Dean Baker's Blog, page 315

L.A. Times Reports Low-Paid Workers Don't Have Much Money Even After Increase in the Minimum Wage

The Los Angeles Times had a news article telling readers that workers in Connecticut are still having a tough time making ends meet even after the minimum wage in the state was increased by 45 cents to $9.15 an hour at the start of 2014. The headline of the piece, which reflected the content of the article, read:

"In Connecticut, some minimum-wage workers say raise has not helped much."

The piece included comments from economists who have criticized the minimum wage, saying both that it would...

NYT Gets Just About Everything Wrong In Discussing Euro Zone Inflation

A NYT piece on the problem of low inflation and weak growth facing the euro zone got just about every aspect of the issue wrong. Near the beginning the piece tells readers:

"the euro zone is at risk of sliding into deflation, a downward price spiral that can ultimately destroy corporate profits and the ability of businesses to hire."

Actually the euro zone already faces a crisis because the low inflation rate means that the real interest rate (the nominal interest rate minus the inflation rat...

The Data Show the Case for College Is More Ambiguous than What the New York Times Tells You

David Leonhardt touts (but doesn't link to) new research from the Economic Policy Institute which shows the wage premium for recent college grads hit a record high in 2013. He then goes on to declare that it would be irrational for people not to go to college given this large pay premium. 

Leonhardt's analysis ignores the dispersion in pay among college grads, especially among men. Research by my colleague John Schmitt and Heather Boushey shows that near one in five recent male college g...

Syriza Is Opposed to the European Union's Anti-Growth Policy, Not the European Union

The Washington Post told readers that in several countries parties hostile to the European Union won in the elections to the European Parliament over the weekend. One of the countries on its list was Greece, where Syriza, the main opposition party received the most votes.

It is inaccurate to describe Syriza as being opposed to the European Union. The party has not called for Greece to leave the European Union. The party is opposed to austerity policies imposed on Greece by the European Union...

Small Businesses Account for 60 Percent of Job Losses

There is a popular and ungodly silly line about new businesses being responsible for some very high share of new jobs in the U.S. economy. A version appears in this NYT article on the economic ripple effects of student loan debt. It cites a study showing that recent graduates with large amounts of student debt are less likely to start a business, then adds:

"Considering that 60 percent of jobs are created by small business, 'if you shut down the ability to create new businesses, you’re going...

Contrary to What You Read in the Washington Post, House Sales Have Recovered

The continuing weakness of the housing market is a regular theme of the business media. They seem as eager to display their ignorance now as they were during the housing bubble years. 

The Post gave us another item in this series in an AP article on existing home sales in April, which ran at 4.65 million annual rate, according to data from the National Association of Realtors. The fourth paragraph told readers:

"Nearly five years into the recovery from the Great Recession, real estate sa...

Washington Post Reports That David Autor Needs to Read His Research on Inequality More Carefully

The Post ran a piece highlighting research by M.I.T. economist David Autor that purportedly shows the wage premium earned by college grads is the main source of inequality in the economy today.This is presented as a counter to much analysis showing that the income gains of the richest 1 percent has been the major source of inequality. The data presented in the piece do not support Autor's claim.

In the case of full-time male workers, Autor's data show that full-time male workers with a colleg...

Imitation Is the Highest Form of Flattery

Some folks have pointed out to me that the housing cost calculator that David Leonhardt has in the Upshot section of the NYT looks a lot like the one that CEPR developed years ago to try to warn people about the housing bubble. Yes, it does, and if memory serves me correctly David had asked me about it when he originally designed another version a few years back. Anyhow, glad to see the idea has caught on.

Robert Samuelson Wants Us to Default on the National Debt

Actually, he probably doesn't, but that would be the logic of his complaint (taken from Gene Steuerle) that "dead men" have established priorities for federal spending. After all, dead men made the decision to borrow the money that constitutes the debt, which thereby obligates the country to pay back the interest and principal.

But Samuelson's complaint is not about the interest and principal being paid back to rich people like Peter Peterson, Samuelson is upset about the money being paid out...

The Seventies Were Not Like the Great Recession

I'm back (thanks for all the kind comments) and I see I have to correct some seriously misleading commentary from Robert Samuelson earlier in the week. Samuelson concluded a discussion of Timothy Geithner's new book:

"This is the central lesson of the crisis. Success at stabilizing and stimulating the economy in the short run can destabilize it in the long run. This also happened in the 1960s, when the belief that economists could control the business cycle led to inflation and instability in...