What's the No. 1 fake financial story of the year that affects your wealth? It's that Americans have not had a pay raise in years.
The coverage depicted above from November 3, 2017 when new wage data was released by the government, shows the myth is perpetuated by many cable TV news channels including Fox Business News, CNBC, CNN and Fox News as well as news syndicates like the Associated Press and Reuters and newspapers throughout the nation.
They have this story wrong.
The misconception that Americans have not had a pay raise for years has, in recent years, become common in an inexplicable abrogation of responsibility by pundits and politicians. The recklessness with which economic facts are ignored is perplexing.
Here's the real story. The Labor Department releases nominal data on wages each month. It doesn't distribute to the press a monthly chart of real wages through multiple expansions and recessions. Those figures need to be calculated, as we've done here. At the end of September 2017, real wages were 1.4% higher than 12 months earlier. The red line is heading almost straight up! The 1.4% real wage growth rate is a high number, but knowing that requires research.
The Brookings Institute crunched wage and inflation numbers through several recessions in a report released in September 2017 and here's what they found. Growth in real wages of 1.4% for the past 12 months is twice the rate of the roaring 1990s expansion! It's four times the rate of growth of the last expansion, from 2000 through 2006.
It's not only untrue that Americans have not had a pay raise in years, but wage growth has been incredibly strong. Benign inflation has hidden it from plain sight and political leaders and the media - who are supposed to know better - are complicit in spreading this false story, making it the No. 1 fake financial news story of the year.
Perhaps the stock market is seeing through the fake news. The Standard & Poor's 500 stock index has been hitting new highs for months. It hit a new record high on Wednesday of 2594.38 before closing the week a fraction lower at 2582.30.
This article was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used as financial advice without consulting a professional about your personal situation.
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