A decline in the purchasing power of American wages helped put Donald Trump back in the Oval Office.

To measure the economic leg of Trump’s victory over Vice President Kamala Harris, my trusty spreadsheet created a wage power index. It combined three key business criteria for the 50 states and the District of Columbia – eight years of the average weekly wage paid of private industry bosses, unemployment rates and national inflation as measured by Consumer price index .

Wage increases were measured by unemployment to approximate how many people received wage increases. These increases were then reduced by the rising cost of living.

Next, to create a national vote-weighted index, purchasing power results were weighted by a state’s electoral college votes. That gave this benchmark, like the presidential election, a touch of favoritism for the small state. Here’s how this measurement worked.

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First, note that in the four years ending in September—roughly measuring the economy of President Biden, a longtime political tie to Harris, his running mate—a typical American wage rose 17 percent. That was slightly better than the 14 percent increase over the last four years of the Trump presidency.

Second, the Biden/Harris unemployment rate averaged 4.2% versus 4.8% during the Trump years.

Finally, and perhaps the game-changer of the election, consumer prices have risen 21% over the past four years, up from an 8% gain over the previous four.

So when you combine these three measurements, adjusted for the quirks of the Electoral College, the wage power index fell 4% in the Biden/Harris era, after rising 5% under Trump.

It is not a small gap. Exit polls show that a third of voters said the economy was their top issue — with 80 percent of those eager to vote for Trump.

Pay swing

Now, let’s consider the index of where presidential elections are actually decided – at the state level.

When comparing these periods, the purchasing power of a typical salary increased in only two states: Idaho and North Dakota. Regardless of the economy, liberal Harris never stood a chance in any of the conservative states.

However, consider the declines in this wage benchmark for the seven swing states in 2024 — all apparently won by Trump.

Nevada: Purchasing power has fallen 5% over the past four years, compared to a 9% gain over the past four years. That’s the eighth-largest decline among states.

Arizona : down 1% over the past four years from the previous gain of 8%. 26th largest gap.

Georgia: 5% reduction in the last four years from the previous gain of 3% – No. 27.

Michigan: Down 3% over last four years from previous 4% gain – No. 32.

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Pennsylvania: Down 5% over the last four years from the previous 2% gain – No. 31.

Wisconsin: Down 1% over the last four years from the previous 4% gain – No. 38.

North Carolina: Down 1% over the past four years from the previous 4% gain – no. 40.

Warning

Now consider the decline in purchasing power in three giant economies with very different policy preferences. Pocket cards clearly did not sway every voter.

In California, wage power has fallen 8% over the past four years, compared to a 9% gain over the past four. That fourth-largest gap didn’t stop Harris from easily winning state.

Meanwhile, the Texas payroll index fell 1 percent over the past four years, compared with a 1 percent increase previously, the fourth-slightest decline. And Florida’s recent 1% decline compared to 6% growth in 2016-20, the 17th best performance.

Still, this pair of states went easy for Trump.

Conclusion

In a previous column, we noted that inflation and the labor market have historically been reliable predictors of presidential elections. The only problem this year was that they pointed in opposite directions: jobs favor Harris, while inflation favors Trump.

Harris and her supporters campaigned that the economy was doing admirably. My salary index tends to agree.

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Consider the recently concluded third quarter. U.S. weekly wages rose at a 3.2 percent annual rate, down slightly from the 3.6 percent average in 2016. Meanwhile, unemployment rose 3.9 percent from the 4.5 percent norm.

And nasty inflation has cooled, rising at an annual rate of 2.6 percent from an eight-year average of 3.4 percent.

That pushed my wage power index up 0.4% for the quarter. This was the first increase in purchasing power for American workers since the start of 2021.

So was this growth too little, too late? Wasn’t the economy a relevant issue for undecided voters?

Or were many Americans unwilling to forgive the holes in their wallets created by what had been the worst rise in inflation in four decades?

Jonathan Lansner is a business columnist for the Southern California News Group. He can be reached at [email protected]

Originally published: Nov 7, 2024 at 9:58 am PST