What a difference three days make. 72 little hours.
In that time, a New York Times reporter went from tolling the death knell of real wage growth to reporting a 7-percent wage jump over last year after inflation.
“[T]he current expansion has a chance to become the first sustained period of economic growth since World War II that fails to offer a prolonged increase in real wages,” The New York Times’ David Leonhardt and Steven Greenhouse [1] somberly noted in their page A6 article in the August 28 edition.
Greenhouse and Leonhardt added a political spin to data showing the “median hourly wage” dipping “2 percent since 2003, after factoring in inflation.”
“That situation is adding to fears among Republicans that the economy will hurt vulnerable incumbents in this year’s midterm elections,” the correspondents argued before remarking that “wages and salaries now make up the lowest share of the nation’s gross domestic product.”
But new data [2] released on August 30 pushed Leonhardt to admit the death of wage growth he wrote about earlier might be greatly exaggerated.
In an August 31 Business Day [3] section story about new government data on the gross domestic product (GDP), Leonhardt found economists arguing the new report “was a welcome sign at a time of significant uncertainty about the economy’s direction.”
“Perhaps the biggest surprise,” Leonhardt noted, “was new evidence of a surge in wage-and-salary income in the first half of this year,” with pay up “at an annual pace around 7 percent after adjusting for inflation,” according to “an economic consulting firm, MFR.”
What’s more, Leonhardt conceded, “As a result, wages and salaries no longer make up their smallest share of the gross domestic product since World War II.” Instead, they now account for “46.1 percent of economic output in the second quarter,” and increase “from 45.4 percent last year.”
Economists speak out on this issue and the NY Times’ reporting:
“Statistical Politics” by Alan Reynolds [4]