I think news editors must wince every time a story about economics crosses their desks. Given what passes for economic acumen in this country, they probably won’t understand it. What’s more, they certainly won’t want a writer to tease it apart and present it in simple terms. Articles that explain can cause boredom, and that’s death in the news biz. Nothing for an editor to do but assign a writer who will put some zip into it. Inevitably, with zip comes slant and very likely misdirection.
A case in point is last month’s story about a report by the Congressional Budget Office—that’s CBO for short—on how Obamacare will affect employment. The CBO is a nonpartisan agency that’s beholden to Congress and reports to it on economic matters. Naturally, one party or the other will question the CBO’s commitment to nonpartisanship if it doesn’t butter its bread on both sides, so it must butter whether that serves clarity or not. In the Obamacare report, the CBO noted that a number of the newly insured would cut back their working hours—say, go from full-time to part-time jobs—because they could now do so without losing their health insurance. Unfortunately, the CBO report added an unhelpful thought: the number of reduced hours overall would be the equivalent of taking 2 million full-time jobs out of the workforce over the next 3 years.
How did the news media react to the bonehead equation of voluntarily reduced hours with lost full-time jobs? Most of them led with it! From the New York Times: “Health Law Is Seen as Leading Some to Leave Work Force.” (Not reduce hours, but leave.) From Reuters: “Obamacare to cut work hours by equivalent of 2 million jobs.” (An absurd reduction of the story.) From CBS News: “Obamacare will shrink workforce by 2 million report says.” (Ditto.) To be fair, some outlets did point out it was a new sense of health security that would lead to somewhat lower work hours, but none I saw chose a sober, objective headline like “Newly insured may choose to work less.”
Beyond these failings, the news media missed an opportunity to contrast the CBO’s point of view with those of esteemed economists. By doing so, they could have brought a number of thoughtful questions to the fore. For example: Won’t Obamacare create a greater demand for health services, and won’t a greater demand create more jobs? Won’t health security lead to less nervousness about devastating expenses, and might more confidence lead to more spending, meaning still more jobs? Isn’t it possible that the effects of Obamacare on employment will be, at worst, offsetting, creating little more than a swell of statistical noise? No, the average news consumer saw none of this. Journalism in America doesn’t offer a “marketplace of ideas.”
It was a busy month for the CBO. Just two weeks later, they reported on the president’s proposal to raise the minimum wage to $10.10 an hour by 2016. Their bread was exceptionally well buttered this time. On one side, they asserted the new minimum would benefit 16 million low-wage workers. Of these, 900,000 would be lifted out of poverty. Another 8 million with higher-than-minimum salaries would get a raise from a “ripple effect.” On the other side, they projected that somewhere between very few and 2 million workers would lose their jobs as small businesses tried to compensate for higher labor costs. They understood a prediction of such scope was meaningless and so restated it a different way: the most probable job loss would be about 500,000. My reaction was, this is a big endorsement mixed with the possibility of a small downside. So how did the news media headline it? With the downside, of course, because bad news is more potent than good news. From USA Today: “CBO report: Minimum wage hike could cost 500,000 jobs.” From the ABC News website: “Minimum Wage Hike Could Cost 500K Jobs, CBO Reports.” From the Chicago Tribune: “U.S. minimum wage hike would kill jobs but alleviate poverty: CBO.” (Here we get a slight positive, “alleviate poverty,” after a big negative, “kill jobs”—just the opposite impression from what the CBO report conveys.)
From what I’ve read, it’s not at all clear that a gradual minimum wage increase, coming after years of wage stagnation, is certain to cause unemployment, even modest unemployment. Surely the public deserves to see arguments that raise this doubt. Trained economists can make them quite well, and even I know some of them. For example, don’t people who earn more spend more, which causes a greater demand for goods and services? And isn’t a greater supply required to satisfy a greater demand? And isn’t it generally necessary to hire more people to produce a greater supply? (I say “generally” because you can increase supply somewhat by making people work more productively. However, people can be stretched only so far.) Again, the public got only the surface story, not the substrata. And it’s a warped surface at that!
In 1787, the British press began covering sessions of the House of Commons. Edmund Burke made a speech that referred to them as the “Fourth Estate,” anointing the press as a coequal with the other “estates”—the clergy, nobility, and commoners—as pillars of the realm. He understood that the future of the nation would be guided by those who delivered the news and explained its implications. Sadly, we cannot bestow the same honor on today’s news media. When you turn on the evening news and hear a report of a panda birth at the National Zoo or of the world’s largest ball of twine or of the CBO’s latest opinions, you’re not watching the work of Fourth Estate. You’re watching the work of the Failed Estate.
The Scratching Post 