The Washington Post Wants You Think the Economy Is Awful #45,706

June 23, 2024

Even though we have had the longest streak of below 4.0 percent unemployment in 70 years, and real wages are rising, especially at the bottom end of the wage distribution, the major media outlets insist the economy is terrible. The Washington Post is setting the pace with the lead story on its homepage headlined “Millennials had it bad financially, but Gen Z may have it worse.”

This one gets pretty creative in telling us how Gen Z has it awful. My favorite is a graph that shows that recent college grads now have a higher unemployment rate than the overall average for all workers. Yeah, that is really horrible. Think of how young college grads must be suffering because older people and those who didn’t graduate college have jobs. Can you feel the hardship?

If we look at the graph, we see that the unemployment rate for recent college grads is actually relatively low at 4.3 percent. This is lower than it was for much of the 1990s, the 2000s, and most of the decade before the pandemic. So, does the Post want us to believe that young college grads are suffering not because they face high unemployment, but because other workers face low unemployment?

The other part of this story that the Post chose not to point out is that, given the relatively low unemployment rate for young people as a whole, the slightly higher rate for college grads means that those without college degrees have unusually low rates. Since most young people don’t have college degrees, this sounds like a good story for Gen Z.

The piece also features a graph showing that inflation adjusted insurance costs and housing costs have outpaced real wage growth, while real food prices have roughly kept even. There are a few points to be made on this graph.

First, it is not clear what housing index they are using. The graph shows real housing costs rising by 115 percent since 1985. The CPI rent index shows real rent increasing by less than 30 percent over this period.

The second point is that it shows real auto insurance costs rising by 145 percent over this period. This is a gross measure of what people pay for insurance, it does not subtract out what they get paid back in claims. The Commerce Department uses a net measure, which shows a still substantial, but considerably smaller 63 percent real increase.

Much of the reason that insurance premiums have gone up so much is that insurers are seeing more and larger claims. Some of this is due to more expensive cars and some of it is due to more climate-related claims, like vehicles being destroyed by fires or flooding. Anyhow, if we have to pay more for insurance because climate change is imposing more damage, that is probably not inflation as we conventionally think of it.

The final point is that the graph shows real wages have risen (as in up) by 33 percent since 1985. Remember, this is a piece that is telling us how bad young people have it today compared to their elders, but it shows us that their real wages are one-third higher than what people got four decades ago.

I would be happy to support the argument that we should have seen faster wage growth. That would have been the case if there had not been so much upward redistribution over the last four decades, but let’s not get caught up in the which-way-is-up problem. Higher real wages mean, as a first approximation, people are better off. That is the wrong direction for the Washington Post’s suffering Gen Z story.

One final point, while the piece spends considerable time on the debt of Generation Z, it chose not to mention President Biden’s income-driven repayment plan for student loan debt. Under this plan, a single person earning less than $32k a year would pay nothing back on their loans and a person earning $40k a year would pay just $60 a month. This should ensure that student loan debt is not a major burden for most borrowers.

For some reason, reporters writing on student debt almost never seem to mention the income-driven repayment plan. This is a bit mind-boggling, but I suppose if you’re trying to pitch the suffering Gen Z story, it is a convenient fact to ignore.


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