The figure below from Trump economists Kevin Hassett and Casey Mulligan shows what happened to the trend in worker pay and compensation over the past eight years.

After healthy gains in Trump’s first term, the trend line fell sharply under Biden. If the Trump trend had continued, worker pay would have risen 4.6% faster.

Why did compensation fall so dramatically? Back five years ago Mulligan and Hassett examined the expected impact of heavy-handed industry regulation and expanded Obamacare subsidies. They famously predicted a 5% decline in what would have been expected if Trump policies had stayed in effect. They were widely attacked. Their forecast of higher inflation and lower worker compensation turned out to be spot on correct.

We expect a big spike this year in compensation due to the Trump tax cut and deregulation efforts.