Tuesday, December 12, 2006

Real Income is Rising, Not Stagnating

According to Diana Furchtgott-Roth in the New York Sun, "the myth of stagnating real median incomes over the past 30 years is one of the most enduring in the popular press. But, with apologies to Lou Dobbs, it just doesn't hold up."

The truth is that median wages haven't been stagnating for decades. They've been rising. Not only is the median American family doing better than ever, but poor families are doing better also.

Adjusting for decreasing family size, real median family income is 13% higher than in 1994, 22% higher than in 1984, 37% higher than in 1974, and 88% higher than in 1964. That's a significant increase, and these numbers represent income before tax and don't include subtractions for federal, state, and payroll taxes, which reduce income. Nor do they include additions to income such as employer-provided health insurance and pensions, and government benefits such as Medicaid, food stamps, school lunch programs, and tax credits.

When all these are taken into account, real median household income adjusted for household size has risen by 34% over the past 20 years. A substantial increase, yes. Stagnant real incomes, no.


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