I’m a contractor and so I don’t pay unemployment insurance and neither do my employers. Guess what? If I fall out of work, I don’t get unemployment benefits. That doesn’t sound like a welfare program to me, either. It sounds like insurance. (Now you could argue that the unemployment benefits extension passed to help folks through this recession is a form of welfare, but I’m guessing CNBC’s study doesn’t make any such distinction. I don’t know because it didn’t publish the data for us to see ourselves.) Moreover, at least 2 percent of those government “handouts” in the $2.2 trillion number are veterans’ benefits.
So CNBC’s welfare and “handouts” number, by any normal standard, is actually far, far lower than even that 18 percent I calculated three paragraphs up, much less its 35 percent number. If you exclude Social Security and veterans’ benefits, as you should, we’re creeping down toward 10 percent.
But too late, this one’s already hit the echo chamber. Here’s Ben Shapiro of Town Hall:
This week, CNBC reported that social welfare payments now comprise 35 percent of wages and salaries this year. In other words, more than a third of all people receiving “paychecks” are receiving government redistribution checks via welfare, Social Security, Medicare or unemployment.
This one will presumably be bouncing around the message boards and chain emails for years.
I smelled rotten statistics and bad math as well when I encountered this "news" story and looked into the numbers as well. As viral as this story has been, I have only found two people who have questioned the numbers. You are one of them. Kudos!
#1 Posted by Mari, CJR on Thu 10 Mar 2011 at 11:28 AM
Another lefty from an ivory tower we hear from trying to confuse people with arithmatic. Earned income on the bottom, transfer payments on the top. It does come out to almost 34%. So the title would be correct; handouts are about 1/3 of wages which does not include transfer payments. I'll say it once more, transfer payments are not included in the denominator becuase they are not earned income.
#2 Posted by matt, CJR on Thu 10 Mar 2011 at 03:11 PM
When was this story on Fast Money? It is not the kind of story Fast Money would have either the time or temperment to every run.
#3 Posted by ron Fell, CJR on Thu 10 Mar 2011 at 03:13 PM
On further review, I think you guys can make mistakes too. Looks like this piece by Melloy might have been written by him for the website, not broadcast, on the cable channel, and your headline might be a little misleading in that no one reads the CNBC website, but the 5pm daily broadcast is one fast-paced market scan that is one of the channels most watchable hours.finely tion
#4 Posted by ron Fell, CJR on Thu 10 Mar 2011 at 03:19 PM
Matt, I explained at length why it makes zero sense to use wages and salaries on the bottom and transfers on the top of the fraction.
Ron, click on the link. It takes you to the CNBC website under the Fast Money heading.
Also nobody reads that website other than the three-and-a-half million unique visitors a month who read that website. http://siteanalytics.compete.com/cnbc.com/
http://www.cnbc.com/id/41969508/
#5 Posted by Ryan Chittum, CJR on Thu 10 Mar 2011 at 04:15 PM
I agree with Matt 1,000 percent!
I'm sick and tired of the these Liberal Biased Ivory Tower Effette Eastern Media Elites who think they "own" math, always "trying to confuse people with arithmatic."
If I want to say 2+2=5, that's my right as an American!!!
#6 Posted by mwh, CJR on Thu 10 Mar 2011 at 04:58 PM
That's right! Who does Ryan think he is with his "analysis" and his demonstrated mastery of "statistical analysis," and putting his words in an order that makes "sense" and "communicates" a point? Jeesh.
#7 Posted by Milwauken, CJR on Thu 10 Mar 2011 at 09:38 PM
Ugly. Welcome to the party, old man Jack Cafferty:
http://videocafe.crooksandliars.com/heather/jack-cafferty-calls-social-security-social
#8 Posted by Thimbles, CJR on Thu 10 Mar 2011 at 11:41 PM
Jack Cafferty at the CNN's Cafferty File
did an ugly editorial calling SS social welfare.
His viewer response only had one tea Bircher
yelling *sochallism* which was surprising.
#9 Posted by Jerry, CJR on Fri 11 Mar 2011 at 01:24 PM
Jack Cafferty at the CNN's Cafferty File
did an ugly editorial calling SS social welfare.
His viewer response only had one tea Bircher
yelling *sochallism* which was surprising.
#10 Posted by Jerry, CJR on Fri 11 Mar 2011 at 01:27 PM
While someone is talking about handouts, add up the subsidies that go to oil companies and other corporations that end up paying no tax!!
I'll switch my pension income with their subsidies. I'm sure they'd like it at $ 23,000 .annually.
#11 Posted by Patricia , CJR on Fri 11 Mar 2011 at 07:14 PM
Matt--politics aside, I'm pretty sure that when you do a percentage calculation, it's key to have the total in the denominator.
Otherwise, it would be like saying that "50% of the fruit is apples" when you have 3 apples and 6 oranges.
#12 Posted by AH, CJR on Fri 11 Mar 2011 at 07:20 PM
Ryan, you say it makes zero sense to show the ratio or transfer payments to wages, but I don't agree. It's at to know how these items relate. Note that the lion's share of these transfer payments come from taxes and assessments taken from wages.
Even if you were right and it was a senseless statistic, it still wouldn't be false. As Matt already pointed out, these various sources reported that the ratio of transfer payments to wages was over 1/3 or around 35%, and those reports were accurate.
#13 Posted by David in Cal, CJR on Wed 16 Mar 2011 at 11:25 AM