The pay increases that were supposed to come from the Trump tax law haven't shown up yet
- Wage growth remained muted in the April jobs report.
- It suggests that the GOP tax law has still not boosted wages in the US economy.
- The slow pace of wage growth is a worrying sign for Republicans' 2018 midterm election fate.
The April jobs report, released Friday, showed a mixed outlook for the US labor market. But one number, in particular, stood out as a glaring weak spot that could be concerning for Republicans' electoral outlook later this year.
According to the report, average hourly earnings increased just 0.1% from a month ago and just 2.6% year-over-year, both short of expectations. That keeps wage growth stuck in its sub-3% growth trend, despite a historically low unemployment rate that fell below 4%.
Mark Hamrick, chief economist at Bankrate, said it was proof that the promised pay boost from the Republican tax law has not shown up yet.
"Wage growth was less-than-stellar, putting the fears seen earlier this year of possible overheating inflation on the back burner," Hamrick said. "This also disrupts the narrative on the potential benefits of the tax cut where more generous pay had essentially been promised."
Since the GOP tax law was implemented, Republican leaders pointed to one-time bonuses and wage-hike announcements as proof of the law's benefits for middle-class Americans. Corporate earnings and share buybacks are booming, but companies' gains don't appear to have trickled down to employees — at least yet.
The Atlanta Fed's wage growth tracker also remains below its high for the post-recession period and well below pre-financial crisis levels.
However, the Bureau of Labor Statistics' Employment Cost Index hit a post-recession high in the first quarter of 2018. But it represented the third quarter in a row that the ECI hit a record and it remains below pre-recession levels, suggesting that the ECI is on the same trendline as it was before the tax law.
Slow wage growth presents a political problem for the GOP heading into the 2018 midterm elections, in which they are fighting to keep control of the House and Senate.
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