Conservative group takes on Hillary Clinton’s favorite chart

The Democratic front-runner’s chart showing that wages have not kept up with workers’ productivity is based on “faulty analysis,” according to the American Action Forum, a right-of-center nonprofit.

Instead, a new analysis from the think tank’s Ben Gitis and Jacqueline Varas says “it is apparent that compensation and productivity have grown hand-in-hand” when the correct statistics are used.

In July, Clinton said that reconnecting hard work and success was key to her agenda.

She cited a “basic bargain: If you work hard and do your part, you should be able to get ahead.”

“But over the past several decades,” she warned, “that bargain has eroded. Our job is to make it strong again.”

During her speech, her campaign released a graph showing productivity and wage growth decoupling around the late 1970s, with wage growth growing slowly while productivity shoots up.

The chart appears to show that American workers are not enjoying the benefits of economic growth and innovation in recent decades, resulting in higher inequality.

The graph appears to be based on data from the Economic Policy Institute, a left-of-center think tank that has found that, from 1979 to 2013, productivity rose 64.9 percent while hourly compensation grew 8.2 percent.

But that’s an apples-to-oranges comparison, the American Action Forum counters.

They argue that the Economic Policy Institute chart makes three wrong comparisons: First, it compares labor productivity for the entire economy to wages for only private-sector workers.

Second, it compares total labor productivity to compensation only for “production and nonsupervisory workers,” a category of workers defined by the Bureau of Labor Statistics that represents about four-fifths of the private-sector workforce.

Lastly, it uses two different measures of inflation for each line: The implicit price deflator for productivity, but the Consumer Price Index for compensation.

Those three errors make compensation appear to be less than it really is. When the think tank corrected them, compensation was up 161 percent since 1964, nearly as much as the 180 percent growth in productivity.

That shows, the nonprofit concludes, that worker compensation is growing with productivity and that workers aren’t being short-changed.

“Most troubling, these assertions inspire misguided policies,” they write of Clinton’s chart.

The forum is the think-tank arm of the American Action Network, a political nonprofit aligned with House Republican leadership.