1. Is income growth becoming more unequal? Chittum, Drum, and O’Brien (CDO) say I have misused the work of economist Robert Gordon. Hey, I report, you decide. Here’s Gordon in his own words from his own 2009 paper:
The rise of American inequality has been exaggerated in magnitude, and its impact is now largely in the past. … Not only has the increase of inequality been exaggerated, but it has ceased. The excess growth of mean relative to median income reversed itself after 2000. The income shares of the top one percent and of CEOs, which had exploded before 2000, went down and back up with stock market gyrations between 2000 and 2006 but did not rise on balance. … Other measures suggest that the rise of inequality ceased well before the year 2000.
So get a time machine, Occupy Wall Street! What’s more, there’s evidence that since 2007 the share of income grabbed by the top 1 percent and top 0.1 percent—using income inequality data that CDO prefer—has collapsed.
Are U.S. incomes more unequal today than they were a generation ago? Sure—as is true of advanced economies generally—but not to the extent CDO argue when you factor differing inflation rates between income groups and household composition.
2. Has the middle class stagnated during the past 30 years? I’ve pointed to a pair of Fed studies that show middle-class wages and incomes rising since the 1970s. But CDO disqualify those studies mainly because liberal economist Jared Bernstein says they’re no good. If only there was some economist CDO respected who could back up my claims. Wait, Robert Gordon does! Here is a bit from an email Gordon sent me in 2007:
The correct statement is that correcting the upward bias of the official [consumer price index] adds more than 1 percent per year to official estimates of the growth in median and mean wages. Cumulatively since 1977, my best estimate of the upward bias in the CPI cumulates to 38 percent between 1977 and 2006. Thus if someone came along and said the male median wage adjusted for CPI inflation has been stagnant since 1977, I would translate this into a true 38 percent increase.
And don’t forget brand-new research from University of Chicago’s Bruce Meyer and Notre Dame’s James Sullivan who find that “median income and consumption both rose by more than 50 percent in real terms between 1980 and 2009.”