Lies, Damn Lies, and Statistics

According to statistics, the average French worker has more productivity than the average American worker. But as George Mason University’s Don Boudreaux notes, averages often are misleading. His recent Christian Science Monitor article explains that the average worker in some nations is more productive only because people with fewer skills do not have jobs and thus are not workers — and that’s hardly a sign of a healthy economy:

[W]hat would happen to average worker productivity if Uncle Sam were to impose a minimum wage of $500 per hour? The correct answer is: “The productivity of the average worker would skyrocket!” This achievement, however, would be no cause for celebration, for this higher productivity would result chiefly from the firing of all workers incapable of producing at least $500 worth of output per hour. Measured productivity in America would jump impressively even as the U.S. economy tanked and most workers were cast into lasting unemployment.

…For example, if teenagers, immigrants, and other lower-skilled workers start entering the labor force in larger numbers, they will lower the average wage rate because lower-skilled workers generally are paid lower wages than those paid to higher-skilled workers. This fall in the average wage rate, however, does not signal that workers’ fortunes are declining. In fact, in this case it is evidence of economic health: The economy is sufficiently flexible to provide jobs to workers who haven’t yet acquired valuable skills. A less-flexible economy, such as France’s, which makes it difficult for lower-skilled workers to find jobs, will not “suffer” any such fall in its average wage rate. But that fact, surely, is small comfort to the many poor people left unemployed.