Macro Roundup

Okay, I've yet to find a good piece of academic/governemnt research adjudicating btw the Pew and Federal Reserve analysis, this Grabar's piece was useful when the reports came out.

a) Okay will run down Strain's data. b) CBO generally uses PCE, though they may use CPI in some circumstances

"... First, “household income” is a pretty limited proxy for wealth, especially when you consider that millennials are better educated and (not unrelatedly) have a high ratio of debt to income. According to a May study from the Federal Reserve Bank of St. Louis, the median net worth of households whose heads were born in the 1980s (older millennials) is 34 percent lower than that for people their age in the past. A recent Federal Reserve Board study corroborates this, reporting that average net worth for young adult households in 2016 is 20 percent lower than that of boomers in 1989 and 40 percent lower than that of Gen X in 2001. (The saving grace for millennials: the idea that student debt will get paid off by the increased future earnings associated with a college education.)Second, while millennials’ household income is higher, it’s not great compared with what everyone else is making. In 1978, according to the Fed study from this month, young boomer households were making on average $77,500 in 2016 dollars—compared with the $88,000 national average. In 1998, the average Gen X household made $73,500 versus the national average of $103,800. In 2014, the average millennial household made $78,200—more than Gen X, but less as a percentage of the national household average of $112,000. Relatively speaking, then, millennials are underperforming. Third, household roles are changing. Millennial women work more than their Gen X counterparts did 17 years ago, and they make more money. The median income for young women is up by nearly a third since 1975, to $29,429. The median income for young men has fallen. If you isolate for female-headed households, the trajectory looks great. If you forget the household concept and just look at all young people’s individual income, the numbers were worse in 2015 than they were in 1975.(Things have improved a bit since then, granted.)Fourth, lots of millennials still live with mom and dad—somewhere between one in five and one in four young Americans live with their parents. That’s a big change from previous generations, and it means the pool of “households” is a little skewed. According to census data, nearly 75 percent of the 8.4 million millennials living at home in 2015 made less than $30,000 a year. That share drops to 63 percent among those living with roommates, and 45 percent among those living independently. In other words, there’s a whole segment of millennial households that aren’t getting counted in Pew’s sunny data, mostly because they’re too poor to move into their own place. Mom is buying the avocados...."
Henry Grabar, "The Federal Reserve Says Millennials Are Broke. Pew Says Millennials Are Loaded. Which Is It?"Slate, December 12, 2018, https://slate.com/business/2018/12/millennial-households-are-making-more-money-than-their-parents-or-grandparents-did-but-dont-get-optimistic.html

The Federal Reserve Says Millennials Are Broke. Pew Says Millennials Are Loaded. Which Is It?

On Tuesday, a Pew Research Center analysis of census data revealed a counterintuitive piece of good news about millennials: Relatively speaking, we’re in the money.

According to Pew, households headed by Americans ages 22 to 37 earn more, adjusted for inflation, than young households at any time in the last 50 years.

Avocado toasts all around!

The median adjusted income for millennial households last year was $69,000, according to Pew, putting 2017 narrowly ahead of 2000 as the best recorded year of household income for young people.

But wait: Didn’t the Federal Reserve Board just report last week that, as my colleague Jordan Weissmann put it, “millennials are, in fact, the brokest generation”? (Yes, they did.) So what’s going on here?

First, “household income” is a pretty limited proxy for wealth, especially when you consider that millennials are better educated and (not unrelatedly) have a high ratio of debt to income. According to a May study from the Federal Reserve Bank of St. Louis, the median net worth of households whose heads were born in the 1980s (older millennials) is 34 percent lower than that for people their age in the past. A recent Federal Reserve Board study corroborates this, reporting that average net worth for young adult households in 2016 is 20 percent lower than that of boomers in 1989 and 40 percent lower than that of Gen X in 2001. (The saving grace for millennials: the idea that student debt will get paid off by the increased future earnings associated with a college education.)

