Scott Winship on Men’s Earnings

by Reihan Salam

An alarming new analysis from the Hamilton Project found that men’s earnings declined markedly — by 28 percent — between 1969 and 2009. Scott Winship suggests that the analysis is flawed:

Here’s the basic problem: the analyses assign all nonworking men annual earnings of $0, and since labor force participation among men has declined, the result is a big drop in median earnings over time. But a lot of that decline in labor force participation is attributable to earlier retirement (they include men as old as 64), later and longer school enrollment (they include men as young as 25), rising “disability” rates (which do not correspond in any obvious way with changes in health or job demands but which do correspond with increasing generosity in disability benefits), and other factors having nothing to do with the strength of labor markets.

I re-crunched the numbers as follows. I included all men age 20 to 59 except for those who said they worked only part of the year or not at all because they were retired, going to school, in the Armed Forces, sick or disabled, or taking care of home and family. Using the inflation adjustment that the Hamilton guys likely used, I find a decline in median earnings of 9 percent, not 28.

Note, however, that comparing 1969 and 2009 holds up a likely peak year (when the business cycle was at a high) to a trough year (when it was at a low). Comparing 1969 to 2007 is apples-to-apples, and when I did that, the median was EXACTLY the same in both years (to the dollar, which is a pretty crazy coincidence). Finally, if I use the Bureau of Economic Analysis “personal consumption expenditures” deflator, which I think overstates inflation somewhat less than other commonly-used deflators, median earnings among men rose 7 percent from 1969 to 2007.

As Scott goes on to remind us, there are a number of other factors that merit consideration: husbands reducing work hours as wives engage in more market production; the growing role of non-wage benefits; the declining tax burden, particularly when factoring in various tax credits; and composition effects. To be sure, all of these factors have had a decidedly uneven impact: some men — married men, non-poor men, men who are not ex-offenders, etc. — have benefited far more than others, while the effective upward mobility of immigrant men is presumably quite high in a way that a U.S.-centric analysis isn’t going to capture. Scott would acknowledge all of this, I’m sure. 

My basic takeaway is that even a more realistic account like Scott’s still counsels the need for policy reform, but it actually leads us towards very different conclusions. If you see most of the changes we’ve seen as basically beneficial, if you believe that post-Fordist flexibility has had real benefits for family life as, for example, (some) fathers have increased their role in the lives of their children and (some) mothers have found more fulfilling work, we’re led to policies that aim to improve the quality of work supports, facilitate geographic mobility and lifelong learning, and encourage asset-building at the low end of the income and wealth distributions, etc., rather than policies that aim to reverse the trend towards a more flexible, smaller-unit economy.

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.