Incite -- (v) 1: give an incentive; 2: provoke or stir up; "incite a riot"; 3: urge on; cause to act
Thursday, July 22, 2004

Debunking an economic fallacy
Written by: Beck

Boring economics post alert. You have been warned. The Senate's Joint Economic Committee recently sent out analysis showing that the Economic Policy Institute's reports claiming new jobs are lower paying than recently lost old jobs (a talking point the Kerry campaign has leaned on heavily) is complete bunk. Read the sentence again, it makes sense if you stare at it long enough. I don't have a link at the moment, but I can email the PDF of the study to anyone who's especially interested.

I do have a link to EPI's "evidence" of lower pay for newly created jobs. If it doesn't look to you like something from which you would readily draw policy recommendations, you're not alone. Anyway, here's the buld of the JEC report for your reading enjoyment:
THE FACTS: The Economic Policy Institute (EPI) derives its conclusion about wages by using unconventional and potentially misleading definitions. With regard to employment, most independent observers would generally define a "growing" -- or expanding -- industry as one in which employment is increasing over a period of time. Conversely, a "contracting" industry would be one in which employment is decreasing over a period of time.

However, EPI does not use these conventional definitions. Instead, it defines an expanding industry as one in which employment is increasing as a share of total national payroll employment. A "contracting" industry is defined as one in which employment is decreasing as a share of total national payroll employment, regardless of whether or not that industry actually added jobs.

Using EPI's unconventional methodology, an industry that added jobs over time could very well be defined as a "contracting" industry. For example, during the 1990's the financial activities industry added 1.089 million payroll jobs. Over that same time period, employment in the financial activities industry as a share of total national payroll employment fell from 6.05 percent in December 1989 to 5.88 percent in December 1999. According to the definitions used by EPI, this industry would be defined as a contracting industry, even though employment in the industry grew.

Government, which added nearly 2.5 million payroll jobs throughout the 1990's, would also be defined as a contracting industry as its share of total national payroll employment fell from 16.61 percent to 15.74 percent. Even the industry of trade, transportation, and utilities, which added more than 3.5 million jobs in the 1990's, would be classified as a contracting industry using this methodology! EPI's conclusions about the labor market are based on the premise that actual employment growth is irrelevant.
OK, so it's not especially interesting or exciting, but you likely won't see or hear it anywhere else, so I thought I'd reprint it here. Next time you hear Kerry or one of his cronies whining about laid off white collar workers taking jobs flipping burgers for McDonalds, you'll have the proof for calling bullshit.

Contact The Author:

John Beck

Feedback Welcomed

Greatest Hits

The Complete United Nations Posts
Immoderate Moderates
Marketing Myopia
In defense of the Republic
UKIP in America
Playing Connect the Dots
A Point So Often Missed: The Presence of an Administered Rate
Reagan Remembrance
Dr. Wolfowitz, or How I Supported the Right War Waged in the Wrong Way for the Wrong Reasons
Divine Right of Kings and UN Mandates
A Fantastic Idea, If I Do Say So Myself
Why We Were Right to Liberate Iraq
The Crisis of Conservatism

Blogs Worth Bookmarking

Steal The Blinds
Poor Dudley's Almanac
Protein Wisdom
Anti-Idiotarian Rottweiler
New Sisyphus
Jim Treacher
Ace of Spades
Captain's Quarters
Rambling's Journal
Neolibertarian Blog
LLP Group Blog
The Llama Butchers
The Castle Argghhh
The Politburo Diktat
The Dissident Frogman
In Search of Utopia
Aaron's cc:
You Know You Wanna
Classical Values
Clowning Glory
Vice Squad
Hit & Run
Link Mecca
The Corner
Power Line
Michelle Malkin
Mises Institute
marchand chronicles
Enlighten - New Jersey

More Top Reads

SlagleRock's Slaughterhouse
This Blog is Full of Crap
Who Tends the Fires
The Bleat
Outside the Beltway
Small Dead Animals
Kim du Toit
Tman in Tennessee
Hog On Ice
Pardon My English
Mr. Minority
Speed Of Thought
La Shawn Barber
Right Wing News
USS Clueless
Belmont Club
Shades of Gray
Seldom Sober
Roger L. Simon
Tacoma Blaze
A Small Victory
Murdoc Online
Iraq Elections Diatribe
Winds of Change
Enlighten - New Jersey
Random Fate
Riding Sun
The Daily File
Matt "The Man" Margolis
Bastard Sword
Roller Coaster of Hate

News Links

Blogger News Network
National Review Online
Tech Central Station
The Drudge Report
Reason Online
Mises Institute
The Weekly Standard
Front Page Magazine
Town Hall

Affiliations, Accolades, & Acknowledgements

The Neolibertarian Network


Image Hosted by
"More tallent than a million monkeys with typewriters."
--Glenn Reynolds

Image Hosted by

Image Hosted by

Image Hosted by

Life, Liberty, Property Community

Reciprocal Blogrolling

Accidental Verbosity
Conservative Eyes
The Moderate Voice
Perpetual Three-Dot Column
Sudan Watch
Mystery Achievement
Le Sabot Post-Moderne
Comment Me No Comments
New Spew

Links That Amuse the Writers

Huffington's Toast
The IFOC News
Dave Barry's Blog
Drum Machine
Something Awful
Cox & Forkum
Exploding Dog


March 2004
April 2004
May 2004
June 2004
July 2004
August 2004
September 2004
October 2004
November 2004
December 2004
January 2005
February 2005
March 2005
April 2005
May 2005
June 2005
July 2005
August 2005
September 2005
October 2005
November 2005
December 2005
January 2006
February 2006
March 2006
April 2006
May 2006
June 2006
August 2006
March 2007
May 2007
June 2007
August 2007
September 2007
October 2007
January 2008
February 2008
March 2008
April 2008
May 2008
September 2008
November 2008
December 2008
March 2009
April 2009
June 2009
July 2009
August 2009
September 2009
October 2009
November 2009

The Elephant Graveyard

We Are Full of Shit
The Sicilian
The Diplomad
Insults Unpunished
Fear & Loathing in Iraq
Right Wingin-It
Serenity's Journal
Son of Nixon
Rachel Lucas


Site Design by Maystar
Ask not for whom the blog tolls...
This page is powered by Blogger. Isn't yours?
Weblog Commenting and Trackback by

Listed on Blogwise
Blogarama - The Blog Directory


Image Hosted by

Email Questions and Comments

Creative Commons License
This work is licensed under a Creative Commons License.
eXTReMe Tracker