Middle Class Incomes Have Historically Risen

July 12, 2013

Much lip service is paid to evidence-based policymaking; all too often it works the other way in Washington, with problematic facts serving as the basis for policy-based evidence-making. Instead of trying to discern why different analyses yield different conclusions, and whether one is better supported than another, partisans simply pick the results that support their beliefs. Sometimes the evidence really is unclear and resolving the question requires further research. But other times, it is clear enough, and those committed to evidence-based policymaking should favor some conclusions over others, says Scott Winship, a fellow in economic studies at the Brookings Institution.

Consider the state of the middle class.

  • According to published Census Bureau figures, median household income (adjusted for inflation) was just 5 percent higher in 2011 than in 1979.
  • Through the help of numerous economists, it has become irrefutably clear that, when properly measured, middle-class incomes actually rose by at least 30 percent between 1979 and 2007 (both business-cycle peaks), and possibly by 40 percent or more.
  • The Census Bureau figures indicate only a 15 percent rise between these years.

Faced with the overwhelming evidence that household incomes have risen significantly, some observers have tried to rescue the theory of middleclass decline by pointing to evidence that earnings have fallen sharply among working-age men. Thus, the story goes, rising household income simply reflects the fact that women have gone to work in response to the deterioration of their husbands' standing.

  • There are a number of problems with this claim, the main one being that, across the developed world, rising employment among women has coincided with their rising educational attainment, as well as deferred marriage, delayed childbearing and lower fertility.
  • This suggests that women today work more than their 1950s counterparts for reasons unrelated to men's earnings.
  • Less appreciated is that middle-class men are doing better than the most widely cited statistics indicate.

To be sure, measures of earnings trends ought to account for labor force dropout. But the conclusion that men's earnings have plummeted stems from inappropriate methodological decisions and inadequate contextualization.

Source: Scott Winship, "Wage Trends: Men's Rising Earnings," Brookings Institution, June 28, 2013.

 

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