The third study Pethokoukis cites claims that rich people have suffered much worse inflation than poor people. In other words, the price of a yacht and a Park Avenue townhouse has gone up far faster than the price of Sam’s Choice Dr Thunder and Dollar General-brand diapers, and that means that inequality is actually unchanged.
Small comfort for generic Dr Pepper-guzzling babies and everyone else. More importantly, the study doesn’t look at the top 1 percent.
Here’s Pethokoukis’s fourth point:
A 2010 study by the University of Chicago’s Bruce Meyer and Notre Dame’s James Sullivan notes that official income inequality statistics indicate a sharp rise in inequality over the past four decades: “The ratio of the 90th to the 10th percentile of income, for example, grew by 23 percent between 1970 and 2008.” But Meyer and Sullivan point out that income statistics miss a lot, such as the value of government programs and the impact of taxes. The latter, especially, is a biggie. The researchers find that “accounting for taxes considerably reduces the rise in income inequality” over the past 45 years. In addition, “consumption inequality is less pronounced than income inequality.”
So let’s consider the value of government programs and the impact of taxes. Here’s the CBO on market income plus transfers minus federal taxes (it’s important to note that the CBO adjusted household income measures by size of the household):
By this measure, income for the poorest member of the top 1 percent has gone up 118 percent (the CBO doesn’t break out these numbers, but the top 0.1 percent would have gone up several times that) while that of the poorest member of the middle quintile has risen 30 percent.
Pethokoukis’s fifth and final point isn’t quantitative at all. It’s the standard “the poors have air conditioning now” right-wing talking point.
Set all the numbers aside for a moment. If you’ve lived through the past four decades, does it really seem like America is no better off today?…
No doubt the past few years have been terrible. But the past few decades have been pretty good—for everybody.
UPDATE: Follow-up post here.