without a bachelor’s degree,” Dube wrote.
According to the Center for Information and Research in Civic Learning and Engagement (CIRLCE), which is affiliated with Tufts University.
“…it is clear that young people had a major impact on the 2022 midterm reviews,” the CIRCLE researchers wrote.
While wage growth among low earners may have played into the youth vote, CEPR’s Fremstad said many issues in Tuesday’s election matter to young people.
“You have other factors playing with young people,” he said. “The issue of abortion is an important driving force for young people.”
Other data from the Bureau of Labor Statistics also shows that income levels for low-income people have increased since the start of the pandemic.
Wages for workers in the unsupervised production and leisure and hospitality sectors — which are typically among the lowest-paying jobs in the economy — have risen by around 5% in real terms since the start of the crisis. pandemic.
“So many employers are hiring because it’s so hard to find workers and that’s because they all have jobs. As a result, we have seen wages increase. So the longer-term trend of college graduates seeing their salaries go up, when nobody else is – that kind of reversed in the last year, a year and a half,” said Matt Darling of Niskanen.
This story was updated at 8:30 a.m.
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