Despite all the proof, Paul Krugman and most of Old Media will probably never let go of the "stagnant wages" meme to describe the Bush 43 prosperity. Their failure to acknowledge the obvious becomes clearer with nearly each passing day.
Tuesday's OpinionJournal.com feature editorial (may require free e-mail registration) doesn't merely show that the favorite meme of Krugman and his economic brothers and sisters is a folk tale. It also reveals a completely unreported item about this prosperity compared to the 1990s that even yours truly was not prepared for -- a truth (in the third excerpted paragraph) that needs to be trotted out on a weekly basis for about the next year -- or ten (bolds are mine):
The latest reports on wages and income have been rolling in, and with them we can discount one more canard about the current economic expansion--namely, that wages are stagnant and workers are doing far more poorly than they did in that second Age of Pericles known as the 1990s.
Over the past year, the real average wage for non-supervisory employees has risen 2.8%. That equates to about a $1,200 increase in purchasing power for the typical household this year. Last year, real median household income was also up 1.1% after inflation. This rise in take-home pay helps to explain how Americans have had the disposable income this Christmas shopping season to pay $600 for PlayStation 3 computer games and $150 for the Kid-Tough Digital Camera for three-year-olds.
It is true that income and wages are still about 2% below the peak they hit in 2000 before the dot-com bust and recession. But a new Treasury Department analysis finds that, measuring from the start of the peak of each expansion, wages so far in this decade's cycle are running ahead of the recovery pace during the 1990s. Thus the "stagnant wages" story can join the "jobless recovery," the "outsourcing" crisis and the runaway budget deficit as other tales of woe that have all turned out to be evanescent.
..... Contrary to popular myth, worker benefits have also been rising, not falling. Yes, many companies are changing to more sustainable 401(k)s from traditional pensions, and most are passing along some of the costs of rising health insurance to workers in co-pays and higher premiums. But the Labor Department measures employer pay packages and finds that fringe benefits paid to workers have risen 39% since 2000, or nearly twice the 22% rate of increase in nominal wages.
In the interest of continuing the march of real wage increases, the OpinionJournal.com editorial advocates making the Bush tax cuts permanent (which, after three years in effect, really means "keep the current income-tax rates in place") and reducing the corporate income tax. Though there is empirical support for both ideas accomplishing the desired result, they would surely get a reaction from Krugman and his acolytes less cordial than a meeting between Rosie O'Donnell and Donald Trump.
Digging deeper, your humble servant found the official December 15 announcement from Treasury Secretary Snow, where I learned that the OpinionJournal.com editorial really didn't go far enough. The second paragraph of the Treasury release is a real mythbuster (bold is mine):
One way to look at the health of the economy is to view where we are compared to previous business cycles. Real hourly wages are up 1.1 percent versus the previous business cycle peak in early 2001. That means workers are today earning more per hour in real terms than they did at the height of the 1990s expansion. By comparison, at the same point in the business cycle of the 1990s, real hourly wages were down 2.1 percent.
Isn't it "amazing" that the contents of Treasury's press release didn't make it into any of Old Media's news reports -- not even on the business pages? This Google News Search on "Treasury Snow" (without quotes) for stories between December 15 and 18 returns no results relating the this news, nor does this Dec. 14-26 search on "Treasury Snow wages" (without quotes).
Does anyone believe that a similar announcement from Robert Rubin's Treasury Department during the 1990s would have been ignored?
Cross-posted at BizzyBlog.com.