Monday, September 04, 2006

Iowa Policy Project: twisting & turning the numbers for their version of the greater good

It’s Labor Day in an election year, which always means the American Worker gets wrapped up in campaign politics. This year, very probably more than other years, it’s a pink elephant playing out in the standard fare; illegal immigration, health care, education, super sized government, CIETC, in fact, it’s difficult to find an issue where labor isn’t a major part of the discussion.

I guess we might be able to say: It’s the worker stupid.

More than any political year in recent memory, issues related to the quality, opportunity and growth of our labor market is shaping an election. A recent example of election year policy-ticking is from the lefties over at the Iowa Policy Project and their new study on the state of working Iowans. They’ve picked up quite a bit of press with their No Picnic report, this is the AP story published in the WCF Courier.

DES MOINES, Iowa (AP) -- Iowans are working harder but seeing little financial gain for their effort, according to nonprofit think tank.

A study by the Iowa Policy Project found that increased worker productivity contributed significantly to soaring corporate profits in the last 15 years, but the companies have not shared the windfall with workers.

"For Iowa's working families, this Labor Day offers little reason to celebrate," the group said. "Measured against its regional and national peers, Iowa wages remain low. Measured across time, those wages have stagnated for most, and fallen in recent years even as worker productivity has increased." …

The study shops the usual sad story about the state of working Iowans. The data, as expected, is creatively parsed. They mix and match categories of data, lump outliers into data sets to provide for dramatic averages, and, in the most unique plea to the average Iowan, go on to run a slice & dice on median incomes with emphasis on the income woes of Iowa's highest wage earners as compared to the rest of wealthy America.

I’d love to be able to cut & paste the study to discuss the logic; however, the IPP only allows access to a PDF file and that's not a particularly friendly format for quick comparisons. I’ll just summarize my points with notes on where to find the confusing data in the IPP report.

First. Why in the world are the researchers combining the rates of change in US based corporate profits, personal savings rates, GDP and US median salaries? They readily admit in this paper that they made up an index to make the data fit their needs: “This allows an illustration of trends from a common date from very dissimilar measures and values”. Translation: our comparison of this odd bunch of unrelated data is presented for mood and affect and our conclusions have no basis in fact. (Page 2, Figure 1 notes, No Picnic)

Second. To provide evidence of Iowa’s pathetic average income they lump all sorts of categories of employment into one data measure without qualifying that each subset is measuring the same particular variables of full time equivalent employment. The service sector category is a low wage outlier, and if you remove this outlier, Iowa's average income suddenly improves by over eight grand. It certainly makes a reader wonder what the service sector data is measuring. I’m not suggesting we ignore Iowans employed in service sector jobs; however, this wage subset must measure the same things the other subsets measure to reassure readers that the data is accurate and believable. (Page 4, Table 1, No Picnic)

Third. It is peculiar, at best, to focus on Iowa's low median wages in the top income bracket without qualifying what population we are probably measuring – health care providers and their incomes from Iowa’s pathetically low Medicare and Medicaid reimbursement. If we swap reimbursement rates with Louisiana or New York and rerun the numbers, I doubt you would see a significant median income disparity in this wage group. And only a power much greater than our own can explain why health care providers stay in Iowa. (Page 5, Figure 6, No Picnic)

Iowa does struggle with a less than dynamic job market, which makes it easy to buy the gloom & doom often shoveled at us by the Iowa Policy Project and others. But I am always & completely annoyed when calculated policy research gets too much news coverage (here, here and here).

I don’t disagree with some of their suggestions. Perhaps looking at Iowa’s minimum wage rate is reasonable, once we get an accurate analysis of real data. The issue of health care coverage must be addressed through some rational process that negotiates the complexities of our public/private health care system. And I’m all in when talking about increasing the earned income tax credits for low-income workers.

What I disagree with is the use of incomplete and unrelated data packaged in official looking, easily consumed publications that spin out factoid-like news bites to score some minor political point. I hate that crap.

Related: Peter Fisher is a tool


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