Dean Baker's Blog, page 272

NYT Badly Confused About Monthly Wage Data

The NYT was seriously misled by the jump in the average hourly wage reported last month, headlining an article, "Economic Recovery Spreads to the Middle Class." The basis for the headline is the 0.4 percent increase in the average hourly wage reported in November. As fans of wage data everywhere know, the monthly data are very erratic. In fact, the November increase followed two months of weak wage growth. As a result, the annual rate of increase in wages for the most recent three months (Sep...

Democrats' Record on the Economy

The NYT had a discussion of the debate among Democrats on whether they should take credit for the state of the economy. The piece is somewhat confused. It it includes many variables that either have no impact on most people or are not even measures of economic success.

For example, it refers to the decline in the deficit to less than 3.0 percent of GDP. Since the economy is still far below full employment according to estimates of the Congressional Budget Office and other forecasters, this j...

The Washington Post Wants Japan to Fire Workers

The Washington Post just hates, hates, hates the idea that ordinary workers (i.e. people who don't earn six, seven, and eight figure salaries) should enjoy any job security. They took this hatred to Japan in their lead editorial, complaining that Japan's Prime Minister Shinzo Abe in a news conference following the re-election of his party pledged to pressure companies to raise wages. The Post told readers:

"a more effective, if less populist, action would be the passage of labor reforms to ma...

It's Hard to Get Information About the Economy at the Washington Post: Michael Gerson Edition

I have often commented about the apparent difficulty of obtaining reliable information about the economy in downtown Washington, DC, as demonstrated by the news and reporting in the Washington Post. Michael Gerson gave us more evidence today in his column criticizing populism of the left and right. At one point he mocks Hilary Clinton for her populist rhetoric noting that her ties to Robert Rubin and concerns for the bond market make it unconvincing.

Gerson then adds:

"Some baggage can never...

If Workers are Struggling to Keep Pace With Robots So Is the Bureau of Labor Statistics

The NYT's Upshot section ran a major piece headlined "as robots grow smarter, American workers struggle to keep up." The gist of the piece is that robots are rapidly replacing workers, leading to a lack of jobs. The piece focuses on the drop in employment in the last decade, which it attributes to the spread of robotization and computer technology. It includes comments from several economists pontificating about the impact on the distribution of income.

If robots and computers are leading to...

Wage Income Rose to a Record High and the Tree in My Back Yard Is Taller Than Ever Before

Economies typically grow and that means aggregate wage income typically grows. That is why it is a bit bizarre that in laying out the case for a Fed rate hike, Steve Mufson told readers:

"Inflation-adjusted wages and salaries in personal income rose to a record high during October, up 2.9 percent from the year before."

That's pretty much the normal state of affairs, as can be seen.

The Great Recession was extraordinary in giving us a prolonged period in which inflation-adjusted wages did not...

Health Care Cost Slowdown Persists In Spite of Projections

Robert Samuelson discusses the slowdown in health care costs in his column today and considers possible explanations. He notes a study from Kaiser Family Foundation which attributes three quarters of the slowdown to the weak economy. This study predicted that spending would accelerate in 2014.

We actually have data on this, since the Bureau of Economic Analysis reports spending through October (Table 2.4.5U, Line 168). Through the first 10 months of 2014 we are on track to see a 3.3 percent...

If We Didn't Have Patents, How Would Major Companies Be Able to Harass Innovative Start-Ups?

A NYT article on Xiaomi, a fast-growing Chinese start-up that is now the number three seller of cell phones in the world, included the fascinating sentence:

"Xiaomi does not yet have much of a patent portfolio, leaving it vulnerable to lawsuits from competitors."

On its face, this sentence should have left readers baffled. Why would the lack of a patent portfolio make a company vulnerable to lawsuits? The answer of course is that patents are used as a harassing tactic. The idea is to bury you...

NYT Brings Adventures in Uninformative Budget Reporting to Kansas

Yes Toto, we're back in Kansas and we're discovering some folks really don't believe in reporting that provides meaningful information to readers. After all, what will most people make of an article on projected deficits in Kansas that told readers about Governor Brownback's schedule of tax cuts which are, "projected to cost $7 billion through the end of the 2019 fiscal year?" We are also told that the state faces a shortfall of nearly $280 million in the current fiscal year, which the govern...

George Will and Tax Reform: If Only He Were Old Enough to Remember the Sixties

George Will began a Washington Post column on tax reform by bemoaning the fact that we have defined success downward. He notes the celebration over the 321,000 job gain reported for November, then tells readers:

"In the 1960s, there were nine months in which more than 300,000 jobs were added, the last being June 1969, when there were about 117 million fewer Americans than there are now ."

While Will is right about the low bar for success (we should be seeing very rapid job growth following a...