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Poor and Stupid

How big government, big business, big media and big academia block your road to financial freedom- and tell you it's for your own good.

IT'S AMAZING WHAT THEY'LL PUT ON THE FRONT PAGE

Posted on 08/28/2006 15:29 PM | Link | Post Comment
Russell Roberts does an outstanding job of demolishing a front-page above-the-fold New York Times story today, which attempts to show that ordinary working Americans aren't getting their share of economic growth. A few highlights:
the key sentence:
The median hourly wage for American workers has declined 2 percent since 2003, after factoring in inflation
. That's a very strange sentence for many reasons:

1. Why would you use a measure of compensation that ignores benefits, an increasingly important form of compensation?

2. Why would you use 2003 as your starting point when the recession ended in November of 2001?

3. There are no government series that I know of on median earnings. Where did those data come from?

There's a chart accompanying the article. It tells the reader that the median hourly pay data are from the Economic Policy Institute. The Economic Policy Institute has a policy agenda... They support a higher minimum wage and the strengthening of labor unions.

The Bureau of Labor Statistics does calculate real hourly compensation for the nonfarm business sector, a measure that includes benefits. Let's see what those numbers look like...

What these numbers show is that for every year since the recession of 2001, real hourly compensation has actually increased. It's up since 2003 as well. And this year it's up quite dramatically...

Later on in the article, the authors make a definitive statement about compensation including benefits:

Total employee compensation — wages plus benefits — has fared a little better. Its share was briefly lower than its current level of 56.1 percent in the mid-1990’s and otherwise has not been so low since 1966.
...my quick look at the Commerce Department numbers shows that total compensation received by employees as a ratio to GDP is HIGHER today than it was in 1966. I've emailed the Times. I'll let you know what they say in reply if it's relevant.
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