President Trump’s State of the Union pointed to rising wages, heralded “our new American moment,”and stated “there has never been a better time to start living the American Dream.”
The speech indicated that Trump hopes to see wages rise, yet also suggests that national legislation to increase the minimum wage is not a priority (as wage legislation was not part of any claimed trend). It also suggests a lack of deep digging. In 2017 U.S. workers received scant wage increases, if any. The sluggish growth in real wages is at least partially attributable to inflation.
Improvements were just reported on Feb. 2, although also reported was a rise in U.S. workers seeking full-time work but finding only part-time employment. The average work week has dropped down to 34 hours.
Trump noted that the stock market is breaking records. The stock market, of course, has been showing impressive gains for years. (It is now experiencing a long-predicted correction.)
On Corporate Investments
The president indicated a keen interest in whether the the tax cuts signed into law in late 2017 are proving effective. Noted in the speech was Apple’s intent to invest $350 billion in the country and take on 20,000 new workers. What Apple is doing involves not so much investment as repatriation. While Apple’s hiring plans were already in place before the tax changes, the company does cite the tax changes when referring to continued growth.
Economist Gregory Wright observed in the Merced Sun-Star that while Trump also highlighted Exxon Mobil’s recent announcement that it will invest billions in the U.S. as a response to the tax bill, it wasn’t the $50 billion Trump’s speech claimed. Still, the $35 billion that actually was announced, after and taking into account the tax cuts, is impactful.
The tax cuts do incentivize new investments. To the extent that the incentives help create increases in pay for U.S. workers, the tax changes will be a welcome boost to the economy.
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