http://bigpicture.typepad.com/comments/2007/08/real-income-fai.html

Passing on.

One note, the IRS uses the government-published CPI for its inflation number. Some believe this underestimates inflation (it fails to count stuff like food and gas).

8/21/2007 9:43:18 AM

Wow. that was well done, the whole streatching of the truth there. Author completely ignored "total compensation", choosing instead to only look at cash wages. If I had my way that would be fine, but as the IRS does not tax benefits, only wages, the tax loophole continues to grow, messing up ignorant analysts such as this one. If we did the progressive thing and closed this loophole by taxing benefits then in short order most benefits would vanish to be replaced by cash wages.

The biggest problem with his graph, of course, is that it ends in 2005; which is two years ago. Gee, I wonder why; could it be that real disposable income has increased dramatically since then? 3.1% alone in 2006.

Quote :

"reported gains reflect increased costs for medical care"

Which employers are covering. If your assertion is right and labor compensation is static then rising medical costs should result in falling cash wages. If medical coverage costs are increasing 10% a year, that means worker compensation is rising AT LEAST 10% a year.

Finally, the use of graphs is fun, especially making sure the scale text is too small to read. Author asserts the unemployment rate has fallen because participation has fallen. But participation has only fallen from just over 67% to just over 66%; a 1% drop. If everyone of these retires left the unemployment roles then it would only be a 1.4% drop.

And judging by these other glaring omissions and half-truths, I find it very suspicious that he is using IRS data instead of BLS statistics. I suspect the data is skewed in someway that I am not qualified to recognize. Especially since BLS statistics directly contradict it (Real disposable personal income in 2000 dollars did not fall any year after 2000). What I suspect is happening is that his numbers include all tax fillings, including the unemployed, which would mean his numbers are still skewed by the higher unemployment rate in 2005 compared to 2000.

To sum up, complete bunk. Poor Flyin Ryan, so easily led astray.

8/21/2007 10:36:26 AM

No need to be snide. The article was about wages, as that is all the IRS cares about. Benefits are an entirely different argument.

But if you want to talk about them, I don't know about your job, but my benefits have steadily decreased since I've started working at my job (July 2004). Mainly due to the costs of healthcare to the company.

[Edited on August 21, 2007 at 10:44 AM. Reason : .]

8/21/2007 10:44:33 AM

BUT THE VALUE OF THAT HEALTH CARE HAS GONE UP SO OBVIOUSLY YOU'RE BETTER OFF!

8/21/2007 10:51:32 AM

No, as the healthcare system continues to malfunction, some of which is due to the unwinding of the insurance falacy, it will continue to make most of us poorer than we otherwise would be.

Thank goodness other markets are increasing productivity sufficiently fast to eat the loss for most workers and still leave them ahead every year. If this were not the case, then perhaps we would have overcome the AMA and had healthcare reform by now.

8/21/2007 12:36:25 PM