With Zohran Mamdani due to be sworn in as New York City Mayor (and in a beautiful, abandoned subway station), the year of “affordability” is being capped off fittingly. The “K-shaped economy,” with diverging prospects for the rich and poor, is the near consensus from economists. And yet, there’s an inconvenient fact: wages are going up, a lot.
Apollo chief economist Torsten Slok noted in a Tuesday blog post that wages are growing faster than inflation, a pattern that has persisted for more than a decade, usually an indication of increased spending and productivity that can buoy the economy.
“When discussing affordability, it is important to note that while the CPI price level has increased 26% since 2019, wages have increased 30%,” he said, citing data from the U.S. Bureau of Labor Statistics.
Similar to Slok, Jason Furman, Harvard Kennedy School of Government professor and former chair of the Council of Economic Advisers under Obama, told CNBC’s “Squawk Box” last week that strong wage growth bucks the trend of economic doom. He went so far as to say that consistently rising incomes weakens the argument that there’s a lopsided, K-shaped economy of the rich getting richer while the poor get poorer.