Second, while millennials’ household income is higher, it’s not great compared with what everyone else is making. In 1978, according to the Fed study from this month, young boomer households were making on average $77,500 in 2016 dollars—compared with the $88,000 national average. In 1998, the average Gen X household made $73,500 versus the national average of $103,800. In 2014, the average millennial household made $78,200—more than Gen X, but less as a percentage of the national household average of $112,000. Relatively speaking, then, millennials are underperforming.

Third, household roles are changing. Millennial women work more than their Gen X counterparts did 17 years ago, and they make more money. The median income for young women is up by nearly a third since 1975, to $29,429. The median income for young men has fallen. If you isolate for female-headed households, the trajectory looks great. If you forget the household concept and just look at all young people’s individual income, the numbers were worse in 2015 than they were in 1975. (Things have improved a bit since then, granted.)

Fourth, lots of millennials still live with mom and dad—somewhere between one in five and one in four young Americans live with their parents. That’s a big change from previous generations, and it means the pool of “households” is a little skewed. According to census data, nearly 75 percent of the 8.4 million millennials living at home in 2015 made less than $30,000 a year. That share drops to 63 percent among those living with roommates, and 45 percent among those living independently. In other words, there’s a whole segment of millennial households that aren’t getting counted in Pew’s sunny data, mostly because they’re too poor to move into their own place. Mom is buying the avocados.

See the attached email/link. If hourly nonsupervisory wages grew 5% from 1973 until today but 20% from 1990 until today, then wages must have fallen 12.5% (=1-) from 1973 until 1990. Is that true? I’d like to see the data he is referring too (not just a link where I have to do the work myself). Does the same data base contain benefits? If so, I’d like to see that too. How does the CBO bridge from their (pretax and transfer) data to this data? Does the CBO use CPI or PCE?

If hh incomes have grown 50ish% since their starting point as the CBO claims, it’s hard to believe that millennia aren’t earning the same or more at the same point in their life than prior generations given how large each demographic is relative to the whole. If one group’s earning are down (relative the other groups at the same point in their lifetime), the others would have to be way ahead. Does CBO decompose their data by generations?

Did you ever ask pew (and ernie), and the st louis fed why their numbers were so different? If not, you should.

We have recent stuff on this from Pew, the Federal Reserve and Ernie.

Pew's looked at household incomes in December of last year and found each new generation seems to be doing better than prior ones at most ages, at least in real household money income. "....The median adjusted income in a household headed by a Millennial was $69,000 in 2017. That is a higher figure than for nearly every other year on record, apart from around 2000, when households headed by people ages 22 to 37 earned about the same amount - $67,600 in inflation-adjusted dollars. (A recent study by the Federal Reserve, which also looked at Millennials’ income, used a different methodology and data source.)..."

Richard Fry, "Young adult households are earning more than most older Americans did at the same age," Pew Research Center, December 11, 2018, http://www.pewresearch.org/fact-tank/2018/12/11/young-adult-households-are-earning-more-than-most-older-americans-did-at-the-same-age/

Ernie adjusted the Pew household money income for education levels which is also worth noting. Quick write ups follow in descending order.

(note this male head of household number doesn't adjust for single/married or educational attainment)

Ernie Tedeschi adjust the Pew numbers for education attainment which is also worth noting:

However they don't have "apple core" comparison that looks at generational incomes net say the cost of housing, education and child care.

They also found that despite the same preferences"... We showed that millennials do have lower real incomes than members of earlier generations when they were at similar ages, and millennials also appear to have accumulated fewer assets. The comparisons for debt are somewhat mixed, but it seems fair to conclude that millennials have levels of real debt that are about the same as those of members of Generation X when they were young and more than those of the baby boomers....."

The same Fed study found that consumption habits (in terms of car ownership, preference for owning over renting) have not changed generational, "... we find little evidence that millennial households have significantly different tastes and preferences than households of previous generations..."

