There is a great deal of talk about "economic angst," brought on, some say, by growing class warfare. However, economists who look at the numbers argue this is not a conclusion borne out by the numbers.

The poor are not losing ground, researchers say. They are falling behind because the center of the pack is pulling ahead.

• About the same share of families get by on $10,000 or less a year (adjusted for inflation) as did a quarter century ago.

• However, families that earn $10,000 to $50,000 are less common because more people are earning more.

Why are some falling behind, and what can be done about it? Two things are important, but they're harder to fix: education and family structure.

• College graduates earned 1.43 times as much as high school grads in 1972 but 1.82 times as much by 1992.

• Those with advanced degrees made 1.72 times as much as high school grads in 1972, 2.54 times as much in 1992.

It's possible to improve the schools, but serious improvement will only come with parental participation, which brings us to the second stumbling block: family structure.

While some single mothers do better than married couples and others are better off without the father in the house, having only one parent in the home is the surest indicator that a family will have a low income and other problems. Government can't make up the financial or, more importantly, the emotional commitments of fathers who live with their families.

But even when both parents work there is no guarantee of equality. At the extreme it doubles the gap in family incomes because people tend to marry their peers (so that one household gets two professional incomes, another gets that of two minimum wage earners). There is no fair way to reverse this trend.

> Another factor is at work which causes inequality:

• More than one-half of families in the highest-income fifth in 1990 had two earners with full-time, year-round jobs.

• In the lowest fifth, only 15 percent had two earners, with full-time, year-round work being the exception rather than the rule.

• More than 40 percent of the lowest fifth reported having no wage earners.

• The fact that nearly 43 percent of the lowest income fifth have a head of household with less than a high school education seriously impedes their ability to earn.

Economic policy still matters, but income inequality has as many if not more roots in society (the schools) as in the workplace.

Source: Editorial, "The Roots Of Inequality," Investor's Business Daily, April 5, 1996.

In the first year, people in the bottom fifth (quintile) had an average income of just over $1,000. Seventeen years later, the average income of those people surged to $26,475 (all figures in constant 1993 dollars). Just 5 percent were still in the bottom income bracket in 1991. Sixty percent climbed all the way to the top 40 percent of all earners. Only 2.3 percent failed to increase their absolute level of income over those years. But two-thirds of the group had a higher income level in 1991 than the middle bracket had 17 years before. Sixty percent of those starting in the top income tier were able to stay there. But on average the income of the richest tier rose 8.6 percent -- to just under $50,000 a year. Only 4 percent fell from the top fifth to the bottom two quintiles. Almost everyone else got ahead as well. Three-fourths of those who started in the second-lowest quintile moved up at least one bracket -- with average income more than quadrupling. Of those who started in the middle quintile, about half advanced -- with a 71 percent gain. And seven out of ten who started in the second highest tier either stayed there or moved up -- with a 40 percent gain. The researchers reported that workers' incomes are growing a lot more over the course of their lives than they used to.

Given their initial lack of experience, workers' earnings start out low. Earnings peak when workers hit middle age, then begin to fall as retirement approaches. But peak earnings now occur later in life and reach a higher level. Two decades ago, the peak earning years were between 35 and 44. Now they occur ten years later. Twenty years ago, those in their peak earning years took home about twice as much as workers between the ages of 20 and 24. Now they earn more than three times as much. In the past, muscle power was an important factor in earnings, but that falters with age.

Today, people are paid for working smarter and doing so for a longer period of time.

Source: Perspective, "Class Warriors," Investor's Business Daily, May 28, 1996.

People in the upper income brackets got there by working more, according to a new study by Kenneth Deavers of the Employment Policy Foundation.

Most of the growth in real income since 1970 has gone to families in the top 60 percent of household incomes, while income (exclusive of welfare benefits) for those in the bottom 40 percent has barely budged.

Here are some of the reasons:

• In 1993, only about 15 percent of families earning less than $15,000 had a full-time, year-around worker in the household.

• By contrast, more than 87 percent of families earning more than $50,000 did.

Income inequality has risen over the past two decades largely because more wealthy women work.

• In 1993, 98 percent of families with incomes over $100,000 had two earners, according to the Congressional Budget Office.
• Families with incomes over $50,000 have an average of 2.2 workers in the household.
• Families with less than $15,000 in household income average less than one worker.
• About 40 percent of families in the lowest fifth of income are now headed by a single woman -- compared to just three percent of top-quintile families.

Families in the "middle class" have gotten richer. Between 1970 and 1990, the share of families with real income of less than $35,000 declined about nine percent -- while those making more than $50,000 swelled more than 34 percent.

Those who stress that average income has fallen in the lowest quintile fail to note that since welfare is not counted as income, and there are fewer in those households who work, inequality is bound to increase.

Source: Perspective, "Class Warriors," Investor's Business Daily, March 22, 1996.

