Tepid wage growth throughout the current economic expansion also bedeviled the Obama administration and remains one of the biggest challenges even with unemployment near the lowest level since 1969. On top of that, workers are failing to reap benefits of legislation cutting corporate taxes, an outcome predicted by some economists before Congress passed the law in December.
“It was our expectation that the major elements of the tax plan likely wouldn’t trickle down into stronger wages for the average worker,” said Michael Gapen, chief U.S. economist at Barclays Plc. “It was more likely to go as returns to shareholders.”
Companies in the S&P 500 index are set to authorize $1 trillion in stock buybacks in 2018, a record and a 46 percent jump from last year, according to an estimate this month from Goldman Sachs Group Inc.
Only 37 percent of Americans approve of the tax package, compared to 45 percent who disapprove, according to a Monmouth University poll released Aug. 20. Such unpopularity is hampering Republicans who had hoped the law would give them a boost in midterm elections.
One in four Americans don’t think they’re “at least doing OK” financially, and more than one in five respondents said they were unable to pay the current month’s bills in full, according to the results of a late 2017 Fed survey released in May.
“People that depend on wages -- and that’s essentially almost everyone except higher-income or higher-wealth individuals -- are not seeing as much benefit from this economy,” said Gregory Daco, head of U.S. macroeconomics at Oxford Economics in New York. “People at the lower end of the income spectrum are actually more constrained.”
This story provided by Bloomberg News.