Upbeat Job, Wage 'News': Is White House Right?

Kevin Phillips, a Washington political commentator, sees the Clinton administration speaking with two voices on the worker and the economy.

At the Labor Department, Secretary Robert Reich complains that declining real wages have created what he terms "the anxious class" and calls for business to exercise "good corporate citizenship."

In contrast, the White House is "puffing the economy," as Mr. Philllips puts it, both to keep afloat the bond and stock markets, thereby keeping big political contributors happy and wooing voters for the November presidential election. For example, the president's Council of Economic Advisers boasted Tuesday in a new study that 8.5 million new jobs have been created since Clinton took office.

Putting it another way, Phillips says Secretary Reich has "jurisdiction over the problem," while the White House has "jurisdiction over the propaganda."

Phillips sees it as "reasonably safe that the economy does not turn turtle before the election." But if a recession does show up, he would expect the administration to take a more Reich-like position, blaming the slump on a "reckless fiscal policy" of a Republican Congress, on "greedy CEOs" paying themselves fat salaries while skimping on workers and their wages, and making a "convenient whipping post" out of Georgia's Newt Gingrich, the House majority leader.

"It makes sense to keep this two-track view of things going," Phillips says. "They should be able to get away with it through November."

The White House study and another new study by the research arm of the National Association of Manufacturers (NAM) paint a more positive view of the job situation than is often portrayed nowadays.

"The news is encouraging," says the White House report, done with the chief economist at the Labor Department.

"In reality, we live in a time of immense economic opportunity for employees at all levels," says Jerry Jasinowski, president of the NAM.

But as economist Dimitri Papadimitriou says, "You can read the statistics in any way and come up with whatever results you want."

That doesn't mean the two reports use false numbers. But in a complex job market, the picture is neither black nor white but gray.

The NAM report, for example, notes that total compensation, a number that includes wages, health insurance, paid vacation, pension contributions, and employer contributions to Social Security rose by 14 percent, after inflation, between 1980 and 1994.

Jared Bernstein, an economist specializing in income statistics at the Economic Policy Institute in Washington, contends such numbers are misleading. He prefers to look at wages and salaries (not total compensation), which have been stagnant or falling on average for some 70 percent of workers for 15 years. Median annual family income is still 5 percent, or about $2,000, below the peak in 1989.

These facts, he says, "bedevil anyone trying to make claims of high job quality." But he wouldn't dispute the White House point that median family income did rise in 1994, for the first time in five years, and that the poverty rate fell.

Mr. Papadimitriou of the Jerome Levy Economic Institute of Bard College, in Annandale-on-Hudson, New York, notes that health insurance, a benefit that can be costly to both employers and workers alike, is often seen by employees as an expense until it is needed. Though total compensation may be up, workers are taking home less cash after inflation to pay the bills. Thus many have a feeling of financial anxiety.

Mr. Bernstein also quarrels with the NAM study's view that "most economists" agree that increases the consumer price index (CPI) are overstated by about 1 percent a year. If this bias were removed, the study finds, real total compensation would have risen 23.3 percent between 1980 and 1984.

"I am not convinced the CPI is upwardly biased," Bernstein says.

But if the CPI was adjusted by this assumption, it would push some taxpayers into higher tax levels, he notes. That is because each year, the Internal Revenue Service adjusts the tax brackets to take account of inflation the previous year.

Neither does Bernstein accept the NAM study's argument that higher taxes are a major contributor to worker anxiety. Overall "effective" tax rates - the proportion of gross income actually paid in taxes to all levels of government - are about the same as 20 years ago, he says.

As for the White House finding that more than two-thirds of recent employment growth has been in those job categories offering the best-paid employment opportunities, Bernstein says OK, but the median wage in these categories has fallen. Nor does the study show whether the new jobs are in low or high-paid areas of these sectors. Is the new employee a manager at McDonald's Corp. or at McDonnell Douglas Corp.? he asks.