Standard wage data show that between the spring of 2017 and the spring of 2018, real wages in the U.S. increased only 0.1%. But there are three major problems with these data. First, they don’t account for fringe benefits, which are an increasing proportion of employee pay. Second, standard wage data use an index that overstates the inflation rate. Third, each year the composition of the workforce changes, as older, higher-paid workers retire and young, lower-paid workers enter the workforce.
A study released this month by the White House Council of Economic Advisers addresses these three biases and concludes that real wages grew by 1% in 2017-18, not the measly 0.1% reported in the wage data.
Gene Epstein dissects the career of Joseph Stiglitz. Here’s Gene’s opening paragraph:
In 2006, Nobel Prize–winning economist Joseph Stiglitz praised the economic policies of Hugo Chávez. The Venezuelan president ran one of the “leftist governments” in Latin America that were unfairly “castigated for being populist,” Stiglitz wrote in Making Globalization Work, published in September of that year. In fact, the Chávez government aimed “to bring education and health benefits to the poor, and to strive for economic policies that not only bring higher growth but also ensure that the fruits of the growth are more widely shared.” In October 2007, Stiglitz repeated his praise of Chávez at an emerging-markets forum in Caracas, sponsored by the Bank of Venezuela. The nation’s economic growth rate was “very impressive,” he noted, adding that “President Hugo Chávez appears to have had success in bringing health and education to the people in the poor neighborhoods of Caracas.” After the conference, the Nobel laureate and the Venezuelan president had an amicable meeting.
John Tamny sets Farhad Manjoo straight on the source, and role, of profits.
Pierre Lemieux asks if libertarians are crazy.
George Will is understandably aghast at the trend of Americans’ attitudes toward parenting.
Protectionism isn’t what made America wealthy. It was always pretty rich, thanks in large part to active overseas trade, as economist Douglas Irwin writes in Clashing over Commerce: A History of U.S. Trade Policy. But when the U.S. clearly became the world’s leading economy in the late 1800s, the high tariffs that were in place weren’t the reason. Immigration was a key catalyst for growth, whether it was the striving unskilled who worked in factories or the ambitious skilled who brought technological know-how with them from abroad.
America’s nationalist populists want to raise the drawbridge to imports and immigrants. It’s a toxic combination for an economy built on openness.
