4 ms·

Required reading for any discussion on median household income. Note in particular compositional effects - household size and mix have changed over time. https

Required reading for any discussion on median household income. Note in particular compositional effects - household size and mix have changed over time. https://www.minneapolisfed.org/publications/the-region/where-has-all-the-income-gone https://www.minneapolisfed.org/publications/the-region/where...

rayiner 8y ago
It’s fascinating to me how much of our discourse is based on “facts” that simply aren’t true.
- rory096 8y ago
  I think it's overstating the case to say there's "no there there" in income stagnation - other and more recent data point to alarming trends in total individual compensation and in overall inequality. But it's important to take into account the flaws in certain metrics we use.
  - rayiner 8y ago
    I’m not suggesting there is no “there there.” Just that here is this basic shibboleth, trotted out multiple times a week by the media, that’s just not true. Does it mean everything is fine? No. Does it suggest that we’re living with the mixed results of various well intentioned policies, rather than the outcome of actual cartoon villany? I think so.
    - rory096 8y ago
      Agreed. Didn't mean to suggest that's what you were saying, just to address the general point.
- IkmoIkmo 8y ago
  This frustrates me to no end. I'm quite alright with being exposed to extreme left and right wing opinions on a daily basis. But I simply can't stand all blatant misinformation which is fuelling seemingly ever increasing levels of indignation about issues that aren't even really real issues. I get particularly disheartened when I see clickbait titles such as 'income flat again: 10 years straight' from traditionally trustworthy public news channels (those EU institutions that have been around for many decades, aren't funded by advertising and have social, not commercial motives). And then I think, no way, I click, and all the way down the article it has a brief memo where it says 'some economists say this is merely an interpretation, as we were referring to household income being flat, even though the number of people who lived in the household decreased. This could also be interpreted as rising incomes and everyone having more real estate per person'. At that point it just strikes me that they intentionally made good news look bad, an organisation looking only to inform the public, not get clicks. It's like the disaster industry isn't even dependent on commercial incentives anymore, it's like this cultural trait journalists seem to have. (or I dare say get the impression, have developed as of late, but I'd probably be myopic to say that.)
  - prolikewh0a 8y ago
    Per Congressional Research Service, real wages have been flat or declined since 1979 for all but the rich [1]. No 'clickbait titles'. [1] https://fas.org/sgp/crs/misc/R45090.pdf https://fas.org/sgp/crs/misc/R45090.pdf
    - IkmoIkmo 8y ago
      As you can see from my post referencing journalism in Europe, I'm not referring to the US case. You'd also see that my post referenced income, not wages. An important distinction, and exactly the kind that journalists don't make when they say 'incomes aren't rising' when they are, and point only to one metric (real wages) to prove it. In a sense your post is a bit ironic. Hourly wages are absolutely important, but your own research example itself indicates it's not the end-all metric, either. For example, your study mentions a period where real wages fell, but overal compensation remained stable, due to other non-wage benefits compensating for the loss in wages. In fact, your study mentions quite clearly that health-benefits are left out of the study, despite being quite a unique aspect of private labor compensation in the US (whereas most other countries have publicly funded healthcare) and healthcare being a key category of high-inflation. So you're counting the inflation to adjust the purchasing power of wages, but you're not counting non-wage compensation of healthcare-benefits which have risen sharply. The study of course also doesn't take into account employment changes, as the study carefully points out. i.e., the sharp increase in labor force participation of women age 25-54 in the past 2 generations, isn't taken into account if you're talking about income, only the fact the median women earns 25% more. That understates improvements in income. Where you went from 4/10 women earning $10 an hour, to now having 7/10 women earning $12.50 an hour, that'd an increase of 118% in the total income earned by women, while real wages 'only' grew by 25%. Rather than control for each individual confounder, one can better just look at real median personal income. https://fred.stlouisfed.org/series/MEPAINUSA672N https://fred.stlouisfed.org/series/MEPAINUSA672N And you find it's 40% higher than in 1979. This metric isn't perfect either, but it does a better job than just looking at hourly wages for working people. Lastly, there are some apples / oranges comparisons still left in inflation. Healthcare inflation is tricky to measure and is mostly done on a price-basis. That's different from other goods, e.g. the price of a harddrive, which goes up in nominal terms (a typical harddrive costs more than 10 years ago in dollar terms), but is adjusted for the fact it's 10x larger than it was 10 years ago. In healthcare however, we don't take into account that life expectancy has improved by about half a decade in 1979. Sometimes we tend to forget our lives are outpacing increases in pension age, i.e. we live longer and with more leisure. This, too, is a form of wealth and could be expressed as income. Instead, the only thing we tend to point to is that our healthcare costs are up, and thus if we adjust our wages by these costs (and then subsequently leave out non-wage compensation that pays for healthcare and retirement), observe that our wages are down or flat in real terms. That's short sighted. But more importantly, I wasn't referencing the US at all.
gcb0 8y ago
link has the 2008 opinion of a federal reserve vice president, on why the middle class is doing just grand. why on earth would I even bother to read it?!
- rory096 8y ago
  The author is vice president of the Research Division of the Federal Reserve Bank of Minneapolis. He's an economist, not a political appointee, and this is a presentation of findings, not an opinion piece.
refurb 8y ago
Exactly. There is an earlier reply talking about household income being flat the last 50 years. What that ignores is that over that time household composition has gone from two earners to closer to one earner (averaged out). But using a household unit for measure hides that change.