For context the Fed used laborearningsand found lower real income then their comps (say baby boomers @ the same point during the life cycle) "... In the economic sphere, millennials appear to have paid a price for coming of age during the Great Recession: Millennials tend to have lower income than members of earlier generations at comparable ages, although the income of young households has not changed much; the difference likely reflects, in part, the rising labor force participation of women....."...Specifically, the real average full-time labor earnings of a millennial male household head in 2014 were about the same as those for a comparable male Generation X household head in 1998 and over 10 percent lower than those for a comparable male baby boomer household head in 1978...."

Susan Edelman, Selim Algar and Aaron Feis, "Richard Carranza held ‘white-supremacy culture’ training for school admins,"New York Post, May 20, 2019, https://nypost.com/2019/05/20/richard-carranza-held-doe-white-supremacy-culture-training/

Richard Carranza held ‘white-supremacy culture’ training for school admins

City Department of Education brass are targeting a “white-supremacy culture” among school administrators — by disparaging ideas like “individualism,” “objectivity” and “worship of the written word,” The Post has learned.

A presentation slide obtained by The Post offers a bullet-point description of the systemic, supposedly pro-white favoritism that Schools Chancellor Richard Carranza claims must be eradicated from the DOE, and provides just one insight into his anti-bias training efforts.

The list — derived from “Dismantling Racism: A Workbook for Social Change Groups” by Kenneth Jones and Tema Okun — names more than a dozen hallmarks of “white-supremacy culture” that school administrators are expected to steer clear of.

“They include such dynamics as “paternalism,” a “sense of urgency” and “power hoarding,” according to the slide, which an insider said was part of mandatory training sponsored and funded by the department’s Office of Equity and Access and recently administered to principals, central office supervisors and superintendent teams.

The seminar is concurrent with Carranza’s larger push to root out “implicit bias” in the school system — an effort that some veteran DOE members blasted as creating a view of “toxic whiteness” detailed in a front-page story in Sunday’s Post.

“The training is not focused on white supremacy and white privilege,” Carranza said after a City Council budget hearing on Monday, referring to his larger campaign.

“It’s about what are our biases and how we work with them.”

The two slides were shown to top managers but were not part of a $23 million city wide implicit bias training, officials said.

The mandatory session for higher-ups included a “White Privilege Exercise” sheet in which attendees were asked to score the personal relevance of certain statements on a scale of 0 to 5.

“If a police officer pulls me over, I can be sure I haven’t been singled out because of my race,” one scenario reads.

“I can be pretty sure that if I ask to talk to ‘the person in charge,’ I will be facing a person of my race,” another says.

The DOE did not immediately respond to a request for comment about the materials used for the administrators’ training, but one adviser said that if the program’s frankness is making people uncomfortable, that’s because it’s working.

“It requires discomfort,” said Matt Gonzales, who serves as an outside adviser on the DOE’s school diversity task force and is a director of New York Appleseed, an advocacy group for school integration.

“Having to talk about someone’s own whiteness is a requirement for them to become liberated.”

Several recent attendees of the DOE’s overarching implicit-bias training sessions — mandatory for all, including teachers — have bristled at the program’s emphasis on the inherent insidiousness of “white” culture.

White employees who object when accused of harboring deep-seated bias are branded “fragile” and “defensive,” one insider who received the training has said.

But Carranza said on Monday that such skeptics often don’t realize their own biases until they are forced to confront them and that they are likely the ones who need the training the most.

“It’s good work. It’s hard work,” Carranza said. “And I would hope that anybody that feels that somehow that process is not beneficial to them, I would very respectfully say they are the ones that need to reflect even harder upon what they believe.”

Carranza also waved off allegations by at least four white DOE administrators who are poised to sue the department over their claims that, under his watch, they were demoted or stripped of duties in favor of less qualified persons of color.

“It’s always been my experience that anyone that comes in as a CEO of an organization takes a look at the organization and, based on their experience, makes some changes,” he said. “This is no different.”

The schools boss insisted that there was room on his staff for people of any race who share his emphasis on equality.

“I have some deputy chancellors that are white, but have an incredible equity lens as well... for making sure that historically underrepresented communities are being served,” Carranza said.

