Government Statistics Are a Scam! No Wonder People are Pissed!

It’s accepted wisdom that Donald Trump and Bernie Sanders have tapped into a deep mistrust, even loathing of the system we live under. Though they obviously come from vastly different political directions , both candidates appeal to voters who feel they’ve been screwed by “the New American Way.” And I’m here to tell you they’re right. The system sucks for most people. Many people can work a full 40-hour week and still qualify for food stamps. Inflation statistics are manipulated, employment numbers hide the truth, and even if you have a bit of extra cash, putting it into a savings account gets you almost nothing. (Still safer than under a mattress, I guess.)

First let’s talk about what the government tells us about inflation. For the year 2015, it reported inflation at .1%. That’s right — 1/10th of a percent. (http://inflationdata.com/Inflation/Inflation_Rate/CurrentInflation.asp) And for those of us who have noticed the ever-declining gas prices, that might seem right. However, the reported rate tends to mask what has happened to salaries vs. expenses for the last four decades.

You see, even though production efficiency of companies has vastly improved in the last forty years, thanks mostly to technological advances and to many companies moving their manufacturing plants out of the country, U.S. workers have not seen a commensurate increase in their wages. There is no longer any kind of rise in the middle class, like the country witnessed in the 1950s.

Ever since 1979, the vast majority of American workers have seen their hourly wages stagnate or decline. This is despite real GDP growth of 149 percent and net productivity growth of 64 percent over this period. In short, the potential has existed for ample, broad-based wage growth over the last three-and-a-half decades, but these economic gains have largely bypassed the vast majority. (Source: http://www.epi.org/publication/stagnant-wages-in-2014/)

And this according to the Pew Research Center:

But after adjusting for inflation, today’s average hourly wage has just about the same purchasing power as it did in 1979, following a long slide in the 1980s and early 1990s and bumpy, inconsistent growth since then. In fact, in real terms the average wage peaked more than 40 years ago: The $4.03-an-hour rate recorded in January 1973 has the same purchasing power as $22.41 would today.

But while wages have stagnated, many costs have shot through the roof. The following graph says it pretty succinctly.

Holy @#$%&!! Medical costs and college tuitions have far outstripped many people’s abilities to pay them. When I was growing up, it was unusual for people in their 20s to live with their parents. Now close to a third of millennials haven’t left the nest.

How about employment statistics? According to the latest numbers, we’ve never had it so good. Supposedly we’ve added over 9 million jobs during President Obama’s term. In fact, our current 4.9% unemployment rate in the past would have been considered “full employment.” But how many Americans would say they’re fully employed at a wage they can live with?

A counter argument comes from Bernie Sanders in a Washington Times article from last July:

Senator Bernie Sanders said Monday that the Obama administration is not being forthright with the American people about the real unemployment rate.

The Vermont senator told a Portland, Maine, audience of 7,500 that the Labor Department’s 5.3% unemployment rate is a ruse.

“There is another set of government statistics,” the independent senator said, and The Daily Caller reported, “and that real unemployment if you include those people who have given up looking for work and the millions of others who are working part-time 20, 25 hours a week when they want to work full-time, when you put all of that together, real unemployment is 10.5 percent.”

And this is coming from a guy who caucuses with the Democrats and is running as a Democrat! (How much will this “anti-Obama” statement hurt him with traditional Democrats, particularly with African-Americans? The answer should come shortly.)

In any case, don’t be surprised if both the Trump and Sanders phenomena continue. People do not have the same expectations for the future — neither for themselves, their children, or their country — that they held in previous generations. It brings back the famous line from Network: “We’re mad as hell and we’re not going to take this anymore.” And if you want to get Biblical about it: “For they sow the wind and they shall reap the whirlwind.”