Permission to ignore the old Grey Lady, just this once

by SixFigureStart | September 16, 2009

  • My Vault
Don't put too much stock in yesterday's New York Times headline "Wages Grow for Those With Jobs, New Figures Show". While his gymnasium analogy is nicely illustrative, the author never really supports his case that "even though unemployment has reached its highest level in 26 years, most workers (italics added) have received a raise over the last year." (Even as the author notes that pay cuts were established at the Times!) In an effort to present some hopeful news, the NYT dropped the ball.

The only hard evidence presented is the national average weekly wage. The figure hopped to $618 by the end of August after lying stagnant at $612 between September of last year and June 2009. (During that period, a small uptick in compensation was said to be offset by a decline in workweek hours.) The Times says the bump is the result of both higher wages and a slightly longer workweek, and the section concludes with "Most companies have evidently decided that pay cuts aren't worth the downside." There are two problems, however, besides the "evidently" (which in our book, means "Look out, here's what I assume to be true.") Firstly, an increase in the federal minimum wage was effected this past July, which surely affects a chunk of the "rank and file workers who make up 80 percent of the workforce" (according to the article). The claim doesn't hold up from a mathematical point of view either. Upon more careful examination, relatively large salary boosts for a relatively small sector of the population could easily mask declines in the rest of the group. Further, might the longer workweek be explained by employees expending additional hours to handle the duties of those who were laid off?

The article goes on to quote a Watson Wyatt consultant who asserts that "executives of companies don't cut pay, even when demand for labor has fallen. They worry that employees will become less motivated or start looking for another job." Surely that theory (developed from Keynesian economics) doesn't play anymore. Bombarded with bad news on all fronts, employees are desperate to keep their jobs, and employers know that it's harder than ever for them to change horses.

Although the mindset of the public these days is as much "don’t believe everything you read" as "don't believe anything you read," the NYT is one of the last reliable print outlets. This time, we'll forgive the transgression.

--Posted by Todd Obolsky, Vault Staff Writer

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