- The Washington Times - Friday, August 26, 2005

Wages and the economy

Your Thursday editorial “The facts on wage trends” decries the fact that there has been no growth in “real average weekly earnings for 80 percent of workers … particularly given the fact that productivity has been soaring.”

Wages, however, are not governed by corporate productivity, but by supply and demand. If a farm owner buys a tractor to replace a mule, why would he pay his plowman more?

If the plowman demands more money because he is plowing more with the tractor than he did with the mule, the owner of the farm will replace him with another plowman.

The Times is not seeing the trees for the forest. While the forest is not getting any taller on average, the individual trees in it are. The older, taller trees are dropping out and being replaced all the time.

Similarly, although average wages have not risen, those of individuals have. Workers at the top, at the end of their careers, are retiring and being replaced, and younger people are coming in at the bottom. If an experienced plowman can plow five acres when a novice can just plow two, the more experienced and more valuable worker naturally receives a higher wage. Just so, an individual is paid more as he grows in experience and value.



Your editorial narrowly focuses attention on wages to the exclusion of benefits. A narrow focus like that gives an incomplete and misleading picture to your readers.

Moreover,your secondary use of average weekly earnings in your editorial is even more misleading,and that is because that measuredoes not account for compositional shifts in thelabor force. Indeed, average weekly earnings can fall while everyone’s wages are going up.

How can that happen, you might ask? Well, suppose the labor force undergoes a compositional shift through a decline in unemployment because more low-paid workers are employed. Those workers are better off because they are employed,and everyone else is better off because wages are going up.

Yet, because of the compositional shift, average weekly earningscan report a decline. That is why I, as do most other economists, prefer the employment-cost index. It has the compositional element removed from it.

When we turn to that measure, we do, in fact, find, as Mr. Luskin notes, that real wages of workers in private industry have gone up only about 0.5 percent per year since 2000. But when we addbenefits to the wage picture, what we find is that private-industry workers’ employment costs have increased about 1.2 percent per year in real terms since 2000, and that is not insignificant.

Benefits cannot and should not be omitted from the wage picture. They are not created out of thin air. They are a cost to the employer just like wages, and for the employee, they represent real money, either immediately or over a long-term period.

I am not surprised by the New York Times or Paul Krugman having omitted benefits from their calculations. The Times and he are the bad-news bears for any Republican administration and are apt to report any informationcasting a negative light, no matter how incomplete that information is.

I am, however,frankly disappointed in The Washington Times for ignoring the benefits aspect of wages and not having includedbenefits in its calculation.


Silver Spring

A HOT debate

Virginia state Sen. Ken Cuccinelli recently called for the re-evaluation of Metrorail’s Dulles corridor extension, advocating for the construction of high-occupancy toll (HOT) lanes instead (“Railroading Dulles,” Op-Ed, Aug. 19). Though the senator certainly is entitled to his opinion, he is not entitled to his own facts. Unfortunately, his column contains more of the former than the latter.

Mr. Cuccinelli’s offer to debate this project is as troubling as it is laughable. Troubling because it makes assumptions about the years of public processes that have gotten us where we are on this project — in the engineering phase — and laughable because of the senator’s failure to be engaged in these processes as they occurred.

In addition to the decades of study prior to the start of the federal environmental impact statement, the project went through this exhaustive environmental process over several years. Between 2001 and 2004, staff from the Dulles Corridor Rapid Transit Project held public hearings and resident information meetings, and, in fact, would meet with any individual or group when requested to do so.

In reviewing the study’s public documents, I counted 209 such meetings with interested civic and homeowner groups and elected officials from both Fairfax and Loudoun counties along with other regional leaders.

Two hundred and nine meetings at which interested persons could testify, ask questions of the study team or raise concerns about the project.

Perhaps not being engaged in this public process, Mr. Cuccinelli missed its clear conclusion — that a seamless rail extension would be not only the best way to serve the Dulles corridor, but the most effective way to handle current and future demand.

Current Fairfax Connector service in the Dulles corridor carries more than 15,000 passengers per day and incorporates several features of bus rapid transit, but it is facing capacity constraints and does not adequately serve Tysons Corner.

Mr. Cuccinelli also misses the mark in discussing Metro. Voters and elected officials alike recognize that Metro is a tremendous regional asset and favor its expansion. Recently, 71 percent of commuters in the Dulles Corridor ranked extending Metrorail as their first choice (60 percent) or second choice (11 percent) for transportation improvement, double those who advocated widening Route 7 or the Dulles Toll Road.

Also, 78 percent of Fairfax County voters supported Fairfax’s 2004 transportation bond referendum (which the senator opposed), which called for significant reinvestment in the Metro system.

While we’re talking percentages, we need to be clear about Metrorail’s cost-recovery ratio — the amount of operating costs covered by passenger fares. At more than 70 percent, it is the second-highest of any heavy rail system in the nation.

With respect to HOT lanes in the Dulles corridor and on other roadways in the region, I and my colleagues on the Fairfax County Board of Supervisors have advocated HOT lanes on both the Beltway and in the Interstate 95 corridor — corridors where they make sense. In fact, as Providence District supervisor, I asked the Virginia Department of Transportation to consider adding HOT lanes to its study of Beltway improvements in June 2002, when Mr. Cuccinelli was still a private citizen.

As responsible stewards of the public interest, we must look at the facts presented and decide on the best solution.



Fairfax County Board of Supervisors


The Vioxx case

Having read William Murchison’s column “When punishment is the crime” (Commentary, Wednesday), I wish to respond.

First, Merck & Co. Inc. should have settled the Ernst case before trial for $150,000. Instead of that fair and rationale act, Merck opted for a scorched-earth policy of no settlements on any case, ever.

Merck told the 4,200 victims with cases on file that with a reasonable effort of getting three to four cases to trial each year, we should be finished trying the currently filed cases sometime around the year 3005. Wrong.

If Merck continues with this scorched-earth approach, juries will teach the company that it is cheaper to settle all cases than to try three a year for a thousand years.

Second, Merck’s spin doctors who call the decision “junk science” were not in the courtroom. The link that showed Robert C. Ernst’s death was caused by Vioxx was set up by Merck documents and the Merck Manual. It was Merck’s hired experts who were explaining to the jury, “We do not consider the Merck Manual authoritative … it is wrong.”

Merck lost on real science.It just needs an excuse now for Wall Street. A “runaway jury” is too convenient a sound bite to avoid.

Third, I will sit down with almost anyone and show him or her where in Merck’s documents the company admits Vioxx causes the problems experienced by Mr. Ernst and others but wants to make sure and hide that fact for needed profits. Once informed, many naysayers will change their tune.


Plaintiff’s lawyer in Ernst vs. Merck


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