More data ex­pos­ing the in­come stag­na­tion myth

Manila Times - - Opinion - ROBERT J. SA­MUEL­SON

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;

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