Despite hand-wringing on the part of some politicians over the plight of the middle class, statistics show that if it is disappearing, it's disappearing upward.

• There has been a net decline in the number of middle class families -- those making below $50,000 a year.
• But this is because they are moving into higher income categories -- above $50,000 in inflation adjusted dollars.
• The number of families making more than $50,000 grew from 24 percent of the population in 1970 to 32 percent in 1990.

Statistics developed by John Hineracker and Scott Johnson at the Center of the American Experiment confirm that those who are moving up are doing so because they are working harder.

• In 1990, of the families that comprised the lowest 20 percent of income, only 45 percent worked at all, and of those working only 24 percent worked full time.

• By contrast, among families in the top 20 percent, 93 percent had two or more members working -- and 11 percent had four or more workers in the household.

Hineracker and Johnson came to the obvious conclusion: upper income families earn more because they work longer hours at more jobs.

Some contend that the 19 million new jobs created during the expansion of the 1980s were mostly low-wage, deadend jobs. But data from the Bureau of Labor Statistics tell a different story.

• Thirty-three percent of the jobs were managerial-professional; with production, 19 percent; technical, 22 percent; operators, 8 percent; and services, 17 percent.

• The average pay for these new jobs was $23,000.

Consider income mobility, in the light of data from the Treasury Department.

• Of those in the bottom 20 percent of income in 1979, 86 percent moved to a higher income class by 1988.
• Some 15 percent of those who were poor in 1979 went all the way to the top income category by 1988.
• And among those taxpayers ranking in the top 1 percent income category in 1979, fully 58 percent fell to a lesser category by 1988.

Source: Walter Williams (George Mason University), "Income Lies and Political Posturing," Washington Times, March 29, 1996.

American living standards aren't declining. It's simply that data used to support that claim are incomplete and misleading, according to a new study from the National Center for Policy Analysis. Total employee compensation has risen -- not fallen -- over the past two decades, according to Dallas Federal Reserve economists Michael Cox and Beverly Fox, the authors of the study.

Consider these factors which are usually overlooked:

• The share of employee compensation going for benefits has doubled over the past 40 years -- at the expense of wages.
• Government mandates and tax breaks have made vacations, family leave, and health and retirement plans a good buy for firms since they are paid for with pretax dollars.
• Since the average worker is two years younger than he was two decades ago and thus has had less time on the job, compensation might be expected to be lower.

While some analysts have claimed that household income has edged down 0.1 percent per year, it should be noted that:

• Households are some 15 percent smaller than they were 20 years ago -- so fewer people share the same income.

• Median after-tax income rose 13 percent during the Reagan years; it was only tax hikes during the Bush and Clinton presidencies that have squeezed the middle class.

• Nevertheless real income per person has actually risen 1.4 percent a year during the last two decades.

• Also, consider that the average workweek is 2.4 hours shorter than it used to be -- with workers enjoying seven more vacation days each year.

As for the supposed growing gap between capital and labor, both wages and returns to capital have dropped as a share of personal income during the past 20 years due to the growth of transfer payments. Meanwhile, Social Secuity and welfare grew to nearly 17 percent of personal income in 1994, versus 11.6 percent in 1973.

Finally, statistics show that the family that wants to get ahead should emphasize education.

• High school dropouts earn less than half what graduates make.

• College graduates make about 80 percent more than high school graduates.

• Those with graduate degrees make about two-and-one-half times more than high school graduates.

The data suggest that tax cuts and school reform should be major elements on the American agenda -- the cuts to promote growth, educational reform to boost income.

Source: Perspective, "Are the Good Times Gone?" Investor's Business Daily, February 6, 1996.

Analysis of the Census Bureau's 1995 Current Population Survey shows that in recent years the elderly have received an increasing The lower an individual's total income, the higher the percentage of it that comes from Social Security. In 1994, Social Security accounted for 84.8 percent of the total income of the elderly in the lowest income quintile, compared with 23.2 percent of income for those in the highest income quintile.

Source: "Income of the Elderly," Facts from EBRI, January 1996, Employee Benefit Research Institute, 2121 K Street, Suite 600, Washington, DC 20037, (202) 775-6342.

Despite anecdotal evidence, statistics show that college graduates do find their niche in the workplace and make about as much now (adjusted for inflation) as they did in 1979.

• As of 1993, 96% of 30-year-old men with only a bachelor's degree earned an average of $34,000.
• 89% of women of similar age and education were earning $25,000 - a lower figure which includes part-time workers.
• Since 1979, men's income has increased only an inflation-adjusted $1,000 annually; but women's wages have increased $4,000 - half of which reflects their working more hours.

While the earnings of college graduate men have been stable since 1979, high school graduates' average earnings have fallen by $7,500.

Source: John Tyler (Harvard) and Frank Levy (M.I.T.), "The Slacker Myth," New York Times, September 27, 1995.