In its Labor Day report entitled "GDP Growth Not Reaching Paychecks," CNN/Money began with this multi-faceted howler (bolds are mine):
The economic expansion that began six years ago has failed to benefit most workers, according to a report from the nonpartisan Economic Policy Institute, released Monday.
Productivity growth, although slower of late, has been strong since 2000. After a sluggish start in the period, employment has picked up, although at a slower pace than in past recoveries. Yet, that growth hasn't transferred to workers' paychecks, particularly for workers at the lower and middle end of the pay scale, the report found.
After rising quickly in the second half of the 1990s, most workers' (sic) real wages have been stagnant in the 2000s, especially since 2003.
This post will deal with EPI's claims; Part 2 deals with its absurd assertion, swallowed whole by CNN/Money, that it is "nonpartisan."
As to the claims -- How convenient of EPI to begin by using "six years," when meaningful post-dotcom bubble expansion in the economy didn't begin until the second quarter of 2003, when GDP growth was an annualized 3.5% (go to this Bureau of Economic Analysis page and select the appropriate time period to confirm this). Of course, after a year of languishing because of the jolt of of the 9/11 terror attacks, and the relatively ineffectual impact of 2001's piecemeal rate cuts, the kick-start to GDP finally took place once the Bush 2003 investment-related tax cuts and steeper rate cuts took hold.
Any attempt to debunk specific numbers in CNN/Money's report is hampered by its lack of citations to specific sources. The EPI report itself, with its frequent references to "Author's analysis of data," makes verifying its representations difficult without what I believe would be many hours of reverse engineering.
Fortunately, that's not necessary. If you go to recently released comprehensive Census Bureau data on households, you'll find that the EPI's "especially since 2003" claim of wage stagnation -- the benchmark for whether the 2003 tax cuts have had their intended effect -- isn't even in the neighborhood of the truth (information is from page 46 of the Census Bureau report, "Income, Poverty and Health Insurance in the United States: 2006," released last week; it is a huge PDF that can be downloaded by going to at this regular web page):
I'm not claiming these results are where I would want them to be, but they are all positive. In fact, the household results show more real improvement at the lower income levels than is found in the middle and upper-middle.
As to whether incomes have continued to grow in the first half of 2007, go here -- There are very few income-increase numbers that are less than inflation plus population growth during the first and second quarters of this year.
For things to be "stagnant" in the economic sense, meaning "characterized by lack of development, advancement, or progressive movement," the numbers above would have to almost all be near zero. They clearly aren't, and EPI is clearly wrong.
So the EPI is hyperventilating about "especially since 2003" because its fervent desire is to discredit the 2003 Bush tax cuts.
CNN/Money's "help" to EPI in this case goes beyond its usual role as liberal think-tank stenographer, as this picture of a portion of the report clearly shows:
That's right -- In case you dumb readers don't get the point, CNN/Money is reminding us, with a prior-story link dropped smack dab into the midst of the article's text, that this is really all about "us-vs.-them."
Back to EPI -- Its hyperventilation is occurring because it is anything but "nonpartisan." Part 2 addresses that, and CNN/Money's very different treatment of a competing think tank.
Cross-posted at BizzyBlog.com.
