America’s lowest-paid workers are suffering a sharper slowdown in wage growth than their richer peers, adding to the pressure on Donald Trump over inequality as he threatens to undermine the reliability of US economic data.
Data from the Federal Reserve Bank of Atlanta shows wage growth for the lowest-paid quartile of workers — people earning roughly less than $806 a week — slowed to an annual rate of 3.7 per cent in June, down from a peak of 7.5 per cent in late 2022, when post-pandemic labour shortages in industries such as hospitality were most acute.
Wage growth has also slowed for higher earners but to a lesser extent. Pay for the top 25 per cent of workers is up by 4.7 per cent in the year to June, and for the overall workforce by 4.3 per cent. Those in the highest quartile earn more than $1,887 a week.
The figures come after the president sacked the head of the country’s labour statistics agency on Friday, hours after a gloomy jobs report. The unprecedented move to intervene caused an outcry among economists. The agency produces reports on the labour market and inflation which underpin the pricing of trillions of dollars in assets globally.
“The data can’t be propaganda,” top White House economic adviser Kevin Hassett told Fox News on Sunday.
He told NBC: “The president wants his own people there so that, when we see the numbers, they’re more transparent and more reliable”.
But on CNN William Beach, the former commissioner of the Bureau of Labor Statistics in Trump’s first term, said the firing “really hurts the statistical system”.
“It undermines credibility in BLS,” he added.
The most recent data is a stark reversal of recent trends that threaten to compound the effects of the US president’s tariff war and government spending cuts on poorer households.
For most of the past decade wages have grown fastest for lower earners, including during Trump’s first presidency. This accelerated after the Covid-19 pandemic as employers in low-paid sectors struggled to find staff.
A similar pattern holds in advertised wages, with salaries on offer in occupations such as law, marketing and engineering gaining most over the past year, according to ads tracked by the job site Indeed. Meanwhile, pay for lower-salaried roles in areas such as driving and logistics is lagging behind.
Economists say wages are often more volatile for the lowest-paid workers, who tend to have less bargaining power when the jobs market weakens.
The Atlanta Fed figures show the lowest earners experienced faster wage gains during Trump’s first term in office, when employment grew strongly.
“It takes a tighter labour market for them to have any leverage,” said Elise Gould, a labour market expert at the Economic Policy Institute.
Data on Friday showed that a slowdown in hiring over the past three months has been much sharper than previously thought, especially in low-wage sectors such as retail and leisure.
Bank of America CEO Brian Moynihan told CBS on Sunday the slowdown in business activity was a result of uncertainty. While companies were now more sure of the direction on tax and trade policy, they were “looking for clarity on deregulation and immigration”.
“The indications from them are they’re being a little more cautious, really waiting for some answers.”
He also said the government needed to improve its data collection to avoid the sort of large revisions that cause distrust.
“We watch what consumers really do. We watch what businesses really do,” he added.
The wage growth trend means the lowest paid are now more likely to find themselves among the 40 per cent of US workers whose salaries are not keeping pace with inflation, even though median pay is still rising faster than prices, according to Cory Stahle, economist at Indeed.
“The people who are already at the bottom and struggling may be the ones who are losing the most purchasing power,” he said.
Diane Swonk, economist at KPMG, said service staff who rely on tips were especially vulnerable to a slump in tourism and a consumer slowdown.
Economists have warned that several of the Trump administration’s main policies, including tariffs on imports, would hit poorer households harder.
The Yale Budget Lab estimates that tariffs will cut disposable income for the poorest tenth of households by more than 3 per cent in the short run. It expects the top 10 per cent to see a short-run hit of just 1 per cent.
A Congressional Budget Office analysis said that Trump’s tax-and-spend legislation, dubbed the “One Big, Beautiful Bill”, will lower resources for the bottom 10 per cent of earners by $1,600 per year. It would boost salaries for the richest 10 per cent by $12,000 per year, as the plans permanently extend tax cuts introduced during Trump’s first term, but cut access to Medicaid and food stamps.
The bill does, however, allow workers in occupations where they receive tips or regularly work overtime — which tends to occur more regularly in jobs that are lower paid — to receive tax deductions.
The administration also believes its trade policies will bring blue-collar manufacturing jobs back to the US, while energy-market deregulation will help drive down the cost of gas and fuel bills.
“In his first term, President Trump used an America First economic agenda to deliver historic working class prosperity and the first reduction in wealth and income inequality in decades,” said Kush Desai, a White House spokesperson. “In his term, President Trump is implementing the very same policy mix of deregulation, fairer trade, and pro-growth tax cuts at an even bigger scale — as these policies take effect, the best is yet to come.”
Data visualisation by Ian Hodgson.
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