English still busy fudging the numbers

Written By: - Date published: 11:23 am, August 20th, 2010 - 24 comments
Categories: Economy, spin, wages - Tags:

Bill English thinks he has proven that wages grew just 3% under Labour and grew 15.5% under National in the 1990s. How’s he done it? By taking a ridiculous definition of wages and a very convenient timeframe.

English uses the Quarterly Employment Survey’s series of average ordinary time wages for Full-Time Equivalent workers. What’s wrong with that, you may ask. Well:

First, English is looking only at Full-Time Equivalent workers. If the average hours worked by workers changes over time, it won’t be picked up by looking only at FTEs. Under Nationals in the 1990s, the workforce became increasingly casualised and part-time, under Labour average work hours rose.

Second, English is counting only ordinary time pay. If average overtime pay or average paid overtime hours worked changes, it is not captured by looking only at ordinary time pay. Under National’s Employment Contract’s Act, overtime all but disappeared. Labour’s Employment Relations Act led to it being restored for many workers.

Third, English compares the quarter ending September 30 1999 and the quarter ending September 30 2008. In fact, Labour entered office on November 27 1999 and left on November 8 2008. The second quarter English has chosen for his comparison just so happens to end one day before Labour’s tax cuts came in. If you include the tax cuts, then even the narrow measure of FTE ordinary time wages increased 6%, not 3% (I can supply anyone who requests it, the working on any of these calculations).

When you count all employees (not just a fictional FTE), and when you count all paid hours (not just ordinary time), and when you use the tax rates when Labour entered and left power (not those at a time that suits English), then the increase in after tax real wages was 8.9% – three times greater than what English would have you believe.

And the increase under National in the 1990s is not the 15.5% English claims but 8.4%.

But that’s not all. English is ignoring the fact that employment levels change too. In fact, Labour’s biggest achievement was getting more people into work for the hours they wanted.

That’s why I look at the total wages earned by all workers and divide it by the number of people in the working age population (not the workforce, because workforce participation changes too). Gross total wages per working age person adjusted for inflation grew 9% from 1990 to 1999. From 1999 to 2008 they grew 16.2%.

Finally, English is howling that wages have gone up 8.7% since this government came to power. Well, if you only count full time workers and you don’t count overtime and you take the old tax rates, not the ones that were in force when he came to power. If you only look at a highly selective narrow set of wages and use invalid assumptions, you can prove anything.

But if you count all workers and you count all hours and you use the real tax rates, the increase is wait for it . 0.5%. Likewise if you take the best measure total wages divided by working age population then wages grown just 0.5%.

And that growth all took place in the last quarter of 2008, the quarter Labour lost power, and can be attributed to the fact that wages are sticky pay rises are often negotiated infrequently for several years ahead so they and take time to follow changes in economic growth. Since National came to power, wages per working age person have fallen 1%.

Yeah, that’s some record, Bill. Keep on inventing distortions, mate. It’s about the only thing you’re good at. Because god knows you’re doing an appalling job running the economy.

24 comments on “English still busy fudging the numbers”

  1. tc 1

    Why should he stop when Labour aren’t doing anything to counter his BS ?

    • It normally takes a couple of days for the figures and methodology to be analysed. National were careful, on Tuesday Blinglish mentioned the figure without the source and on Wednesday he mentioned the source.

      You can bet that Labour staffers have been beavering away ever since.

      I agree this is cynical appalling politics. Find some bogus data, keep saying it and then create a yelling match when the opposition tries to point out the lies.

      To the swinging voter all they see is a yelling match and many of them are not able to make an informed decision about who is right and who is wrong.

      But politics tends to be more about feeling and no amount of bluster by Blinglish can change the growing feeling that there is something rotten in the state of New Zealand.

    • Lanthanide 1.2

      That does seem to be the case.

      But it is also that case that a nice, easy to understand numbers like 3% and 15.5% stick in peoples mind. To actually prove why they are wrong takes a long analysis like Marty’s above, and even I have a hard time following the details of what Marty has used to get the real figures.

      So even if Labour were to counter his BS, actually providing the evidence for why he is wrong will put the public to sleep and they’d much rather believe English’s little numbers game than try to understand the real figures. They may even go a step further and believe that it is actually Labour that is trying to manipulate statistics, and not English.

  2. bbfloyd 2

    @Lanthanide… “they may even go a step further and believe that it is labour that is trying to manipulate statistics”. knowing where our fourth column is situated, i can well believe that any coverage of this argument will push that line.
    thank god for the internet!

  3. roger nome 3

    Well done on catching them out Marty. Another thing to note is that many workers were made to start paying for thier own gear – i.e. boots, uniforms and other expensive things) in the early 1990s where as in the 1980s such things were usually covered by the Award (country/industry-wide) agrements. So wage growth in the 1990s probably needs to be adjusted down some $10 per week to account for this.

  4. tc 4

    Maybe it’s about time fire meet fire with labour producing some BS of it’s own on the basis that if it’s good enough for the govt etc etc.

    Perhaps some childish type rhyming slogans all the kids in the MSM can remember….so don’t put it to the tune of anything made more than 10 years ago.

    • ghostwhowalksnz 4.1

      They have . The campaign against the GST increase was called ‘Axe the Tax’
      AS well labour MPs are sending out flyers with the total GST after Oct 1 for various household expenditure.
      Selling the sizzle its called.

