After telling us that a falling share going to the top fifth constitutes a jump, the AP story next tries to tell us that rising incomes are down. "The U.S. jobs market is soft, sending wages down. ... More than a million jobs have been added back to the 2.6 million lost since Bush took office, but they pay less and offer fewer benefits. ... Three in five pay below the national median hourly wage."
It is undeniably true that precisely 2.5 out of five jobs always pay less than the median, because that is what median means. With a little careless rounding, anyone could always claim three out of five jobs pay either more or less than the median. But nobody really knows whether "new jobs" pay more or less than old jobs, because the data are not collected that way. Strope's claim that "new jobs are concentrated in ... lower-paying industries" is dubious and irrelevant. Would she conclude that heart surgeons are poorly paid because they work in health care or that gourmet chefs are poorly paid because they work in food services?
To defend the claim that wages are "down," the AP story says "on a weekly basis, the average wage of $525.84 is at the lowest level since October 2001." Unfortunately, that figure (which is up from $491.64 in October 2001) is only for "production and nonsupervisory workers" and is diluted by including part-time jobs. Median weekly earnings of full-time wage and salary workers were $639 in the second quarter -- up 3.7 percent from a year before. When we include benefits, total compensation in private industry was up 4 percent between the second quarters of 2003 and 2004 -- a larger gain than in any year from 1994 to 1999.
Hundreds of newspapers around the country published this incompetent AP "news" story, which: 1) describes a drop in the share of income received by the top fifth as a jump, 2) describes a jump in wages and benefits as a drop, and 3) asks readers to be shocked that half of all jobs pay less than the median wage. This is not a liberal bias but an ignorance bias. Does the AP have any editorial standards?
There is no excuse for such appalling indifference to reality when purporting to report on readily available information about incomes. The true meaning of these politically tortured statistics was explained, for example, in my survey of the topic in "The New Promise of American Life," a 1995 anthology edited by Lamar Alexander and Chester Finn. There is also an excellent book, "Myths of Rich and Poor" by the Dallas Fed's chief economist, W. Michael Cox.
I am writing this just before the release of last year's estimated poverty rate, but I have no doubt that this statistics will also be badly garbled by politicized reporting. The poverty rate probably rose a bit from 2002, yet nonetheless remained far below the 13.9 percent average from 1980 to 1998 and also lower than in any single year during that period. In 1998, for example, the poverty rate was 12.8 percent. Nothing but political bias can explain why last year's below-average poverty rate will soon be reported as if it was unusually awful. But I'm sure that is exactly what is about to happen.
The quality of economic reporting in the United States is awful and getting worse. Perhaps some philanthropist should underwrite a few joint degree programs in economics and journalism. In the meantime, watch the bylines on the most ridiculous "news