But one Manhattan middle school teacher who underwent mandatory implicit-bias training in December said she left feeling as though everything she had learned about “colorblindness” was being uprooted.

“I say they’re my students whether they’re green, purple, orange or black,” the educator, who asked not to be identified, told The Post. “We’re being told if you’re not recognizing students as African American, Haitian, Puerto Rican, Dominican, et cetera, you’re wrong.”

“It feels like I’m in a dystopian novel where all of a sudden being white is bad. All of a sudden, I’m the enemy.”

“…Bottom Line: The AFL-CIO can only get a distorted and wildly inflated CEO-to-worker pay ratio of something like 360-to-1 every year with a flawed apples-to-oranges analysis that compares the total annual compensation of a small, select group of CEOs in their prime earning years heading America’s largest multi-national corporations, who probably typically work 50-60 hours per week or more, to the average annual cash wages of part-time rank-and-file employees who work less than 34 hours per week on average, often for small companies that aren’t anywhere close to the size of S&P 500 companies. According to this 2015 report from Business Insider, S&P 500 companies employ only 17% of workers in the US, so it’s not really fair to compare the salaries to S&P 500 CEOs to all of the rank-and-file US workers, since a large of majority of those workers aren’t employed by large multinational companies in the S&P 500.Once we make a more statistically valid apples-to-apples comparison, the CEO-to-worker compensation ratio falls by two-thirds from the AFL-CIO’s expected 364.5-to-1 ratio to 124-to-1 once we consider total (median) compensation for both CEOs and full-time (40 hours per week) rank-and-file workers employed by companies with 500 or more workers. If we assume a 60-hour work week for the average worker (to be comparable to the workweek of an average CEO), the CEO-to-worker compensation ratio falls by two-thirds to only 83-to-1 for median CEO pay. Further, even if we could confiscate 100% of the compensation of all S&P 500 CEOs, the typical rank-and-file worker would probably get about $1.34 per week in additional after-tax earnings. Big deal….”

Mark Perry, "Any day now, expect the AFL-CIO to produce another hugely inflated CEO-to-worker pay ratio, debunked in advance," American Enterprise Institute, May 20, 2019, https://www.aei.org/carpe-diem/its-that-time-of-year-expect-afl-cio-to-produce-another-hugely-inflated-ceo-to-worker-pay-ratio-any-day-debunked-in-advance-2/

Any day now, expect the AFL-CIO to produce another hugely inflated CEO-to-worker pay ratio, debunked in advance

Ahead of this year’s annual AFL-CIO report on executive pay, the Wall Street Journal last week published its second new annual report on CEO compensation in 2018 for the S&P 500 companies along with several related articles here and here. Therefore, like last year, I’m able to preempt the AFL-CIO and publish a rebuttal to its anticipated massively inflated 360+ CEO-to-worker pay ratio before its analysis is released, instead of responding to their report after it has gone public and gets widely and blindly reported by the media without anyone (except John Merline of IBD in 2015 ) ever questioning “the statistical legerdemain used to produce it” (see below).

As I have reported annually every May since 2014, here is a summary of the main flaws in the “methodology” used by the AFL-CIO to produce its wildly inflated 360+ CEO-to-worker pay ratios year after year:

The AFL-CIO uses the mean (average) CEO compensation figure each year, which is always much higher than the more realistic and more typical median CEO compensation. Based on the Wall Street Journal‘s CEO pay database in 2017, the mean compensation for S&P 500 CEOs was $13.5 million, which was 13.4% higher than the more realistic median pay of $11.9 million for the typical CEO in that year. For 2018, the Wall Street Journal is reporting that the median compensation for S&P 500 CEOs last year was $12.4 million, a 4.2% increase from the median compensation in 2017. (The Wall Street Journal did not provide a complete database of CEO compensation for 2018, so it’s not possible to report the mean compensation this year for S&P 500 CEOs using WSJ data.)
Applying the 4.2% increase in median pay in 2018 for median compensation, I predict that the AFL-CIO will be reporting average CEO compensation in 2018 of something like $14.5 million (it reported $13.94 million for CEO compensation in 2017, which was higher than the $13.5 million average according to the Wall Street Journal). In that case, the expected average CEO compensation reported by the AFL-CIO of $14.5 million will be about 17% higher than the more realistic compensation of $12.4 million for a typical S&P 500 CEO as reported by the WSJ using median pay.
The AFL-CIO compares total CEO compensation (base salary plus all additional forms of compensation including cash bonuses, stock awards, option awards, pension benefits, etc.) for executives in their prime earning years managing the world’s largest corporations to cash-only pay for part-time rank-and-file workers of all ages working for companies of all sizes (including small grocery stores, independent small restaurants, etc.).

