White House says wages rising faster than government reporting

Wages for U.S. workers are improving more than the government is reporting due to flawed measures of inflation, the White House said Wednesday.

Kevin Hassett, chairman of president’s Council of Economic Advisers, said wage growth so far this year has averaged about 1.4 percent above inflation. That estimate conflicts with data from the Labor Department, which reported last month that wages have actually fallen by 0.2 percent in the previous 12 months due to higher costs of living.

Mr. Hassett said there is “confusion” about wage growth largely because the Consumer Price Index, the traditional measure of inflation, and other measurements don’t account for workers’ benefits such as bonus pay, health care benefits and contributions to retirement plans. Employers handed out one-time bonuses to about 6 million workers this year after the enactment of tax cuts.

“The headlines have missed the real wage growth because they measure inflation with the CPI, which has long been known to exaggerate inflation, and therefore exaggerate the rate at which wages have to grow to maintain a worker’s purchasing power,” Mr. Hassett told reporters.

Various news reports about wages in recent months have focused on stagnant wage growth during a period of low unemployment, when wages should be rising.

The CEA issued a report Wednesday arguing that full workers’ benefits should be included in calculations of wage growth.