Free-trade advocates won’t find much to like in this article from U.S. News, though it’s nice to see some recognition of the fallacies put forth by some protectionists:
Then there’s the claim that workers’ wages have been flat since the 1970s. According to the Labor Department, average hourly earnings, adjusted for inflation, have been flat overall since 1977. But there are two problems with this commonly heard statistic. For starters, there’s a strong case to be made that government inflation statistics overstate rising prices by about a percentage point, failing to take into account the rising quality of goods and the ability of consumers to shift to Wal-Mart when prices go up at their local supermarket. If true, earnings have actually risen by 35 percent or so. Second, the Labor Department numbers do a poor job at tracking the earnings of “knowledge workers,” notes economist Edward Yardeni, and are scheduled to be phased out in a few years and replaced with a more comprehensive measure. Better to look at overall compensation, including benefits such as healthcare coverage and 401(k) matches. Compensation has been rising at a far faster pace than wages in recent years.
