I was reading a debate on a conservative website about affordability in this campaign when I came across an argument that deserves a closer look. The left-leaning participants were challenging Donald Trump’s description of the American economy as a golden economy. Their evidence? Wages weren’t keeping up with inflation.
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Fair enough. If prices rise 4 percent while wages increase only 1 percent, workers are losing purchasing power. Nobody needs an economics degree to understand that arithmetic. When the cost of living rises faster than your paycheck, you fall behind.
But that argument leaves out the most important part of the story. It treats today’s gap between wage growth and inflation as though Americans are starting from scratch. They aren’t. They are still living with the accumulated damage of the inflation that preceded it.
The affordability problem did not begin with this month’s inflation rate.
Between January 2021 and December 2024, the Consumer Price Index rose approximately 20.7 percent. According to the Bureau of Labor Statistics, the index climbed from 261.582 to 315.605. A basket of goods and services that cost $100 at the beginning of that period cost about $120.70 by the end.
Think about what that means for a family buying groceries, filling the gas tank, paying rent, renewing insurance, or keeping the lights on. Those expenses did not suddenly return to their old prices when inflation slowed. The higher prices stayed, and families had to adjust their lives around them.
Inflation measures how quickly prices are rising. The price level tells us what Americans are actually paying. When inflation falls, prices generally continue rising, only more slowly. Recovering lost purchasing power requires wages to outpace inflation over time, and even then, recovery is not automatic or evenly distributed.
Imagine a family whose expenses increased by 20 percent over several years while its income barely moved. If wages now grow 1.5 percentage points faster than inflation, that is progress. It is not a solution to the entire problem. Recovering the lost ground could take years, assuming the favorable relationship continues.
Yet the political argument often focuses on that narrow difference between current wage growth and current inflation. The implication is that Trump’s economic claims can be dismissed simply because wages have recently fallen behind prices. That tells us something about the current direction of the economy. It does not tell us the whole story about how Americans got here.
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The Biden administration presided over a period in which consumer prices rose dramatically. The causes included pandemic-related supply disruptions, surging demand, energy costs, and federal fiscal policy. The administration’s spending decisions deserve scrutiny as part of that history. Pretending the cumulative damage does not matter is no more reasonable than attributing every price increase to a single cause.
A recovering economy and an affordable economy are not necessarily the same thing. Economic growth, rising employment, increasing investment, and improving wages can all be positive developments while families continue struggling with prices elevated by years of inflation. Pointing to improving economic indicators does not make a family’s grocery bill any smaller.
If we want an honest discussion about affordability, we should ask three questions: How much did the cost of living rise? How much have wages gained in comparison? And how much ground have American households recovered?
Those questions offer a more complete picture than a snapshot of current inflation and wage figures. The arithmetic behind the wage argument is real, and families feel the consequences. But using that gap to dismiss an improving economy while ignoring the enormous increase in the cost of living that preceded it leaves out half the argument.
The people who helped create this affordability crisis are now presenting themselves as the solution. They point to today’s gap between wages and inflation while ignoring the cumulative damage that brought us here. They want Americans to forget how we got here and judge the economy as though the past four years never happened. That is political gaslighting, and Republicans should recognize it for what it is. The party responsible for helping create this mess should not get to rewrite the history of how it happened and then return to power promising to clean it up.
Americans did not arrive at today’s grocery prices, housing costs, and insurance bills overnight. They will not escape the consequences overnight, either.
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Image: pasja1000 via Pixabay, Pixabay License.