      • Lanthanide 4.1.1

        I really find the slogan ‘Axe the Tax’ to be a bullet in the boot for Labour, because they have not said they would definitely repeal the tax when they get into government.

        captcha: excesss <- Yes, there really are 3 s's on the end there. Can you run the captcha file through a spellcheck and get these oddball ones taken out?

  5. bbfloyd 5

    sad really when good ideas and serious issues can only be discussed using 15 second sound bites. we’re getting down to the level of goldfish rapidly.
    is this a reflection on us, or the “journalists” who employ these methods of communication?

  6. marsman 6

    ‘Tell them what they want to hear then do what you want to do’
    Wasn’t that the National Party’s Election slogan?

  7. Tanz 7

    During their nine years of power, Labour refused to cut taxes, lower GSt or raise wages. Cullen even withheld the çhewing gum’ tax cuts once promised. Therefore, ‘the áxe the tax’campaign rings hollow (especially as Labour presided over a booming economy, at a time when tax cuts were much more affordable). We paid much more under Labour, everything got taxed extra, such as power bills.

    • marsman 7.1

      Yes and that money was invested in Education,Health etc.not sent overseas in interest payments.

    • aj 7.2

      “Labour refused to cut taxes”

      Wrong. Labour cut business taxes substantially.

    • Blighty 7.3

      and labour raised the minimum wage by about 80%. National opposed it every time.

      Also, National is raising GST, not Labour.

      Labour didn’t put up tax on power bills.

      And if tax cuts had been made during the boom times, our deficit would be even bigger now. Tax cuts are a permanent change to the government’s income level.

      • Labour didn’t put up tax on power bills.

        Well they pretty much did. The ETS was introduced by Labour, and was cut by National.

      • Lanthanide 7.3.2

        “Tax cuts are a permanent change to the government’s income level.”
        Careful, there. One of the RWNJ arguments for tax cuts is that tax cuts lead to higher growth, which in the long run will increase government revenue.

        This has been shown to have happened many times with different countries (don’t know any off the top of my head), but generally only when the tax cuts they’re giving are significant, like 10%+ or higher. I don’t think lopping a couple of percent off the business tax rate, after a certain point, will make much of a difference to growth. Eg taking an 85% tax rate down to 80% might make a reasonable difference, but going from 20% to 15% probably wouldn’t.

        • Blighty 7.3.2.1

          true. What I mean is that if tax cuts worth $2 billion a year, say, had been passed in 2005 then this year’s tax revenue would also be (at least) $2 billion lower.

          making structural reductions to income in response to cyclical supluses is dumb.

        • Pascal's bookie 7.3.2.2

          One of the RWNJ arguments for tax cuts is that tax cuts lead to higher growth, which in the long run will increase government revenue.

          This is a con trick. It’s stems out of Wanniski’s ‘Two Santa’ theory of politics, by way of the laffer curve and supply side economics.

          Here’s a nice long read on the history of it:

          http://www.tnr.com/article/feast-the-wingnuts

          Which is not to say that they don’t have data points to point at and say ‘SEE’, but gee. It don’t make no sense, never did. Don’t buy it.

          Take a look at this post which crunches the US data as far back as it goes, in a number of different ways.

          http://www.presimetrics.com/blog/?p=92

          I’ve pointed a few folks at that who have tried to sell me this line, but not a one of them has had anything like a sensible response to explain why shrinking the govt doesn’t produce growth when looked at in the US. It just doesn’t.

          • RedLogix 7.3.2.2.1

            Great link..thanks pb.

            The whole Laffer Curver thing was always such a total nonsense, but it stands as a testament to the power of our willingness to believe what we want to hear.

  8. Descendant Of Smith 8

    If my memory serves me right part of the reason Cullen didn’t give tax cuts because he was quite clear about following Treasury advice and during the tenure Treasury advice was never particularly forthcoming. He took a conservative (in the cautious sense of the word) position and was open about this.

    I would have to say during Cullen’s time I understood more about why things were done or not done from a cost position more than at any other time in the last 40 years. I didn’t always agree but generally I could understand what was being said and why.

    It’s also been my casual observation over the years that Treasury consistently over rates the benefits and under-estimates the costs of National policies and underrates the benefits and over-rates the costs of Labours.

    The problem for Labour is that by taking a position based on policy advice then the political aspects can sometimes be ignored. National have no such issues cause they make the policy up as they go along – or come in with a pre-meditated (visible or hidden) agenda.

  9. Tanz 9

    Well, that was good for the busineses, maybe, that they received tax cuts, but what about the coal-face workers? Labour was once the workers’ party, was it not? Was, and not is. And yes, power bills did go up under Labour, before the ETS, as did petrol and the general cost of living. Not that National are any better, but they have given tax cuts, and are cutting back on wastage spending, so that’s better than nothing, if grasping at straws.

  10. Take home wages are important, especially for those with families to feed and bills to pay. But Public services are important too. Not only did real wages grow under Labour as Marty G points out but the last Labour Government also halted the growth in the gap between rich and poor. At the same time Real GDP grew by around 25%. A significant proportion of this went into better public services: Early Childhood Education, Schools, Healthcare, infrastructure and so on. And all without excessive borrowing.
    Compare this with recent National Governments. When National is in power it is a wealthy few who benefit unequally from any gains to the economy. Most families receive little or no benefit.

    • r0b 10.1

      I see from your blog that you’re standing for Dunedin North! It will be great to have your perspective here…

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