In a new piece, The Intercept tries to work out why Democrats aren’t gaining support for rising wages. The answer is that wages aren’t really rising. That seems simple enough, but is beyond the economic knowledge of that journal.
What The Intercept wants to say is that rising wages come from all of the things that are good and holy over on the progressive left. More government, proper planning, strong unions — that’s what leads to rising wages. The outlet also wants to say that capitalism and markets and all things R don’t bring us much and at the moment they’re bringing us inflation — a bad thing. So, logically, since wages are rising, the Ds should be gaining lots of credit, right?
The actual answer is that wages aren’t really rising, at least not as much as they think. By definition, your real wage is what you get to consume. What can you buy with that you get from going out to work? How many gallons of milk, loaves of bread, that’s the true measure of your wage. So, if prices rise as well as the number on the paycheck then the real wage hasn’t risen at all.
This is where many Americans are right now. Sure, paychecks are larger – so are grocery bills. It’s not that the Ds aren’t gaining credit for the rising wages, it’s that wages aren’t rising.
They get so close too. They say this at one point: “the fact that since the late 1970s, we went some 40 years without any real wage growth.” That’s not true, not in the slightest, but it is the same concept. If the prices of things we buy go up the same as our wages then real wages haven’t risen.
The Intercept was originally funded out of the eBay fortune of Pierre Omidyar to be an entirely independent outlet, free of outside control. As can happen to such it has become colonized by a clique with a particular worldview. It gains some 4 million views a month, is just outside the top 600 news and media sites globally. It has influence.
When trying to write about matters economic it is essential to understand the difference between nominal and real – between numbers before inflation and after. If inflation is going up at the same speed as wages are – not far off where we are now – then real wages aren’t rising. It’s not that folks aren’t congratulating the Democrats and unions for higher wages, it’s that there aren’t any higher wages. Perhaps economic columns should be written by those who grasp the basics of economics?