As for whose claim is more credible, based on what I know now I am inclined to believe that what you suggest is true. It doesn’t strike me as credible that premium changes are responsible for the degree of wage changes in the 1990s and 2000s. Yet I also believe there is likely a one-to-one premium-wage connection, which is really what’s relevant in the current policy debate. That doesn’t excuse individuals from exaggerating the role of premium changes. To the extent you’re correcting the record on that, I applaud it. But it is important also to make it clear that premiums do affect wages. That’s all I was trying to do, though perhaps with an unwarranted degree of “flair.”

So, what do you think of Gruber’s claim that health cost trends explain the faster wage growth in the late 1990s and the slower wage growth in the 2000s? I think it is simply untrue.

In closing, I emphasize that isn’t evident that we actually disagree about anything. I wasn’t refuting your work and you’re not claiming that of the economists I cited is suspect. I see no reason for strong words of suspicion about who might have read what. But let me ask, is there something in my post you disagree with?

First, your critique is of a straw man, emphasizing that there is a trade-off between heath care costs and wages. My paper does not address whether there is a trade-off between health care costs and wages and explicitly says so:
“One claim for the Senate excise tax has recently surfaced: that health care cost increases have been a major driving force in constraining wage growth and that wages will grow more strongly by curtailing employer health costs via the excise tax. This claim boldly asserts that health care costs are large enough (and the tradeoff with wages is large enough) to drive major changes in overall wages. This is a much stronger claim than saying that there is some tradeoff between higher health costs and wages in the total compensation package.” (underlining added).

I present evidence directly drawn from my book, The State of Working America (published by Cornell Press). Simply, the acceleration of wages in the 1990s reflects the acceleration of overall compensation and not any shift in the composition of compensation between health care and wages. I note that health care is just 7% of total compensation and can’t drive overall wage trends. And, I point to the fact that the wages of low and middle-wage workers accelerated the most and they’re the ones with the least health care coverage. The same applies to the deceleration in the 2000s.

Too bad you didn’t read the actual paper and respond to my evidence.

I think saying the work does not appear in peer-reviewed research is a bit silly, too, since the claims I’m responding to were not made in journals but in recent journalistic blogs and an op-ed. The evidence I present did appear in an academic press book.
Larry Mishel

The sad truth is my wife’s school district PPO comes brushing up against the limit already set forth in the proposed legislation. That Obama embraces this tax on a decidedly middle class person but not the public option speaks volumes about the failure of Obama and the Congressional Dems to stand up to the Republicans, Scorpion Democrats (unfortunately called Blue Dogs) and the insurance industry.