On June 19 we wrote that wage increases had kept pace with inflation in the year to May, and criticized Sen. John F. Kerry for suggesting that wages had fallen behind. We were wrong and Mr. Kerry was right: Hourly wages for non-supervisory workers rose 2.2 percent, while the consumer price index rose 3.1 percent. (Published 6/22/04)
THE FUROR OVER "offshoring" of jobs to countries such as India, so pronounced during the Democratic primaries, seems to have faded. With good reason: Last week the Labor Department published the first government effort to quantify the impact of offshoring, which tentatively suggested that it may be responsible for just 2.5 percent of the job losses in the first quarter of this year.
Moreover, job creation, which appeared surprisingly weak a few months ago despite strong economic growth, is now healthy -- and statistical revisions suggest that it was robust as far back as March and respectable in January -- just when the gloom from the Democratic primaries was at its fiercest. After suffering a net loss of 2.7 million jobs between March 2001 and August 2003, the economy has gained 1.4 million jobs.
Now comes the next round of political gloom-mongering. Sen. John F. Kerry, the victor in the Democratic primaries, has been telling voters this week that although job creation may have recovered, wages are the real problem. "In the last year, wages have gone down, and prices have gone up," the candidate told an audience on Tuesday. Actually, hourly wages for non-supervisory workers have risen this year by 2.2 percent as of May, so they kept pace with consumer price inflation. Precise statements about whether the new jobs being created pay more or less than average are not possible, because it takes months for these data to be assembled. But it is possible to say that new job creation, which in the early stages of the recovery was concentrated at low-paying employers such as restaurants, has now broadened to include manufacturing and other sectors where wages are higher than average.
If Mr. Kerry's message seems exaggerated now, it will seem even less convincing soon. Job markets recover in three phases: As the economy picks up, employers ask workers to put in extra hours; when they've exhausted that option, they hire new workers; when new workers become hard to find, labor scarcity pushes wages upward. We are now well into the second stage and may be entering the third.
In any case, there is not much that President Bush -- or a President Kerry -- can do to influence this process. On Friday, Mr. Kerry proposed an increase in the minimum wage, and this could help; but it would only reach workers at the very bottom, and if this policy were pushed too far, it could slow new job creation.
Mr. Kerry has clearly decided that voters want him to feel their pain, and he's willing to deliver what his audience expects from him. This may be sound politics, but it distracts from the serious criticisms of Mr. Bush's record that an opponent should be making. Mr. Bush's tax cuts have created a fiscal crisis far bigger than the nation appears to understand. Fixing it will require a style of leadership that faces tough choices -- which is not what Mr. Kerry is providing.