Treasury Secretary John Snow, testifying before a House committee today, boasted in prepared remarks, “Average hourly earnings are picking up. We learned from this month’s jobs report that average hourly earnings have risen 3.8% over the past 12 months — their largest increase in nearly five years.”
But Snow’s briefers apparently didn’t prepare him for questioning by Rep. Barney Frank, the sharp-tongued Massachusetts Democrat who delights at cross examination of administration witnesses.
“Mr. Secretary,” Frank said, “I agree with much of your statement, but I confess to some trouble with your citation of the rise in hourly wages. What’s the CPI increase over the past 12 months? Do you know?” Replied Snow: “Well, about 5, I think, 5.1.”
To which Frank said: “OK, because you’ve got hourly earnings going up 3.8%, and I believe…that’s not adjusted for inflation. So my understanding is that even in the past 12 months, which are your best 12 months, hourly wages have barely kept up with inflation….. But you would acknowledge that 3.8% increase in wages you’re talking about is nominal, not adjusted for inflation, correct?
Snow, who has a Ph.D. in economics, was a bit flummoxed at first. “I’ll have to go back, Congressman, and check these numbers,” he said.
“That’s not a trick question,” Frank insisted.
“I know it’s not,” replied the Treasury secretary. He then confirmed that the 3.8% was nominal, that is unadjusted for inflation.
The concession didn’t satisfy Frank. “I think it’s misleading to talk about the 3.8% over 12 months when that doesn’t take into account inflation, which was very close to that. I’d ask you to submit to us, what’s it been over 24 months, 36 months and 48 months, because, in fact, during this recovery…wages have dropped… compared to inflation.” Mr. Snow promised to deliver more numbers, and Frank turned to another subject.
TheEconomic Policy Institute, meanwhile, noted today that the latest Bureau of Labor Statistics data, released today, show that hourly and weekly earnings of production and non-supervisory workers in April finally returned to levels where they were, adjusted for inflation, in November 2001 when the current economic recovery began.
It's always rewarding to see a Bushie have to confront an opponent armed with facts.