The analysis below summarizes my corrections for those statistical flaws above that are used by the AFL-CIO annually to get an exaggerated, inflated CEO-to-worker pay ratio:

In previous years, the AFL-CIO reported the methodology it uses to calculate annual worker pay as follows:

The average annual income earned by rank-and-file workers is taken from the U.S. Bureau of Labor Statistics Current Employment Statistics survey. Specifically, it is the average hours and earnings of production and nonsupervisory employees on private nonfarm payrolls. The average weekly pay is multiplied by 52.

Based on the AFL-CIO’s methodology, here’s how average worker pay will be updated and calculated for 2018. The AFL-CIO will use an average hourly wage of $22.70 for production and non-supervisory workers last year (BLS data here) and an average workweek of only 33.7 hours (BLS data here) for the average rank-and-file worker. Assuming 52 weeks of work per year: $22.70 per hour x 33.7 hours per week x 52 weeks ≈ $39,779 average annual cash-only earnings for the typical part-time worker in 2018. Conveniently, the fringe benefits that all rank-and-file workers, even part-time workers, receive as part of their total compensation are always completely ignored by the AFL-CIO.

Therefore, the AFL-CIO engages in some questionable statistical chicanery by sloppily reporting an apples-to-oranges comparison of: a) total CEO compensation for only about 500 CEOs working full-time in their prime earning years to b) the cash wages only for 1o4.3 million rank-and-file workers of all ages working for companies of all sizes, who work an average of less than 34 hours per week, and are therefore working part-time, not full-time, on average. But you would never know that from the AFL-CIO’s website because the average hourly pay and average hourly workweek of rank-and-file workers are never reported, and I guess nobody has ever bothered to check to find out that the AFL-CIO is using average annual cash-only income (excluding fringe benefits) for a mix of full-time and part-time employees whose average workweek was only 33.7 hours last year.

For 2018, the CEO-to-worker pay would be about 312-to-1 ($12,400,000 ÷ $38,640) comparing the Wall Street Journal‘s reported median compensation of $12.4 million for S&P 500 CEOs to the annual cash wages for part-time workers using the AFL-CIO’s methodology, see graph above. Assuming that the AFL-CIO reports average CEO compensation of $14.5 million in 2018, we can expect its new forthcoming CEO-to-worker pay ratio to be around 364.5-to-1 for 2018 (see graph above), slightly higher than the 361-to-1 ratio it reported for 2017. Using a more realistic estimate of the compensation for an S&P 500 CEO (median instead of mean) reduces the CEO-to-worker pay ratio by more than 14%. But that’s not the most important correction to make, so let’s now adjust for hours worked and add fringe benefits for rank-and-file workers to make a more accurate comparison since CEO pay is based on total compensation including all fringe benefits.

