Quote:
Originally Posted by
Loyal Rogue
Here is a more recent and not-so-vague quote from a PEW economic mobility study in 2008,
"Nearly three-quarters of individuals born into the bottom half of the income distribution improved their economic standing relative to their parents by at least one percentile, yet less than half moved up more than 20 percentiles, and fewer than two in five moved into the top half of the distribution, according to a new report issued by The Economic Mobility Project, an initiative of The Pew Charitable Trusts."
Most people doing better than their parents did is supposed to be a bad thing?
Quote:
P&S conclude that if a different price indicator were used and adjustments were made for the missing incomes, changing family sizes, and rising benefits, “from 1973 to 2000, the average income of the bottom 99% would have grown by about 50% in real terms instead of stagnating (as displayed on the figure above.” This remarkable difference is rarely acknowledged by the many writers who cite P&S findings.
This is not the only problem with IRS data: there are close to 30 percent more IRS “filers” than families, and most of these extra filers have very low incomes. As a result, an-IRS based poverty rate would be nearly triple the official rate and the IRS median income level is 40 percent lower than the comparable figure derived from Census data. Researchers who use IRS data concur that the only logical explanation for this discrepancy is that many income-earning minors file separately from their parents in order to avoid paying taxes at the parents’ higher rates. By contrast, the Census approach of combining the income of all family members into a common pool would mean that the income of these extra filers should actually be added to the incomes of the rest of their families.
Why are these criticisms so important? Because so many journalists and editorialists have cited the P&S findings as evidence of economic stagnation among all but the super-rich. Among them are such well-known critics as Paul Krugman, Robert Reich, Robert Kuttner, Peter Gosselin, and Kevin Phillips.
Former New York Times reporter David Cay Johnston cited these results in several front-page news stories, as well as featuring them in his recent best-selling book Free Lunch, where he writes that the average income of the bottom 90 percent of the population had an income of $29,000 in 2005, which was almost $4,000 (or $75 a week) less than the comparable figure in 1973.
In some ways, it is hard to believe that anyone could write that the average income of the bottom 90% of households in 2005 was under $30,000. The real number according to the, the annual current population surveys (the gold standard for studies on socioeconomic conditions) is 81 percent higher—over $52,400. Further, instead of dropping by $4,000 over these years, the average incomes of the bottom 90 percent increased by $8,000.
