Workers have been better off almost every year since America started its slow climb out of the Great Recession in 2009. But this year is different. Things aren’t just a bit better — we’re setting records!
After years of slow wage growth, slow economic growth, stagnant job creation, and declining business investment, all of these measures are improving — and fast.
We’re in the midst of the longest-running period of businesses adding new jobs. More job openings are a sign of a healthy economy, one in which employees have the upper hand.
Because of this, workers report the highest job satisfaction since 2005, and those who aren’t happy are voluntarily leaving for better opportunities at the highest rate ever recorded.
The sustained good economic news is due in no small part to last year’s tax cuts and the Trump administration’s elimination of unnecessary regulations that were dampening growth.
The tax cuts are letting average American families keep about $3,000 more in their pocketbooks — money that they’re now spending on back-to-school shopping, end-of-summer vacations or other family priorities. Those fatter paychecks are helping fuel consumer confidence, which reached an 18-year high in August.
And there are more paychecks, too. Businesses are taking their tax cuts and turning them into new jobs and new investments, further fueling the strong economy.
Many workers are benefiting twice from the tax cuts. First, by paying less in taxes, and second from higher wages generated by a faster-growing economy.
The Heritage Foundation recently calculated that over the next decade, the typical American household will reap an additional $26,000 in take-home pay thanks to the cuts and the growth they fuel.
For a family of four, the 10-year benefits are almost $45,000 — more than enough to buy a new car or put a down payment on a house.
The economic growth has already started to take off. Since tax reform passed, over 1 million net new jobs have been created. Companies are also using their tax savings to increase bonuses, wages, and charitable giving.
Evidence of the economic rebound can be found in virtually every business district and across Main Street in America.
Just look at the storefront windows. You’re bound to see more “help wanted” signs than you’ve seen in a long while. Businesses are vigorously looking for workers.
Unemployment is close to historic lows. For the first time, there are more jobs available than people looking for them — even though a growing number of people are re-entering the job market after a poor economy pushed them out years ago.
What’s most impressive is that the lowest-income workers are benefiting the most. Wage growth for workers in construction, hospitality, and retail have outpaced both inflation and wage growth in the rest of the economy. In May, wage growth for rank-and-file, nonsupervisory workers posted its best annual gain since 2009, and it continues to increase.
Because wage growth for lower-wage workers has outpaced high-income earners, income inequality has decreased over the past three years.
As tax reform continues to promote a strong economy and unnecessary regulations are rolled back, you can expect this trend to continue.
The future is not without uncertainty, however. Many of the tax cuts expire after 2025, and Congress is unwilling to reduce the growth rate of federal spending, which drives up our debt and threatens the prosperity of future generations.
To solidify this broad-based economic expansion, Congress must make the tax cuts permanent and place meaningful limits on federal budgets.
This Labor Day, American workers are better off than they have been in almost two decades. With the right policy locked in, the future can be even brighter.
Adam N. Michel is a policy analyst specializing in tax and budgetary issues for The Heritage Foundation’s Roe Institute for Economic Policy Studies.