Thursday, December 14, 2006

"Real Income" Tricks of the Trade and McIlheran

I'll take exception to P-Mac's calm acceptance of a certain report on economic progress in the USA.

Yah, we've all heard the numbers--roughly translated, that the "middle class" has not been doing well since Bushitler became President, (hint: all the money is going to Halliburton and its ex-officers...) etc., etc.

That's based on Department of Labor numbers which address average wage numbers. In fact, average wage numbers HAVE been stagnant for quite some time (although that has very little to do with Bush and much more to do with X42's love affair with PRChina.)

In fairness, it should be noted that while wages may have been stagnant, benefit costs like health insurance have risen significantly, mostly absorbed by employers. So it's not a simple proposition. Neither "Employers Good/Labor Bad" nor "Labor Bad/Employers Good" is the answer.

But here's my quibble with P-Mac's source:

“These changes are happening because, over the past 25 years, more families have moved to upper-income brackets. In 2004, the latest year for which we have comparable information, 34% of families made over $75,000. But in 1979, only 21% did so, after adjusting for inflation. And we now have fewer families in lower-income brackets. Only 46% of families made less than $50,000 in 2004, compared with 54% of families in 1979. The stagnant real median family income that is supposedly the reason for last month's Democratic victory is not so sluggish after all. Real median family income was $54,000 in 2004. After inflation, that's 11% higher than in 1994, 18% higher than in 1984, 25% higher than in 1974, and 59% higher than in 1964.

Close observers will note the term "family" has been highlighted.

The point? "Family" income in 1964 was earned (in the vast majority of the cases) by ONE worker, usually Dad. "Family" income in 2004 was earned by TWO workers (in the vast majority of the cases.)

Not all that hard to figure out why the number's almost double in the comparison, is it?

I hold no brief for spending on lawn-services, nor for $15K wedding-costs. But I also dislike manipulation of the numbers for the sake of making political points. Of course, that's not likely to cease soon, is it?

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