January 20, 2019

The Myth of Income Stagnation

“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% or the top 10%, 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 Congressional Budget Office (CBO). 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 incomes for the middle fifth of Americans (by income) rose from $56,400 in 2000 to $64,700 in 2015. That’s a 15% gain.

What I didn’t know then was that the Urban Institute, a well-known think tank, was finishing a complementary report by economist Stephen J. Rose. The report, now available, compares various income estimates and reaches a similar conclusion: Most Americans have realized small annual increases that ultimately cumulated into meaningful gains.”

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