Saturday, May 17, 2014

Disposable Income Has Increased Across All Income Groups Since 1979

From The Wall Street Journal, "The Denial of Middle-Class Prosperity: Government data show that average disposable income has increased across all income groups since 1979." by Neil Gilbert:
The problem with the research showing middle-class stagnation is that it looks at market incomes, which exclude taxes, government transfers and adjustments for household size.
The Congressional Budget Office's 2011 report on income inequality trends offers a more precise accounting, dispelling the notion that the past three decades have been characterized by the rich getting richer at the expense of the poor while the middle class stays about the same. The CBO adjusts market income by subtracting taxes and adding the cash value of social benefits. When households are then divided into five equal income groups, the data reveal that average disposable household income has increased across all groups since 1979. The average household income grew by 40% for the middle quintile and increased by 49% for the bottom quintile.
The average U.S. family has 38% more disposable income than a family in Italy, 25% more than a family in France and 20% more than a household in Germany, when adjusted for purchasing power, according to the Organization for Economic Cooperation and Development. Inequality in the U.S. is not a struggle between the "haves" and the "have-nots," but a social friction between those who have a lot and others who have more.

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