Washington Post Says Falling Wages Are Really Rising, So Donald Trump’s Voters Must Be Wrong


Americans who support Donald Trump are just being too darn gloomy about the nation’s crummy economy and stalled wages, says a Washington Post editorial.

“The rise of populists on the left and right [presumably Trump supporters] stems from wage stagnation and related trends … But what if that gloomy picture is obsolete, to the extent it was ever true?” said the editorial, which is introduced as “The Post’s View: Things are getting better for workers, despite populist candidates’ talk.”

The Post just burbles on;

According to a growing body of data, real hourly earnings in the United States have been increasing for the past four-plus years. There are even tentative indications that the benefits are accruing to lower-income people who need them most.

But the Post’s evidence is so feeble and skewed that the editorial’s author gradually abandons the attempt to paint a pretty smile on President Barack Obama’s progressive misdirection of the nation’s economy. “Progress is not impossible; and optimism can be a form of realism,” the Post pleads at the end of the editorial.

Here is the Post‘s claim for optimism — and for ignoring Trump’s critical message; “According to a growing body of data, real hourly earnings in the United States have been increasing for the past four-plus years.”

But that claim of “real hourly earnings” ignores the other calculations which show how inflation, shorter hours or benefit cuts are reducing Americans’ compensation packages, despite the record number of high-end restaurants that are opening in the Washington D.C. area. 

Those extra factors are included in quarterly calculations of employee compensation prepared by the Bureau of Labor Statistics. In its most recent quarterly report, from August 9, the BLS said that compensation is declining this year.

In the first quarter, “real hourly compensation decreased 0.4 percent after revision, rather than the previously-published [estimated] increase of 4.2 percent,” and then fell at an annual rate of 1.1 percent during the second quarter, said the BLS report. That’s an overall decline of 0.8 percent during 2016, which, contra the Post, is not an increase. 

Also contrary to the Post‘s claim, real hourly compensation rose 2.8 percent in 2015 and 1.1 percent in 2014, but dropped 0.3 percent in 2013. That’s only an increase in two of four years, not four of four years, counting 2016.

The Post then finds some potential good news from Georgia, saying “The Atlanta Federal Reserve’s survey tracking the same cohort of continuously employed people showed that the median employee saw pay rise 3.6 percent as of June, year-over-year.”

But that Federal Reserve measure ignored inflation, which would nick off roughly 1 percent, leaving an estimated 2.6 percent pay rise. The BLS “implicit price deflator” is even higher, at 2 percent. The wage tracker is following “nominal” wage growth, so it does not adjust for inflation, said Melinda Pitts, the research director at the Center for Human Capital Studies at the Atlante Federal Reserve. 

Nor does the Georgia data track the fluctuating number of hours worked or the fluctuating value of benefits. “It is hourly wage so it is separate from hours and benefits … there are no benefits included,” Pitts told Breitbart

Besides, that Federal Reserve measure is more optimistic that the BLS data, maybe because its advisory council includes many business groups that have an incentive to maximize claims of wage growth.

Next, the Post tries to shove millions of Americans out of the picture by choosing to ignore the roughly 7 million men aged 25 to 54 who have quit the workforce, when it claims that “all measures of under- and unemployment are now back to their pre-recession averages, with the exception of the Labor Department’s measure of involuntary part-time work, which remains slightly elevated.”

Not quite. Millions of Americans who have given up looking for work don’t get counted in the Post’s categories of underemployed, unemployed and “involuntary part-time-work.” But there roughly seven million men — and a few million women — who have fallen out of the workforce, and out of the WashPo’s optimistic calculations.

That group is huge because wages have have been driven so low over the prior decades that many Americans don’t think working is worth the trouble or reward, President Barack Obama’s top economic advisor told an interviewer at the Brookings Institution.

“This [dropout] is caused by policies and institutions, not by technology,” admitted Jason Furman, an economist who chairs the president’s Council of Economic Advisors. “We shouldn’t accept it as inevitable,” he said Aug. 10.

Furman was quite frank about the cause and impact of the massive and hidden unemployment,

The fraction of prime age men who are working or looking for work has fallen continuously since the 1950s. In the early 1950s, 98 percent of men in that age bracket had a job … [or] were actively looking for one. Today, that fraction has fallen down to 88 percent. … Understand it is quite large. The difference between a recession and a normal economic period is maybe two percentage points on the employment population ratio … so this is something that is more like 10 percent age points [five recessions] stretched over a long period of time.

In some sense [this drop-off] is bigger than the difference between a recession and a boom, and the impact it has, the evidence is very clear that … when you’re talking about someone who is not married, who has less than a high-school degree, there’s a good chance that [unemployment] is not a choice, and it is associated with depression, with drug use, with suicide, with a range of bad outcomes for people.

The dropouts have increased because companies won’t pay decent wages, Furman says. “The amount [of money] that employers would want to hire them for some reason has gone down. … That’s consistent with what we see in the states and in the aggregate,” Furman said.

The Brookings interviewer prodded Furman to explain: “Your hypothesis is that they’re not looking for work because they pretty much know that no-one wants to hire them or if they got a job, it would not be enough money to justify the cost of working or whatever else,” he said. “Exactly,” responded Furman.

As the Post‘s editorial struggled to find good news, it gradually drifted into admitting the bad news.

“Productivity growth has been nonexistent in recent months, while labor force participation has remained well below pre-recession levels,” it admitted. 

Yes, that’s what Furman was saying about the 7 million missing men. And that’s what the BLS posted this month along with the bad news about declining compensation. Moreover, the bad news about declining productivity is what you’d expect to happen when Obama’s policy is to import large numbers of low-skilled, wage-cutting workers instead of pressuring companies to buy labor-saving machines.

“Nonfarm business sector labor productivity decreased at a 0.5-percent annual rate during the second quarter of 2016, the U.S. Bureau of Labor Statistics reported today, as output increased 1.2 percent and hours worked increased 1.8 percent,” the BLS reported Aug. 9.

So the Post’s anti-Trump editorial just wheezes to an end — out of facts, plausible hopes or even the nerve to insist on the implausible.

In contrast, Donald Trump’s economic and labor policies will increase salaries, reduce unemployment and make it easier for young people to buy homes, according to a critical study by a Wall Street analyst who support Hillary Clinton.

So when  the Washington Post‘s editorial insists that “wage stagnation” is just an old tale that is best ignored in the rush to elect Obama’s female ally as president, it is probably best that voters just ignore the Washington Post.