Must... Not... Succumb... Eddie Lazear... Is a Good Guy... in an Impossible Position...

Daniel Gross is shrill:

Daniel Gross: July 23, 2006 - July 29, 2006 Archives: It's tough being part of the Bush economic team, in large part because there are so many of chunks of the recent record that are difficult to defend/spin. Indeed, it's been my experience that the academic types who have served in the administration are, as a group, far more intelligent, honest, and engaging as private citizens than they were as public servants. Looks like Ed Lazear, chairman of the Council of Economic Advisors, is going to be in that same mold. Edward Luce and Krishna Guha report in the Financial Times.

The US is now in its fifth year of growth since the last recession. Yet median weekly earnings (wage earners who are at the 50th percentile of income distribution, with half the workforce earning more and half less) have fallen by 3.2 per cent in real terms since the start of the recovery in October 2001.... Senior administration officials believe the public's frequently expressed economic dissatisfaction - more than two-thirds of Americans believe their country is heading in the wrong direction - reflects Washington's inability to get its message across to the US heartlands.... Ed Lazear, chairman of the president's Council of Economic Advisors, says the growing focus on wage stagnation is misleading for two reasons.

First, there are signs that hourly earnings growth is beginning to accelerate after an unusually long lag. And second, the measure fails to capture broader growth in worker compensation, which includes pensions and healthcare provided by employers. "Hourly wages have grown more slowly than total compensation," Mr Lazear said in a speech last week. "The relevant measure is total compensation." Mr Shapiro disagrees: "This is not about whether the American public is hearing the right message - it is about what most people are experiencing."

Translation: "We're not pissing on you. It's just raining." Note the super-hyper conditionality attached to the discussion of wage growth: there are signs that hourly earnings growth is beginning to accelerate. And regarding overall compensation, he must be kidding. It may be true that wages are growing more slowly than overall compensation due to increased spending on health benefits and pension. In fact, for many people, they're not growing at all. But I'd bet a lot of that growth in benefits spending has to do with inflation in health care, not in a broadening of benefits....

And pensions? Lazear has got to be kidding here, too. Is there any evidence that workers who aren't getting wage increases are getting big pension increases? If so, I haven't seen it. We're in the midst of a massive cram-down, whereby many very large companies are freezing defined-benefit pension plans, thus slashing retirement benefits for hundreds of thousands of workers.

Ugh.

Must... not... succumb... Eddie Lazear... is a good guy... in an impossible situation... Must... not... snark... Must... stay... calm...