Wednesday, September 03, 2008

Samuelson: Mixed-Bag Economic Results

A pretty good (fair and balanced!) look at the Census Bureau stats from Samuelson of the WaPo.

The Census Bureau found that median household income in 2007 was $50,233. Though up 1.3 percent from 2006, that was still less than the peak of $50,641 in 1999. (The median is the midpoint; all figures are in inflation-adjusted 2007 dollars.) Meanwhile, the share of people below the government's poverty line -- about $21,000 for a family of four -- was 12.5 percent, up from 11.3 percent in 2000. Finally, the ranks of the uninsured have increased in six of the past eight years. They're now about 15 percent of the population.

That sounds not-too-hot. But then, there are liars, damned liars, and statistics.

First, comparisons are made to an artificially high benchmark -- the late 1990s "tech bubble."

If one selects 1997 as a basis, then we've had 10 years of growing income, says Samuelson.

Second, immigration distorts commonly cited statistics

Obviously, when several million people take low-pay/low-skilled jobs, the median will suffer.

Third, the census figures understate income gains by not counting fringe benefits.

TOTAL compensation has gone up quite a bit--but health costs and SS tax increases have eaten up a bunch of the money before it got to anyone's pocketbook.

(As an aside, WEAC members don't want you to know what THEIR health-insurance policies actually cost the taxpayer. But they'll be happy to talk about horrible paychecks...)

Samuelson is not an optimist:

...a continuation of present trends would imperil future prosperity.

If health-care spending remains uncontrolled, Americans will see more of their compensation diverted from take-home pay into insurance that mainly benefits (as insurance should) a small proportion of very sick people. Similarly, if the immigration of low-skilled workers continues unabated -- whether they're legal or illegal -- the ranks of the poor will swell, as will the uninsured or the costs of providing government insurance.

Given the 2008 economy -- higher unemployment and inflation -- next year's census numbers will probably be worse than this year's. But it's the long-term threats that really matter.
Obama and McCain don't confront them realistically because doing so would be unpopular and there's no strong public case for action. That's the biggest cost of misreading the economic report card.

Surprise!! Politicians acting...spinelessly!!

HT: FoxPolitics

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