The media’s comments about the economic data from the Census Bureau have been mostly negative, despite that the median household income in 2005 rose slightly in real terms. The major media complaints have been remarkably uniform. For example, a recent Palm Beach Post editorial complained as follows.
The stories behind the numbers are nothing to celebrate. The meager 1.1 percent rise in family income, to $46,326, is the first increase since 1999, but it didn't come from higher wages. The rise came because 23 million households headed by someone 65 or older are doing better with investments and retirement income. Such numbers are hardly the vital signs of an overall healthy economy. In Florida, many households are keeping inflation at bay only because more family members are working longer hours or holding second jobs. Last year, salaries for full-time working men and women declined. Again.
It is increases in wealth that count. Wages are only one source of wealth increases. Disparaging other sources of income and profit is silly.
Many households headed by someone under 65 benefited from (1) income and profit on tax deferred investments, which is not included in these households’ reported income and (2) tax deferred contributions to retirement plans, also not reported as income. The Underground Economy is not included either, and that is rampant in Florida.
In South Florida, the number of people living in poverty increased by about 50,000. Driven by tourism and the robust service industry, the state again leads the nation in job creation, and registered an enviable 3.5 percent unemployment rate - but don't ask what those new jobs pay.
Erstwhile unemployed workers are better off with jobs than without them. Thus, the economy has improved.
Job creation implies that more people are working. Presumably, the comment “but don’t ask what those new jobs pay” means that the new jobs don’t pay much. All else equal, if some unemployed workers become employed at low level jobs, the percentage of low paying jobs (e.g., below the poverty level) increases, there is no change in the median income level (which lies well above the poverty level), and there is a decline in the average income level. As the old adage says, “figures don’t lie, but liars (and editors) figure”.
The number of Floridians without health insurance rose to 19.6 percent, well above the national average of 15.9 percent; only Texas (24.6 percent) and New Mexico (21.1 percent) are worse. Most of the job creation Gov. Bush likes to crow about comes without benefits or career possibilities. Don't get sick and don't count on a future.
With respect to lack of health insurance, there are many sources of free health care. For example, many hospitals are required to provide emergency room treatment regardless of patients’ ability to pay. The percentage of people without health insurance overstates the percentage of people who cannot obtain adequate health care.
Complaining about the type of job creation and linking it to career possibilities misses some points that invalidate the complaint.
Most workers move through a life cycle, as Thomas Sowell has discussed endlessly. They start at low paying jobs (including currently highly paid editors) and move up the pay scale. Many of those currently with incomes below the poverty level are young and will move to higher income levels as they age.
A better indication of how the economy is doing is the implied time average income of workers over their working lives. The low end of this measure is far higher than the low end of the point in time income distribution. Yet, it the latter that the media focuses on. Perhaps it is an unreasonable to expect the media to do otherwise; that would take some economic insight.
Low unemployment rates mean less if the nation gets there with low-quality jobs.
I can accept this statement. But it does not imply that low-quality jobs are worse than no jobs and that those who take low-quality jobs never move up the income ladder.
A final point. Cost of living indicators are biased in a manner that understates standard of living improvements. Today, even those with incomes below the poverty level live far better lives than their corresponding cohort did in the past. That is, in part, because the huge price declines in technological products are not reflected accurately in cost of living statistics. Today, for example, even “poor” people have cell phones, TVs, etc. They also have access to far more effective medical care, even without health insurance.
A colleague of mine, Jason Greene notes that:
In an economy in which there is an increasing proportion of households in which there are two wage earners, health insurance for one of those wage earners might be unnecessary. For example, if I am employed in a position in which I have family health care coverage at a reasonable cost, my spouse has the luxury of seeking employment in a job that she likes, but which does not offer health insurance. I believe that she would be counted among the workers without health insurance, since these surveys usually do not account for the entire picture. Thus, I expect the under insurance problem is overstated.
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