Monday, July 19, 2004


Ben Stein, the economist/lawyer/Nixon speechwriter turned actor and game-show host, writes in The New York Times that you shouldn't pay attention to a bunch of silly old statistics:

On the Democratic [National C]ommittee's [Web] site, a major heading is an allegation from a group not usually friendly to the Republicans - a group of mayors - that new jobs created in 2004 and 2005 will pay, "on average, $8,000 less than old jobs," namely, jobs created in 2001 to 2003.... It is, of course, absolutely and totally impossible to forecast what future jobs will pay or what those jobs will be. In fact, most economic forecasting is valueless, but that's another story.

Er, how do you feel about reports of current economic activity, Ben? Let's look at the lead story in yesterday's Times (the issue in which Stein's article appeared):

The amount of money workers receive in their paychecks is failing to keep up with inflation....

On Friday, the Bureau of Labor Statistics reported that hourly earnings of production workers - nonmanagement workers ranging from nurses and teachers to hamburger flippers and assembly-line workers - fell 1.1 percent in June, after accounting for inflation. The June drop, the steepest decline since the depths of recession in mid-1991, came after a 0.8 percent fall in real hourly earnings in May.

Coming on top of a 12-minute drop in the average workweek, the decline in the hourly rate last month cut deeply into workers' pay. In June, production workers took home $525.84 a week, on average. After accounting for inflation, this is about $8 less than they were pocketing last January, and is the lowest level of weekly pay since October 2001.

And how do you feel about Morgan Stanley and Lehman Brothers, Ben? Are they also unfriendly to Republicans? Here's Lehman's chief economist, Ethan S. Harris:

"Joe Six-Pack is under a lot of pressure. He got a lousy raise; he's paying more for gasoline and milk. He's not doing that great...."

And, from another article, here's Morgan Stanley's chief economist:

The evidence, meanwhile, suggests that the jobs being created pay less than the old jobs that were lost. Stephen S. Roach, chief economist at Morgan Stanley, estimated that 44 percent of the hiring from February to June was in lower-paying jobs and that 81 percent of total job growth over the last year had been in lower-paying occupations like retail sales and transportation.

"A likely persistence of low-quality job creation could jeopardize sustained economic recovery," Mr. Roach wrote recently.

But Stein doesn't think poor-paying blue-collar jobs are a problem, because he thinks all blue-collar workers have to do is get off their fat butts and become bond traders:

The real point is personal responsibility: almost any worker has a chance to make a job a well-paying job by acquiring more skills and education. The jobs are not parceled out to the Passaic Workers' Commune by the Commissar of Jobs. People get the jobs for which they are qualified, by skill and education. If a young person gets a college degree with good grades, then gets a business school degree with very, very good grades, he'll get a job at Goldman Sachs that will pay him about $200,000 in the first year. If he goes to nursing school and learns operating-room skills, he can expect to make $80,000 a year almost immediately in many hospitals. If she learns to do electrical work in houses in Los Angeles, she can expect to make $40 an hour, plus overtime.

That is, pay is not a given. Of course, there are constraints of time and circumstance, but people who want good-paying jobs can get them by dint of education, which is available everywhere.

Oh, sure -- because every blue-collar worker has tens of thousands of dollars stashed away in a cookie jar somewhere, ready to pay for a nursing school or a Wharton M.B.A.

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