rayiner 8y ago

It’s fascinating to me how much of our discourse is based on “facts” that simply aren’t true.

rory096 8y ago
I think it's overstating the case to say there's "no there there" in income stagnation - other and more recent data point to alarming trends in total individual compensation and in overall inequality. But it's important to take into account the flaws in certain metrics we use.
- rayiner 8y ago
  I’m not suggesting there is no “there there.” Just that here is this basic shibboleth, trotted out multiple times a week by the media, that’s just not true. Does it mean everything is fine? No. Does it suggest that we’re living with the mixed results of various well intentioned policies, rather than the outcome of actual cartoon villany? I think so.
  - rory096 8y ago
    Agreed. Didn't mean to suggest that's what you were saying, just to address the general point.
IkmoIkmo 8y ago
This frustrates me to no end. I'm quite alright with being exposed to extreme left and right wing opinions on a daily basis. But I simply can't stand all blatant misinformation which is fuelling seemingly ever increasing levels of indignation about issues that aren't even really real issues. I get particularly disheartened when I see clickbait titles such as 'income flat again: 10 years straight' from traditionally trustworthy public news channels (those EU institutions that have been around for many decades, aren't funded by advertising and have social, not commercial motives). And then I think, no way, I click, and all the way down the article it has a brief memo where it says 'some economists say this is merely an interpretation, as we were referring to household income being flat, even though the number of people who lived in the household decreased. This could also be interpreted as rising incomes and everyone having more real estate per person'. At that point it just strikes me that they intentionally made good news look bad, an organisation looking only to inform the public, not get clicks. It's like the disaster industry isn't even dependent on commercial incentives anymore, it's like this cultural trait journalists seem to have. (or I dare say get the impression, have developed as of late, but I'd probably be myopic to say that.)
- prolikewh0a 8y ago
  Per Congressional Research Service, real wages have been flat or declined since 1979 for all but the rich [1]. No 'clickbait titles'. [1] https://fas.org/sgp/crs/misc/R45090.pdf https://fas.org/sgp/crs/misc/R45090.pdf
  - IkmoIkmo 8y ago
    As you can see from my post referencing journalism in Europe, I'm not referring to the US case. You'd also see that my post referenced income, not wages. An important distinction, and exactly the kind that journalists don't make when they say 'incomes aren't rising' when they are, and point only to one metric (real wages) to prove it. In a sense your post is a bit ironic. Hourly wages are absolutely important, but your own research example itself indicates it's not the end-all metric, either. For example, your study mentions a period where real wages fell, but overal compensation remained stable, due to other non-wage benefits compensating for the loss in wages. In fact, your study mentions quite clearly that health-benefits are left out of the study, despite being quite a unique aspect of private labor compensation in the US (whereas most other countries have publicly funded healthcare) and healthcare being a key category of high-inflation. So you're counting the inflation to adjust the purchasing power of wages, but you're not counting non-wage compensation of healthcare-benefits which have risen sharply. The study of course also doesn't take into account employment changes, as the study carefully points out. i.e., the sharp increase in labor force participation of women age 25-54 in the past 2 generations, isn't taken into account if you're talking about income, only the fact the median women earns 25% more. That understates improvements in income. Where you went from 4/10 women earning $10 an hour, to now having 7/10 women earning $12.50 an hour, that'd an increase of 118% in the total income earned by women, while real wages 'only' grew by 25%. Rather than control for each individual confounder, one can better just look at real median personal income. https://fred.stlouisfed.org/series/MEPAINUSA672N https://fred.stlouisfed.org/series/MEPAINUSA672N And you find it's 40% higher than in 1979. This metric isn't perfect either, but it does a better job than just looking at hourly wages for working people. Lastly, there are some apples / oranges comparisons still left in inflation. Healthcare inflation is tricky to measure and is mostly done on a price-basis. That's different from other goods, e.g. the price of a harddrive, which goes up in nominal terms (a typical harddrive costs more than 10 years ago in dollar terms), but is adjusted for the fact it's 10x larger than it was 10 years ago. In healthcare however, we don't take into account that life expectancy has improved by about half a decade in 1979. Sometimes we tend to forget our lives are outpacing increases in pension age, i.e. we live longer and with more leisure. This, too, is a form of wealth and could be expressed as income. Instead, the only thing we tend to point to is that our healthcare costs are up, and thus if we adjust our wages by these costs (and then subsequently leave out non-wage compensation that pays for healthcare and retirement), observe that our wages are down or flat in real terms. That's short sighted. But more importantly, I wasn't referencing the US at all.

gcb0 8y ago

link has the 2008 opinion of a federal reserve vice president, on why the middle class is doing just grand. why on earth would I even bother to read it?!

rory096 8y ago
The author is vice president of the Research Division of the Federal Reserve Bank of Minneapolis. He's an economist, not a political appointee, and this is a presentation of findings, not an opinion piece.

refurb 8y ago

Exactly. There is an earlier reply talking about household income being flat the last 50 years. What that ignores is that over that time household composition has gone from two earners to closer to one earner (averaged out). But using a household unit for measure hides that change.