Post-Gazette Editorial – 8/9/06

This page was last updated on August 9, 2006.

Losing ground / It’s a tough time for American workers; Editorial; Pittsburgh Post-Gazette; August 9, 2006.

Below is a detailed critique of the subject editorial.

“A basic problem with the current state of the economy for most Americans is that their wages are not keeping pace with the rise in their cost of living.”

[RWC] Not exactly. According to the Bureau of Labor Statistics, wages are increasing faster than inflation. I don’t know if that’s good or not, but it’s indicative of low unemployment. In other words, when unemployment is low, wages go up because businesses have a harder time finding the employees they need.

“This serious problem is made substantially worse by the fact that the normal way of dealing with that situation -- changing jobs to get more money -- has been made more difficult by the fact that jobs are scarcer. As a result, they are forced to stay with the jobs they have and, instead, cut corners, riding the economy down, rather than leave the no-raise job and go find a better one.”

[RWC] With unemployment below 5%, how does the editorial author conclude, “jobs are scarcer?” In a September 2005 editorial, the PG said unemployment around 5% was “low by historical standards.”

“It is necessary to add that this is true for virtually all but the richest Americans, whose income continues to rise, putting them in a position to be able not to feel the pain of the rising cost of living. They are leaving ordinary Americans in the dust in terms of their standard of living -- multiple houses, expensive cars, never mind for them the fact that the price of gas has shot up over the past year. They don’t have to worry about the cost of the commutes that the two- or three-job family faces, some of whom live far from their places of employment.

“One more slap in the face for middle Americans in this category came last Friday, when the total of new jobs created in July was announced as 113,000, 11,000 less than in June and far under the 150,000 needed for the economy just to keep pace with the number of new entries into the job market that month. The unemployment rate also went up to 4.8 percent, the highest it has been in five months, although even that figure is deceptively low -- not taking into account the number of people who continue to drop out of the job market, through despair or lack of interest in finding a job in a hard-times job market.”

[RWC] How do you turn unemployment “low by historical standards” into a “hard-times job market?”

“Optimists looking for a sign of hope judge that the flagging economy was what prompted the Federal Reserve not to raise the interest rate another notch at its meeting Tuesday, fearful of causing the economy to really stall out into a major downturn. No additional raise in the key interest rate was a marginally helpful measure for people already facing major credit card debt or, worse, variable interest mortgages whose rates have risen, pushing them up against the wall.”

[RWC] “Flagging economy?” The U.S. economy is outgrowing every major Western industrial economy. For the most recent three months, the GDP grew at an annual rate of 3.5%.

“By the way, what does a family on a tight budget do when its mortgage payment and costs for gas and heating soar? What the Bush administration should be worried about is that the voters in that family vote Democrat in the November elections, thus taking one or both houses of Congress away from the Republicans.

[RWC] How would Democrats lower mortgage payments and “costs for gas and heating oil?” Lest we forget, the folks on the left pretty much vote against any efforts to increase energy supply. These folks seem to believe the only answer is using less.

There’s one other point. While interest rates have increased quite a bit over the last couple of years, they are still fairly low. For example, the federal funds rate is currently 0.75% below the rate when President Bush took office, and 1.25% below the rate for most of 2000.

“What the whole country has to worry about now is that the Bush administration might take the country deeper into Middle East warfare -- rather than extracting America from it -- to try to scare the American people out of voting their pocketbook in November, as they would otherwise normally do in such circumstances.”

[RWC] This is character assassination. The editorial opines the Bush administration may crank up hostilities in the Middle East just to garner votes. I wouldn’t accuse anyone of that behavior without incontrovertible proof. How sad is it that the PG feels the need to sink to this level?