Joni Ernst praises Iowa economy, compares it to weak U.S. wage trend

During an Oct. 11, 2014, debate, Republican Joni Ernst and Democrat Bruce Braley -- who are facing off in one of the nation’s most pivotal Senate races -- sparred over the economy.

At one point in the debate, Ernst compared "Washington, D.C., ways" with "Iowa values."

She pointed to "records of failure coming from this administration, and followers like Congressman Braley, versus our Iowa values and the way we have conducted business in the last four years. With my good supporter, (Republican Gov.) Terry Branstad, we have implemented strong economic policy here in Iowa -- lower taxes, reduced job-killing regulations, and a balanced budget, and we are putting more of our hard-working Iowans back to work with new, good-paying jobs. Iowa has the fourth fastest-growing personal income in the United States, while nationally, the real wage has decreased over the past eight years that Congressman Braley has been there by 2.7 percent."

But we wondered: Is her statistical comparison between Iowa and the United States valid? We took a closer look. (Ernst’s campaign did not respond to an inquiry.)

'Iowa has the fourth fastest-growing personal income in the United States.'

On the first part of the claim, Ernst has a point, according to data from the Bureau of Economic Analysis, the federal government’s official source of data about personal income.

In the most recent quarter for which data is currently available -- the second quarter of 2014 -- personal income in Iowa increased by 2.4 percent over the previous quarter in Iowa. Only three states had faster growth -- Nebraska (2.7 percent), North Dakota (2.7 percent) and Idaho (2.5 percent).

But some context serves to undercut the significance of this achievement.

The statistics for such short periods of time tend to be "noisy" -- that is, the numbers bounce around a lot. As an illustration, let’s look at the statistics for the couple of quarters before the 2.4 percent increase. Moving backward one quarter at a time, personal income growth in Iowa clocked in at -0.6 percent, -0.5 percent, 1.0 percent, 0.0 percent, and -0.2 percent. This paints a very different picture of personal income growth in Iowa.

To effectively detect genuine trends, you need to study a longer period of time. Let’s take a look at how Iowa did for full-year periods rather than quarters.

Between full-year 2012 and full-year 2013, Iowa had the 18th-highest percentage change in personal income among the 50 states, which is quite a bit weaker than the fourth-place finish Ernst cited.

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Iowa fared even more poorly between 2011 and 2012, when the state ranked 43rd nationally. This, too, is quite a different picture than the one she painted in the debate.

'Nationally, the real wage has decreased over the past eight years … by 2.7 percent.'

Not if you look at median weekly earnings of full-time wage and salary workers.

According to the Bureau of Labor Statistics, the median weekly wage nationally in 2013 -- the most recent full year available -- was $776, up from $671 in 2008. Once you adjust the 2006 figure for inflation in 2013 dollars, it works out to be $775.37 -- meaning there was basically no change at all between 2006 and 2013. It’s virtually the same if you inflation-adjust the data for 2005 -- there’s no significant change in median weekly earnings between 2005 and 2013.

"What I always say when writing about wage developments, at least after the number of employed Americans started rising again in 2010, is that real wages are basically flat," said Gary Burtless, an economist with the Brookings Institution.

Meanwhile, the comparison Ernst offered -- of strong Iowa growth amid national stagnation -- is flawed, for two reasons.

• She’s comparing two different statistics. Personal income and real wages aren’t the same thing. Real wages are a component of personal income, but not the only one. They are derived from separate data sources, and they use very different methodologies.

• She’s comparing two different periods of time. You can’t simply compare the most recent quarter with the past eight years and get a meaningful contrast. It’s comparing apples and oranges.

All this said, Ernst does have a point: Real wages have grown faster in Iowa over the past eight years then they have nationally. If you start the clock in 2005, real wages in Iowa increased by 1.6 percent by 2013, and if you start the clock in 2006, they increased by 1.8 percent by 2013. And she also has a point that stagnant real earnings growth over eight years is nothing to be proud of, even if she exaggerates by blaming this situation on Braley. (Lots of factors shape the economy beyond just one minority-party member of Congress.)

Our ruling

Ernst said that "Iowa has the fourth fastest-growing personal income in the United States, while nationally, the real wage has decreased over the past eight years that Congressman Braley has been there by 2.7 percent."

Iowa did rank fourth nationally in personal income growth, but only for the most recent quarter, and when compared to earlier quarters, this high rate seems like a statistical anomaly. Meanwhile, she’s wrong that real wages declined by 2.7 percent over the past eight years, although she does have a point that Iowa did somewhat better on this score than did the nation as a whole.

Equally problematic, Ernst’s comparison between Iowa’s economy and the nation’s is questionable because it appears to compare quarterly data for one statistic to eight years of a different statistic. Economists say this isn’t a sound method. The claim contains an element of truth but ignores critical facts that would give a different impression, so we rate it Mostly False.