Questions: a) How would the CEO-to-worker pay ratio change if we: a) calculate average worker pay for full-time workers, b) compare the average pay for a rank-and-file worker who works the same number of hours that a typical CEO works, e.g., 50 or 60 hours per week, c) compare total compensation of both CEOs and rank-and-file workers working full-time including fringe benefits for the rank-and-file, and d) consider only those workers who are employed by companies with 500 or more workers to consider the workers most likely to actually work for an S&P 500 company? The graph above summarizes how the CEO-to-worker pay ratio would change, here are the details:

1. Correcting for the AFL-CIO’s Statistical Shortcomings/Legerdemain

a. Using the WSJ data, a typical S&P 500 CEO earned $12.4 million last year. Assuming a 40-hour workweek for full-time workers employed by private companies with 500 or more workers, who received average hourly compensation of $49.85 last year including fringe benefits (BLS data here, Table 8), and annual total compensation of $99,700, we would get CEO-to-worker compensation ratio of only 124-to-1, or less than half of the previously calculated 312-to-1 ratio. In other words, expect the AFL-CIO’s CEO-to-worker pay ratio to be conveniently inflated again this year by a factor of more than 2X by using cash wages only for part-time workers and comparing it to the total compensation for S&P CEOs! Talk about bogus statistical chicanery! And year after year, the media never questions the AFL-CIO’s totally flawed methodology and parrots the inflated and wildly exaggerated CEO-to-worker pay ratios.

b. Since we can realistically assume that no S&P 500 CEO works only 40 hours per week, let’s assume a 50-hour workweek for full-time rank-and-file workers to make a more realistic comparison, and use hourly compensation of $49.85 like above and annual total compensation of $124,625 for workers employed by companies with 500 or more employees. That would result in a CEO-to-worker compensation ratio of only 99.5-to-1 see graph above.

c. To make it an even more realistic comparison to the average workweek of an S&P 500 CEO, let’s assume a 60-hour workweek for full-time rank-and-file workers and annual total compensation of $114,348 we would get CEO-to-worker compensation ratios of 83-to-1.

Conclusion: By considering both total compensation (including fringe benefits) for both CEOs (and using median CEO pay) and rank-and-file workers working for large companies with more than 500 workers, and by considering longer workweeks for rank-and-file workers that would be more comparable to the hours worked by a typical CEO of a major multi-national corporation in the S&P 500, we can get a more accurate apples-to-apples comparison. Those more accurate comparisons result in CEO-to-worker compensation ratios of between 124-to-1 (for rank-and-file workers averaging 40-hour workweeks) to as low as 83-to-1 for rank-and-file workers putting in 60-hour weeks that might be the most comparable to the workweek of a typical S&P 500 CEO.

Let’s keep this analysis in mind in the coming weeks when the AFL-CIO’s reports something like last year’s 361-to-1 CEO-to-worker pay ratio that will generate sensationalized media coverage even though it is hugely exaggerated by a factor of more than 2X and probably more realistically inflated by a factor of more than 4-to-1!

2. Confiscation and Redistribution of CEO Pay

And what’s the whole point of the AFL-CIO’s annual reports on wildly inflated CEO-to-worker pay ratios? The sub-title of the AFL-CIO’s Executive Paywatch report in 2017 pretty much sums it up: “More for Them, Less for Us.”

The AFL-CIO’s message seems to be that if CEOs weren’t being so generously over-compensated, then the rank-and-file workers would be doing much better and making higher wages. For example, according to the AFL-CIO in 2015:

America is supposed to be the land of opportunity, a country where hard work and playing by the rules would provide working families with a middle-class standard of living. But in recent decades, corporate CEOs have been taking a greater share of the economic pie while workers’ wages have stagnated.

The AFL-CIO has fallen here hook, line and sinker for the zero-sum, fixed pie fallacy, one of the most common economic mistakes that falsely assumes that there’s a static fixed pie and therefore one party can gain (get a bigger slice) only at the expense of another (who’s left with a smaller slice). But let’s assume that there is a “fixed pie of wages” and do some confiscation and redistribution of CEO compensation to see how that would affect average rank-and-file worker pay.

Q: If the average CEO of an S&P 500 company received $14.5 million last year, then as a group, those 500 CEOs received about $7.25 billion in total compensation in 2018. If the AFL-CIO could wave a magic wand and confiscate that entire amount and redistribute $7.25 billion to the current 104.3 million rank-and-file workers, what would each one get?

A: An annual increase in pay of $69.50 for each rank-and-file worker before taxes, or about $1.34 more per week and about only 3 cents per hour. In other words, complete confiscation and redistribution of S&P 500 CEO compensation would make almost no difference for the average rank-and-file worker.

