The WSJ really does have great news coverage, but man is their editorial team dragging the whole paper’s reputation into the ground. Via Brad DeLong, Stephen Moore (former Club for Growth president and now “a member of The Wall Street Journal’s editorial board”) actually wrote this:
The explosion of benefits paid to workers is in large part an artifact of the federal tax code, which allows employers to deduct from taxes pensions, health care, child care, and the like, but not wages.
That’s right, Stephen Moore wrote that employers cannot deduct wages from their taxable income. And no one with any authority at the WSJ — the world’s leading business news publication — noticed the mistake! This editorial was Moore’s feeble attempt to explain, in his own words, “Why have wages only crept up since 2000 during this era of unprecedented productivity gains? [Ed. note: I’m also not sure that the productivity gains since 2000 are “unprecedented” but I’ll leave that for another time.]”
Deciding to double-down on mendacity (alert readers will recall that I was recently in Las Vegas), the WSJ issued this correction:
THE AUG. 27 feature, “The Wages of Prosperity,” by Stephen Moore mistakenly reported that wages are not tax deductible to employers. The relevant sentence should have said, “Fringe benefits have exploded in recent years because benefits are tax free to employees, but wages are taxed.”
The corrected wording doesn’t pass muster as an explanation for flat wage growth, either. Benefits have been tax free to employees, and wages have not, for as long as I can remember. So the ongoing taxability (to the employee) of wages but not benefits simply cannot explain why wage growth has been flat in the last 4 years.