The average (median) worker does not earn the (arithmetic) average wage

Eryk Bagshaw, recently[1] appointed economics correspondent for Fairfax, is certainly aware of that. In fact, mentions it right near the end of this scare story about the effects of Labor’s rejection of the second-stage of the Morrison government’s legislated tax cuts. But that didn’t stop the Fairfax subeditor running his article under the headline “Average full-time workers to be $1000 a year worse off under Labor”

To spell it out, the trick here is that Bagshaw is looking at workers who earn between $90,000 [the arithmetic mean of wages for full time workers} and $120,000. He estimates that there are about 1.6 million such workers. That’s a bit over 10 per cent of the workforce (about 13 million people). As he admits, the median full time wage is well below this, and the median wage for all workers lower again. Once pensioners and welfare recipients are taken into account, it’s evident that Bagshaw’s “average workers” are well towards the top end of the income distribution.

This is amusing since I had a previous run-in with Bagshaw over this very issue of headlines. On that occasion, Bagshaw was scathing about a sloppily written ACTU press release, which ended up with a totally inaccurate headline. I don’t think a defence of innocent error is available here. Bagshaw’s story is written in a way that would lead any casual reader to make the same inference as the subeditor. Moreover, there’s no obvious reason why workers receiving between $90K and $120K should be of more interest than any decile of the workforce. Certainly they aren’t average in any meaningful sense. So, without the misleading phrasing, the story would probably have been spiked.


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Why headlines are always wrong*

Update: After some pushing, I got the headline fixed.

Original post follows

I’ve complained in the past about the fact that writers in newspapers and magazines generally don’t get to choose their headlines. I’ve read that this is a hangover from the days of hot metal typesetting, when the headline had to be chosen to fit the layout of the paper, determined at the last minute by the sub-editors. Whatever the case, the tradition has endured.

I’ve rarely been happy with the headlines chosen for me, but most of the time they are not bad enough for me to complain. Today was an exception. Following my interview on the dairy industry, which was the subject of this post, the ABC ran a story which focused on a simple piece of arithmetic, quoted as follows

Professor of economics at the University of Queensland John Quiggin said if milk prices kept up with inflation, consumers would have to fork out an extra 46 cents a litre.
“If you maintained the real price of milk with 20 per cent inflation [across nine years] that would be around $1.56 today,” he said.
“Of course there is no economic law that says that all prices should rise at the same rate.

That was accurate as far as it went, though of course none of the points I actually wanted to make got through. The problem was with the subeditors, who highlight the sentence ending “$1.56 today”, and ran the piece under the headline Economics professor says milk should be $1.56 a litre in 2019, something dairy industry hopes for. I’ve complained, but nothing is going to happen on a Sunday, and probably nothing will be done anyway.

This reminds me of a more tangled case, which involved me in a silly Twitter fight recently.


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Brexit and the oral culture of journalism

For anyone following the trainwreck of Brexit, Richard North’s eureferendum.com is an indispensable source. North was (and, at least in principle, still is) a Leave supporter, proposing a model called Flexcit (roughly, the Norway/EFTA/EEA option), but has long since broken with May, Johnson and the rest of the Brexiteers.

North is scathing about the low level of analysis of just about everyone involved in the debate, the only consistent exceptions being Pete North (not sure if or how they are related) and his former employer Christopher Booker who, despite being on the denialist fringe of the climate debate, seems to make sense on Brexit.

I’ll ask a question about Brexit over the fold, but I mainly wanted to cite this important observation. Attacking a recent report, he writes that the author

proudly announces that his piece “is based on conversations” with certain prestigious persons, rather than to reference to primary sources. This so typifies the “oral culture” approach of what passes for journalism, with not even a passing reference to the Commission’s Notices to Stakeholders.

It is probably this superficial, prestige-driven approach which defines the popular Efta/EEA narrative. The average journalist would have a nose-bleed if they ever had to look at a copy of the EEA Agreement. In-depth “research” means looking up back copies of the Financial Times. As for the politicians, they seem to make it up as they go along.