Bottom Line: The AFL-CIO can only get a distorted and wildly inflated CEO-to-worker pay ratio of something like 360-to-1 every year with a flawed apples-to-oranges analysis that compares the total annual compensation of a small, select group of CEOs in their prime earning years heading America’s largest multi-national corporations, who probably typically work 50-60 hours per week or more, to the average annual cash wages of part-time rank-and-file employees who work less than 34 hours per week on average, often for small companies that aren’t anywhere close to the size of S&P 500 companies. According to this 2015 report from Business Insider, S&P 500 companies employ only 17% of workers in the US, so it’s not really fair to compare the salaries to S&P 500 CEOs to all of the rank-and-file US workers, since a large of majority of those workers aren’t employed by large multinational companies in the S&P 500.

Once we make a more statistically valid apples-to-apples comparison, the CEO-to-worker compensation ratio falls by two-thirds from the AFL-CIO’s expected 364.5-to-1 ratio to 124-to-1 once we consider total (median) compensation for both CEOs and full-time (40 hours per week) rank-and-file workers employed by companies with 500 or more workers. If we assume a 60-hour work week for the average worker (to be comparable to the workweek of an average CEO), the CEO-to-worker compensation ratio falls by two-thirds to only 83-to-1 for median CEO pay. Further, even if we could confiscate 100% of the compensation of all S&P 500 CEOs, the typical rank-and-file worker would probably get about $1.34 per week in additional after-tax earnings. Big deal.

When it’s released, the 2018 CEO-to-worker pay ratio reported by the AFL-CIO gets my annual “Biggest Blindly Accepted Statistical Fairy Tale of the Year Award.” Well no, it’s actually a tie with the gender wage gap myth and the incessantly repeated “77 cents on the dollar” statistical falsehood. What’s disappointing is that much of the mainstream media seem to blindly accept both of these statistical falsehoods without ever challenging the “statistical legerdemain” that are used to produce and perpetuate these statistical myths. One exception was this excellent article in 2015 by Investor’s Business Daily’s John Merline, (“Do CEOs Make 300 Times What Workers Get? Not Even Close“) who concluded:

What’s not understandable is why the mainstream press keeps repeating the massively inflated 300-to-1 number without noting the statistical legerdemain that produced it.

MP: Post will updated appropriately once the AFL-CIO releases its Executive Paywatch 2019 report based on 2018 data.

SF Fed note implies the high cost of low skilled labor

"....With these rates, I can calculate the separate contributions of inflows and outflows to the level of the overall participation rate. Figure 3 shows the contribution of the inflows (blue line) and the contribution of the outflows (green line). The sum of these two reflects the deviations of the prime-age participation from its 1978-2018 average (yellow line). For instance, the fall in the LFP rate during the Great Recession caused by the sharp increase in the outflow rate (green line) would have been even more pronounced if the rate of inflows (blue line) had not also increased. With overall participation closely following the changes in outflows during the period of the recovery and the recent increase in labor force participation, the figure clearly shows that the predominant force is the slowdown in the outflows from participation. The inflow probability has remained flat over the past three years, suggesting that the tight labor market is not bringing new workers into the labor force. Instead, the participation rate is rising because fewer workers are leaving the labor force.... contrary to a popular and appealing hypothesis, the tight labor market is not bringing new workers into the labor force. Using micro data to construct the flows of workers into and out of the labor force, I show that the recent increase in the prime-age labor force participation rate is not driven by an inflow of new workers. Instead, the increase is a mechanical byproduct of the tight labor market: because unemployed workers are finding jobs faster, they are less likely to leave the labor force.... "

Regis Barnichon, "Is the Hot Economy Pulling New Workers into the Labor Force?" Federal Reserve Bank of San Francisco, May 20, 2019, https://www.frbsf.org/economic-research/publications/economic-letter/2019/may/is-hot-economy-pulling-new-workers-into-labor-force/