More data exposing the income stagnation myth

WASHINGTON, DC: We in the media have a problem. Actually, it’s a big problem for all of us. We have become addicted to the notion that, except for the top 1 percent or the top 10 percent, the incomes of most Americans have stagnated for decades. The problem is that, at best, this is an exaggeration and, at worst, an untruth.

A few weeks back, I wrote about a new study from the Con-

It convinced me that, although typical incomes are rising slowly, they are still rising and that, over long periods, the increases are significant. To cite one statistic from that column: Average inflation- adjusted household

$56,400 in 2000 to $64,700 in 2015. That’s a 15 percent gain.

What I didn’t know then was that the Urban Institute, a well- that much of the conventional wisdom about the wealthy is true. Compared to most Americans, their gains have soared. From 1979 to 2015, the before- tax income of the top 1 percent, expressed again in inflationadjusted dollars, roughly tripled to $1.8 million, says the CBO.

Confusion arises because a multitude of studies purport to measure the same thing -- the change in Americans’ incomes over time -- and get widely different results. In theory, the task seems easy: Correct incomes

Similar details plague much of the estimating process. Another adjustment involves taxes and government welfare programs

Social

Security, Medicare and

study is pre-tax or after-tax and whether it includes transfers. If you ignore taxes, you overstate the incomes of the wealthy; if you ignore transfers, you understate the incomes of the poor.

Likewise, the inclusion or exclusion of employer-paid health insurance determines people’s true incomes, even if workers rarely see any cash. Also, adjusting for the population’s age -- incomes vary by life stage -- affects the results.

Different assumptions lead to different conclusions. In his report, economist Rose examined median income jumped 33 percent from 1979 to 2014.

“We think the new study provides better and more meaningful numbers,” Saez said in an email.

None of this means that we should stop debating inequality. Who gets what and why are inevitable subjects for examination in a rich democratic society. By contrast with many advanced societies, income and wealth are indisputably more concentrated in the United States.

But to be useful, debate must

convenient sound bites. This is a challenge, because many Americans embrace the stagnation myth.

There are many reasons for this:

so small that they don’t register -- stagnation seems vindicated;