Bill Knight - December 3
Macomb, IL – It's a fact: The press loves a price.
Reporters seize on a dollar amount, a percentage or some seemingly concrete number because such a fact - 3 is always 3; 45% is never 65% - lends credence to a story. Plus, readers, listeners and viewers are comforted by a percentage or a price; it seems to be a little order in an otherwise disordered time.
But sometimes - especially in news about labor or the economy - a number is important but, by itself, is incomplete. Context is usually needed. Comparisons are valuable.
A savvy audience should ask, "What's this or that number MEAN?"
For instance, a lot of the blather about health-care reform pivots on some number, dollar or another figure. Stories stressing someone's opinion exploiting a projected price can be misleading or even dangerous by fueling misconceptions people may have that one proposal or another is fiscally stupid or "run by the government."
Some context: Reasonable people agree that the current health-care system in the United States already is fiscally stupid. And it's run by corporations, who don't even give shareholders (much less most of us who own no stock) the illusion that our preferences matter.
As to labor, misconceptions about the economy can develop if people see newscasts or magazine pieces emphasizing the relatively low rise in inflation: "Happy days are here again!"
However, the Consumer Price Index (CPI) is only part of the economic story.
As working people know, cutting household expenses can be beneficial, but the family income must be considered, too.
So, economic outlooks and judgments should be tempered with a wider picture including wages as well as prices.
It's true that the Bureau of Labor Statistics' last CPI in October showed a meager 0.1% increase from September, and a year-to-year change of -0.2%. That's certainly a relief to consumers.
But, first, that's for all items. So while the national prices for utility (piped) gas service fell 24% in a year, some people don't use as much natural gas as others. Further, prices went up significantly elsewhere - for education and communication (+2.7%), medical care (+3.5%) and "other goods and services" (+7.7%).
Next, the Bureau of Labor Statistics (BLS) on Nov. 18 released its "Real Earnings" report, and it showed that U.S. workers' pay has decreased.
The report says, "Real average hourly earnings fell 0.1% from September to October. Since reaching a recent high point in December 2008, real average weekly earnings have fallen by 1.9%."
In fact, real average weekly earnings have dropped in 9 of the last 10 months, the BLS shows.
A snapshot of key industries, their average weekly earnings in current dollars, and the annual percent change in "constant dollars" (factoring in inflation).
Construction $850, down almost 1%; Education/health services $630, up 2%, Financial services $750, up 3%, Leisure/hospitality $270, down 0.2%, Manufacturing $740, up 2%, Retail $390, up more than 1%, and Trade/transportation/utilities $540, up 2%.
Sure, the employed are thankful they still have jobs. But no one should be convinced that things are rosy with the economy when the net change in take-home pay after inflation is so low, or even negative.
Declines are never increases.
That's a fact, too.