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What presidential candidates need to understand about income inequality
What presidential candidates need to understand about income inequality
5/21/2015
Before I sat down with President Obama to talk about trade a few weeks ago, I called a few economists with different perspectives. One of them was Robert Shapiro, a longtime Democratic advisor, who urged me to look at a paper he had recently written about income growth over the last several presidencies. I did.
...The story we’re always told about incomes in America is one of “stagnation.” On both ends of the political spectrum, there’s an accepted wisdom that income growth for most Americans began to slow in the 1970s and has essentially flattened out. The American Dream is imperiled, our candidates are always telling us, because it’s getting harder and harder for new generations of middle-class Americans to do better financially than their parents did.
Shapiro’s exhaustive analysis tells a much more complicated — and ultimately more disheartening — story.
... It turns out, first of all, that most American families were actually doing a lot better in the 1980s and 1990s than we thought they were. The aggregate median household income — that is, the number we’re used to citing, which lumps everyone together — was about $46,000 in 1982 and had risen to almost $55,000 20 years later. That’s just a little less than 20 percent higher, or an average of less than 1 percent growth per year.
...But mostly what we’re seeing, Shapiro says, is the inevitable result of a global marketplace that forces industry to keep its prices low and its dividends high in order to compete for customers and capital, even as fixed costs continue to rise.
... After 2002, however, household incomes did more than flatten; they essentially cratered for middle-aged and older Americans. That same group whose income had risen by something like 70 percent under Reagan and Clinton experienced a drop of about 19 percent over the next decade. If you were in your early 50s at the start of the Bush years, generally speaking, your income fell by an average of about 30 percent.
Only the youngest Americans were lucky enough to see their incomes stagnate under George W. Bush and Barack Obama. And while college graduates did better than less educated Americans, their gains were marginal. Most American households tumbled backward.
But Shapiro shows that if you were the head of a household and were between the ages of 25 and 29 in 1982, your income grew over the next two decades, on average, by more than 70 percent, from $45,440 to $77,543.
...To put this in its plainest terms, the American Dream that’s at the center of our national identity is not, in fact, in danger of slipping away. For most Americans, it’s already long gone, like Oldsmobiles and New Coke.
https://www.yahoo.com/politics/what-presidential-candidates-need-to-understand-119490857141.html
5/21/2015
Before I sat down with President Obama to talk about trade a few weeks ago, I called a few economists with different perspectives. One of them was Robert Shapiro, a longtime Democratic advisor, who urged me to look at a paper he had recently written about income growth over the last several presidencies. I did.
...The story we’re always told about incomes in America is one of “stagnation.” On both ends of the political spectrum, there’s an accepted wisdom that income growth for most Americans began to slow in the 1970s and has essentially flattened out. The American Dream is imperiled, our candidates are always telling us, because it’s getting harder and harder for new generations of middle-class Americans to do better financially than their parents did.
Shapiro’s exhaustive analysis tells a much more complicated — and ultimately more disheartening — story.
... It turns out, first of all, that most American families were actually doing a lot better in the 1980s and 1990s than we thought they were. The aggregate median household income — that is, the number we’re used to citing, which lumps everyone together — was about $46,000 in 1982 and had risen to almost $55,000 20 years later. That’s just a little less than 20 percent higher, or an average of less than 1 percent growth per year.
...But mostly what we’re seeing, Shapiro says, is the inevitable result of a global marketplace that forces industry to keep its prices low and its dividends high in order to compete for customers and capital, even as fixed costs continue to rise.
... After 2002, however, household incomes did more than flatten; they essentially cratered for middle-aged and older Americans. That same group whose income had risen by something like 70 percent under Reagan and Clinton experienced a drop of about 19 percent over the next decade. If you were in your early 50s at the start of the Bush years, generally speaking, your income fell by an average of about 30 percent.
Only the youngest Americans were lucky enough to see their incomes stagnate under George W. Bush and Barack Obama. And while college graduates did better than less educated Americans, their gains were marginal. Most American households tumbled backward.
But Shapiro shows that if you were the head of a household and were between the ages of 25 and 29 in 1982, your income grew over the next two decades, on average, by more than 70 percent, from $45,440 to $77,543.
...To put this in its plainest terms, the American Dream that’s at the center of our national identity is not, in fact, in danger of slipping away. For most Americans, it’s already long gone, like Oldsmobiles and New Coke.
https://www.yahoo.com/politics/what-presidential-candidates-need-to-understand-119490857141.html
You really have to read the entire article to get the complexities. And then Shapiro's paper as well. Globalization has stolen the American Dream.
25 replies
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We had government and economists tell us one story, while our gut was telling us something entirely different. Yet, at least a large portion of us listened to them becaue (a) there were so many of them who had megaphones; and (b) they allegedly knew better than we did.
But, every time you read or heard some rosy story, didn't something inside say 
