Considering that it is an election year, it is perhaps unsurprising that there are two competing narratives on the current state of real (i.e., inflation-adjusted) wages. Democrats point out that, even after adjusting for inflation, wages are now higher than they were prior to the pandemic. Republicans, in contrast, note that real wages have declined since Biden took office. The fact checkers say both sides are technically correct: whether real wages are higher or lower today depends on one’s choice of the start date for the analysis.

At first glance, the fact checkers appear to be correct. As shown in Figure 1, real average hourly earnings can be calculated by dividing average hourly earnings by the Consumer Price Index and then multiplying the series by 100. By this measure, real average hourly earnings grew at an annualized rate of 0.4 percent from January 2020 to June 2024 (as indicated by the blue dashed line). They grew at an annualized rate of -0.6 percent from January 2021 to June 2024 (as indicated by the red dashed line).

A closer look, however, suggests otherwise. The problem isn’t so much with the fact checkers. Rather, it is with the data, which should be adjusted for composition effects. After adjusting real average hourly earnings for the changing composition of employment, it no longer matters whether one chooses a start date of January 2020 or January 2021: real average hourly earnings are higher today. But they aren’t much higher. Real average hourly earnings have grown slower in the post-pandemic period—and, under the Biden administration — than they did in the immediate pre-pandemic period.