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Opinion: Bernie Sanders’s Half-Truth on Wages

Progressives are attempting to discredit the Trump economy by claiming workers aren’t seeing the benefits. Sen. Bernie Sanders recently claimed that the increase in wages last year “nets out to zero” because of inflation and that “the average American worker today, despite the strong economy, is not getting ahead.”

Mr. Sanders has half a point. According to the Bureau of Labor Statistics’ latest report on real earnings, as of July average hourly earnings had increased 2.7% over the preceding year, while inflation was 2.9%, due in large part to a surge in oil prices—a slight decrease in real terms.

But workers have benefited in other ways. The stronger economy has created opportunities to increase earnings by working more hours. Over the past year, the number of people working part time because they were unable to find full-time employment decreased by nearly 700,000 while the number of people working full time increased by more than three million. For those already employed full-time, there are more opportunities to work overtime at 50% higher hourly wages. The BLS credits increased hours with adding 0.3% to weekly earnings, for a combined earnings increase of 3%, slightly more than the 2.9% inflation rate.

None of this takes into account the effect of lower taxes. According to Sentier Research, an economic-research firm founded by former Census Bureau officials, median household income in July 2017 was $60,879. In 2017 a married couple with no children filing jointly with income of $60,879 would have taken a standard deduction of $12,700 plus personal exemptions of $8,100, resulting in taxable income of $40,079. Their tax rate would have been 15%, for a federal income-tax liability of $5,079. After paying payroll taxes of $4,657, this couple would have taken home $51,143.

Read the entire article at The Wall Street Journal 

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