. Michael Cox and Richard Alm write in today's New York Times:
It’s true that the share of national income going to the richest 20 percent of households rose from 43.6 percent in 1975 to 49.6 percent in 2006, the most recent year for which the Bureau of Labor Statistics has complete data. Meanwhile, families in the lowest fifth saw their piece of the pie fall from 4.3 percent to 3.3 percent.
Income statistics, however, don’t tell the whole story of Americans’ living standards. Looking at a far more direct measure of American families’ economic status — household consumption — indicates that the gap between rich and poor is far less than most assume, and that the abstract, income-based way in which we measure the so-called poverty rate no longer applies to our society.
...So, bearing this in mind, if we compare the incomes of the top and bottom fifths, we see a ratio of 15 to 1. If we turn to consumption, the gap declines to around 4 to 1. A similar narrowing takes place throughout all levels of income distribution. The middle 20 percent of families had incomes more than four times the bottom fifth. Yet their edge in consumption fell to about 2 to 1.
To which Art Carden at DOL adds:
Critics tend to point to trends in income shares as a proof of the "injustice" of the market economy--note the popular slogan "the rich get richer while the poor get poorer"--but there's a larger point that must be recognized. Channeling my inner Thomas Sowell, people don't buy food, clothing, and shelter with percentage shares. They buy them with real income. And, as Russell Roberts points out, that has been increasing, too.
And don't forget inequality of leisure, where the poor are getting richer, a point Steven Landsburg made last March.
marketpower.typepad.com
And you have to consider that that the average household size is higher in the top quintile than the bottom quintile which decreases per person inequality even more.
"Conclusion
The Census income distribution figures are the foundation of most class-warfare rhetoric. On the surface, these figures show a high level of inequality: The top fifth of households have $14.30 of income for every $1.00 at the bottom.
However, these figures are flawed by the exclusion of taxes and social safety net spending and by the fact that the "fifths" do not contain equal numbers of people. Adjustment for these factors radically alters the picture of income distribution: The top fifth of the population has $4.21 of income for every $1.00 at the bottom.
The remaining inequality in society is heavily influenced by the lack of work at the bottom. If working-age adults in the lower quintiles worked as much as their higher-income counterparts, the income disparity of the top to the bottom quintiles would fall to $2.91 to $1.00."
heritage.org |