The point about the oral culture is spot-on, I think. I remember observing long ago that journalists, unlike bloggers, assume that they can ring anyone up about anything and expect an answer. That has a huge influence on the way the media work.

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Tweet trouble

According to Chris Mitchell at the Oz (paywalled, I think), I’m the mastermind (or at least a mastermind) behind the original version of Emma Alberici’s now-rewritten analysis of company tax cuts. Here’s Mitchell

In Alberici’s case a lot of weight was given to left-wing academic John Quiggin and economist Saul Eslake, a prominent commentator whose position on the central question — do corporate tax cuts eventually trickle down as increased wages? — seems to have changed over the years.

It’s nice to be so influential, but there’s just one problem. In Alberici’s original article (here), I don’t get a mention.

But maybe Alberici is presenting my ideas second-hand. Sadly, the arguments I’ve put forward on the topic don’t get a run either. Here’s the summary of my piece in Crikey (also paywalled, I fear)

Optimistic tax models put the average Australian at being 0.1% better off under the proposed company tax cuts. And the good news is they’ll only have to wait 25 years for that tiny benefit to appear!

Alberici doesn’t mention this.

So how did I get top billing? The villain, as usual, is social media. Twitter user (tweep?) Matt K asked me whether there were any mistakes in the Alberici piece and I said no. Apart from a couple of replies to further questions, that was my entire contribution, as you can see from the thread of the conversation. But, as they say nowadays, it went viral, at least insofar as a comment on tax policy can go viral.

Before I knew it, I was being attacked from all directions. Helen Razer said I was a bogus “leftist”, while Aaron Patrick at the Fin hit me from the right because I mentioned Marx and Engels in the draft introduction to my book. To be fair, Razer wrote to explain her position. By contrast, Patrick’s whole technique is verballing and out-of-context gotchas’, so I don’t expect that to change.

I do get a passing mention in the revised column, but since my name is mis-spelt, I think it’s safe to assume that I’m not a primary source. Obviously, Mitchell didn’t get around to reading the original (maybe the research skillz of Newscorp aren’t up to locating it) and assumed that I was quoted there.

While I’m on the subject, Mitchell had an amazing piece a while back (not worth linking, since Paul Kelly and Mark Latham have already trodden this ground many times) about the end of freedom of speech in Australia. The burden of it is that decent, ordinary Australians like Mitchell and Andrew Bolt, limited as they are to major national newspapers and broadcast media, can’t say what they think about Muslims, lefties and so on any more without people on Twitter saying what they think about Mitchell and Bolt. As Tim Dunlop says in a similar context, any less self-reflection and they’d be vampires.

Gotcha!

Like most people, I don’t like being suckered. But I was well and truly suckered by Aaron Patrick of the Australian Financial Review today. Patrick wrote to me saying he was doing a feature article on penalty rates and I gave him a long interview setting out my position. In particular, I made the point that, if (say) a 10 per cent reduction in wages produced only a 1 per cent increase in hours of work demanded by employers, the average worker would end up doing more work for less money. This is a standard point in the analysis of minimum wages.

As it turned out, I was wasting my breath. All Patrick wanted was the concession that lower wages might produce some increase in employment, thereby justifying the Gotcha! headline ‘Even union economists accept cutting penalty rates creates jobs’.

Given my history with the Fin, I shouldn’t have been surprised, I guess. But my general experience, even since Michael Stutchbury became editor, has been that most AFR journalists are straightforward professionals.

Also, most journalists these days understand that the game has changed with the rise of blogs and social media. Twenty years ago, the only response to a shoddy smear like Patrick’s would be a letter to the editor, which might or might not get published long after the event. Now, I can respond here and on Twitter, Facebook and so on. My readership might not be as big as the measured circulation of the AFR, but, after you deduct all the people who only look at the business pages, it’s not that different.

In any case, Patrick and the Fin are on a hiding to nothing with this one. Most people work for a living, and most have worked out by now that when the bosses talk about flexibility and productivity, they mean “work more for less”.