“The start of a new year is a good time to take stock,” wrote the Washington Post on January 3, 2007, “and there are few better indicators of our long-term economic prospects—and also our prospects for political and social peace—than productivity.”
Yet while productivity, or output per hour, rose an average 2.5 percent annually between 2000 and 2007, compared to just 2 percent in the 1990s (Economic Policy Institute, 8/26/08), real median household income declined by 0.6 percent, or $324. During that same period of “growth,” poverty rose from 11.3 percent to 12.5 percent.
Unqualified reliance on output figures like productivity or Gross Domestic Product (GDP) can be misleading, as they mask the inequality that marks the U.S. economy. As GDP grew and real median household income fell between 2000 and 2007, the bottom 20th percent of households saw a remarkable 6 percent decrease in income; meanwhile, between 2002 and 2006, the income of the wealthiest 1 percent of Americans increased nearly 50 percent (Economic Policy Institute, 8/26/08).
Just as financial reports largely rely on GDP data that is not necessarily reflective of most Americans’ financial realities, corporate media display a near-frenetic concern with stock prices, reporting on market indices as if they were the ultimate indicator of the population’s economic health (Extra!, 9-10/07). Yet while the market flourished between 2003 and 2007, with the Dow Jones Industrial Average climbing 64 percent before the bull market ended, real median income grew by only 2.8 percent, and failed to return to the peak it reached in 1999. The official poverty rate remained stuck around 12.5 percent, and the number of people covered by health insurance dropped 0.3 percent (U.S. Census Bureau News, 8/26/04, 8/29/06, 8/28/07, 8/26/08).
When in June 2008 the Dow Jones index fell to 20 percent below its peak, the New York Times’ Michael Grynbaum (6/28/08) lamented that this “bleak . . . if primarily a symbolic” milestone marked the start of a bear market, seen three times during the 20th century in “periods [that] coincided with geopolitical or economic turbulence—wars, the Depression, stagflation. Of course, all of those periods eventually gave way to great bull markets.”
Economist Dean Baker (Beat the Press, 7/3/08) pointed out, however, that during the first eight years of one of those bear markets, 1965-82, average hourly wages grew 1.7 percent annually: “Real wages for a typical worker grew more during the first eight years of this bear market than in the subsequent 35 years.”
The reality is that in 2006, less than half of American households owned stocks, and only 35 percent owned more than $5,000 worth. A whopping 90 percent of total stock value was concentrated in the wealthiest fifth of households (Economic Policy Institute, 8/29/06).
In addition to GDP and stocks, corporate media’s financial reports frequently rely on the unemployment rate. As that rate averaged about 5 percent during the 2000s (New York Times, 3/5/08)—compared to 6.2 percent in the 1970s, 7.3 in the ’80s and 5.8 in the ’90s (based on Bureau of Labor Statistics data)—corporate media often looked at it as a sign of a strong economy.
The Washington Post (6/2/07) ran an article titled “Job Growth Strengthens Economy” that saw “an economy on the mend” as “employers picked up the pace of hiring and the unemployment rate held steady at a low 4.5 percent.” It was not until the second half of the article that readers learned that undocumented construction workers affected by the downturn in the housing market likely suffered significant unrecorded job losses. The article also noted that economists at Goldman Sachs suspected that the Labor Department overestimated job growth. Reporter Nell Henderson concluded nonetheless that “the job growth numbers fit with other signs of healthy employment.”
The New York Times (10/5/08) reassured readers that despite other troubling economic signs,
for now, the United States economy is far stronger than it was in the 1970s. . . . but economists are still predicting a relatively mild recession. The unemployment rate, for example, has risen from 4.4 percent in March 2007 to 6.1 percent at the end of September, but it is far below the post-World War II peak of 10.8 percent in November 1982.
But as Times reporter David Leonhardt (3/5/08) pointed out in a particularly insightful piece, the standard unemployment rate does not include all the jobless, but only those who “do not have a job, have actively looked for work in the prior four weeks, and are currently available for work”—excluding, for example, the “discouraged” unemployed who are no longer looking for work.
As Leonhardt noted, in February 2008 unemployment and employment both officially declined: The same month that unemployment dropped from 4.9 percent to 4.8 percent, the economy lost 63,000 jobs. Why? Because some 450,000 job-seekers said they had given up—dropping the labor participation rate from 66.1 percent in January to 65.9 percent (Chicago Tribune, 3/8/08).
While official unemployment has hit a historical low, the percent of prime-age men (25-54) who are not employed is at its second-highest peak since World War II—13 percent in March (New York Times, 3/5/08), compared to just 6 percent in 1968. (The percentage of prime-age women who are not employed also rose from 25 in 2000 to 27 this year—New York Times, 3/5/08.)
The Bureau of Labor Statistics actually tracks a number of alternative employment measures that factor in subsets not included in the official unemployment rate, including discouraged workers, people not currently working due to problems such as child care or transportation, and part-time workers who wish to be full-time. Its 2007 report on household data annual averages shows some 4.7 million non-workers who wanted a job yet were not counted among the officially unemployed. All of these numbers, of course, are easily available to journalists trying to explain the economic situation to their audience.
The day after the Dow Jones index closed at a new high, USA Today (10/4/06) questioned why, despite a GDP that had grown 28 percent in five years and “an impressively low” unemployment rate, “did only 39 percent approve of Bush’s handling of the economy and 57 percent disapprove?” Pointing to the rising cost of basic needs such as housing and healthcare—certainly valid points—this article, too, failed to question the fundamental validity of GDP and unemployment as indicators of average Americans’ financial security.
You can find numerous examples of pieces in corporate media that acknowledge the discrepancy between the most visible economic indicators and the economic situation of average Americans. But reporters need to go beyond noting the irony and start using statistics that better reflect the lives of ordinary people.
Veronica Cassidy is a freelance writer and former FAIR intern based in Brooklyn.