Cavuto falsely claimed real wages have increased

Written by Kurt Donaldson

Published

In a discussion with Rep. Barney Frank (D-MA) regarding income disparity in the United States, Fox News' Neil Cavuto repeatedly claimed that real wages for American workers have increased. In fact, as Frank pointed out, real wages declined in each of the past two years.


On the February 21 edition of Fox News' Your World with Neil Cavuto, during a discussion with Rep. Barney Frank (D-MA) on income disparity in the United States, host Neil Cavuto repeatedly stated, falsely, that real wages -- wages adjusted for inflation -- have increased for American workers. In fact, they have declined each of the past two years.

Cavuto claimed real wages have risen “3.3 percent.” Although it is unclear where Cavuto derived this figure, a January 31 Department of Labor release reported a real wage decline of 0.9 percent for private industry workers and a decline of 0.3 percent for state and local government workers during 2005.

Further, as The New York Times has noted, this makes the first consecutive year-to-year decline in real wages for private employees since 1990; in 2004, real wages declined 0.8 percent for private industry workers and 1.1 percent for state and local government workers.

From the February 21 edition of Fox News' Your World with Neil Cavuto:

CAVUTO: But would you argue, sir -- and I wish we had more time -- that, with a 4.7 percent unemployment, housing starts booming, factory production up, real wages, adjusted for inflation, also up, that it's not as bad --

FRANK: No, they're not.

CAVUTO: -- as you say?

FRANK: That's wrong. No, that's wrong. Real wages are not up. Real wages have stagnated. Real wages, taking inflation into account, at least -- and the Federal Reserve will tell you this -- have essentially stagnated.

CAVUTO: Last year, they were up --

FRANK: And it's what [former Federal Reserve chairman] Alan Greenspan said.

[crosstalk]

CAVUTO: Last year, they were up 3.3 percent, adjusted for inflation.

FRANK: No, not real wages. You are simply wrong, Neil. Real wages -- now --

CAVUTO: No. No.

FRANK: By the way, if you take --

CAVUTO: I'm saying, after inflation, sir, 3.3 percent.

FRANK: No. Well, we just differ. And I -- that is simply -- I think you are factually incorrect. Real wages -- nominal wages may have gone up that way, the dollars. But real wages means, when you take away inflation, they have been stagnant.