Wages

Blue-Collar Wages Surge in 2025

June 17, 2025 by Tim McMahon

According to recent data from the U.S. Department of the Treasury, in the first five months of President Donald Trump’s second term, blue-collar workers have experienced the strongest early-term wage gains for working-class Americans under any U.S. president in nearly 60 years. The 1.7% real (i.e., inflation-adjusted) wage increase sharply contrasts with negative growth under most Presidents.

Since President Richard Nixon took office in 1969, no other president has matched this level of early-term wage growth for non-supervisory and production workers. Nixon’s comparable figure stood at just 0.8% during his initial months in office. Trump’s latest achievement builds upon his previous track record; in his first term, blue-collar wages grew by 1.3% in the same period, already a strong showing, but now surpassed. [Read more…] about Blue-Collar Wages Surge in 2025

Does Raising The Minimum Wage Make A Substantial Difference?

June 16, 2025 by Tim McMahon

Minimum wage increases seem to be a “hot-button” topic for many people. On the surface, it seems obvious—if we raise the minimum wage, workers will earn more and be better off. But, economics is rarely that simple, and in the real-world consequences often tell a more complicated story.

Productivity, Not Policy, Drives Wage Growth

To begin, we need to understand a fundamental economic truth: wages are ultimately tied to productivity, not legislation. Governments can set legal minimums, but unless a worker produces enough value to justify that wage, forcing businesses to pay more becomes unsustainable. Sustainable wage growth only occurs when individuals generate more value for their employers, whether that’s through skills, efficiency, or technology.

What Happens When Minimum Wages Go Up?

Raising the minimum wage might sound compassionate, but businesses don’t exist to pay more than necessary for labor. When mandated wages rise, businesses react, and not always in ways that benefit workers.

They have a few options:

Cut jobs or hours
Automate roles (think kiosks replacing cashiers)
Outsource or offshore tasks
Close or relocate altogether

A striking example came in 2024 when California implemented a $20/hour minimum wage for certain fast-food workers. The result? Over 10,000 jobs disappeared almost immediately. More than 1,500 restaurants shut down or moved operations to lower-cost states. Far from helping workers, this policy left many unemployed or underemployed, and some businesses simply vanished. [Read more…] about Does Raising The Minimum Wage Make A Substantial Difference?

Have Wages Kept Up With Inflation?

September 23, 2024 by Tim McMahon

One of the most important questions regarding your income is whether your wages have kept up with inflation. You might be getting nice yearly raises, but if inflation is growing faster, you are still falling behind. So, in order for your purchasing power to increase or at least stay the same it is important to look at Inflation-Adjusted wages.

If you ask your neighbors, they will almost certainly say that the average wage hasn’t kept up with inflation. And since “bad news sells” even the media tends to try to convince us that the average wage hasn’t kept up with inflation. But what do the actual numbers say?

If we look at the numbers presented by the Federal Reserve CES0500000003 index (Average Hourly Earnings of All Employees) we get the following chart. And it looks pretty good, wages are going up fairly steadily. But is inflation going up faster? We really can’t tell.

Inflation-Adjusted Hourly Wages

So to get the true picture we have to adjust it by the Consumer Price Index (CPI-U) and then we get the following chart: [Read more…] about Have Wages Kept Up With Inflation?