Fact Checking the President
This is Dylan Matthews:
During his big economic speech Wednesday, President Obama declared, “The link between higher productivity and people’s wages and salaries was severed ― the income of the top 1 percent nearly quadrupled from 1979 to 2007, while the typical family’s barely budged.”
The problem, as James Pethokoukis pointed out, is the latter statement is not true. Admittedly, “barely budged” is a pretty vague term, but according to the Current Population Survey’s Annual Social Economic Supplements (ASEC) — a Census Bureau publication tracking income, health coverage, and poverty — the real median American family income increased by 17.7 percent between 1979 and 2007, and the real median household income (which includes people living alone and unrelated roommates) grew by 14.7 percent.
When you compare 117% to 400%, I think barely budged is acceptable.
He was right about the separation between productivity and labor’s share of wages too.
Whoooo, marginal product of capital.
What do you mean by compare 117% to 400%? What standard are you talking about?
400% = “the income of the top 1 percent nearly quadrupled from 1979 to 2007”
117% = “The real median American family income increased by 17.7 percent between 1979 and 2007”
Right I get that, I was just asking if you knew based on what measure. But if we assume it’s accurate, or even close to accurate, then I don’t see how one can make the case against the President’s comment on “barely budged.” I agree with you on that front.
I personally think his general points were adequate to the state of how our economy and income levels have changed over the past few decades.
This is a first of several parts of his economic speech, do a fact check of the whole thing.
Heritage has an excellent study completely disproving this claim:
http://www.heritage.org/research/reports/2013/07/productivity-and-compensation-growing-together
Wow, insightful
Take out the top 10 percent, and you will see that median income has fallen dramatically for the bottom 90%. In addition, investment wealth has also fallen dramatically for the bottom 90%.
It’s one thing to try to assuage your guilt for the startling economic inequities in this country.
It’s another thing to massage the figures to the point of utter irrelevancy.
Don Levit
The cited study by James Sherk is very valuable.
Obama of course relies on public perception, not economics. That is to be expected.
But that begs the question, why is public perception more favorable to Obama?
Here are a few reasons:
– The 1950’s had about the same number of good jobs vs bad jobs that we see today. But in the 1950’s; good jobs were more or less one to a family.
Today we have far more two-income, two-professional couples. Single earner families have fallen behind.
– High wages also depend on bargaining power, and the ability of employers to pass on high costs to their customers. The people who hold up “go slow” signs on road projects are not very productive, but they are paid a living wage because they have a union and a docile customer (i.e. state government). Many hospital employees are wildly unproductive by classical measure, but their salaries have risen nicely for 2 decades.
By contrast, fast food workers have hard-nosed penny pinching bosses and penny pinching customers.
– Imagine a community has 10,000 living wage jobs and 10,000 low wage jobs.
Then say that the community adds 2,000 low wage jobs and no more living wage jobs.
The median family income will go down. But is the community worse off?