Biden betting on wage growth, while GOP warns of inflation

WASHINGTON (AP) — The Biden administration recently gave a bit of simple advice to businesses that are unable to find workers: Offer them more money.

This recommendation, included in a White House memo about the state of the economy, gets at a fundamental tension in an economy that is returning to full health after the coronavirus pandemic. Businesses are coping with spiking prices for goods such as steel, plywood, plastics and asphalt. Yet workers, after enduring a year of job losses, business closures and social distancing, are no longer interested in accepting low wages.

Administration officials say the White House is not trying to target a specific wage level for workers. But officials say higher wages are a goal of President Joe Biden and a byproduct of his $1.9 trillion relief package and at least $3.5 trillion in additional spending being proposed for infrastructure and education.

Boosting wages gets at the central promise of the Biden presidency to improve the lives of everyday Americans and restore the country’s competitive edge in the world. Republicans say that Biden’s policies have already let loose a torrent of inflation that will hurt the economy. The outcome of these competing forces could decide the trajectory of the U.S. economy as well as the factors weighing on voters in next year’s elections.

White House economic adviser Jared Bernstein said the goal is “to pull forward a robust, inclusive recovery that provides good employment opportunities to people who have been the heroes of this pandemic, folks who are in the bottom half, who went to work, often in unsafe conditions, or had to stay home to take care of their families and deal with school closures and childcare constraints.”

The New York Federal Reserve reported this month that there has been a 26% increase over the past year in wage...