Pethokoukis

A chat with Richard Burkhauser on income inequality

On my latest Ricochet Money & Politics Podcast, I chatted with Richard Burkhauser, economics professor at Cornell University. Prof. Burkhauser and his team at Cornell have done some amazing research that gives a much different perspective on the issue of income inequality. The mainstream media opinion holds that middle-class incomes have gone nowhere for 30 years while the income gap between the rich and everybody else has widened.

Underlying that thesis is the work of two economists, Thomas Piketty and Emmanuel Saez. According to them, median American incomes, adjusted for inflation, rose just 3.2% from 1979 through 2007.

But it’s just not true, according to Burkhauser. He finds that median household income – properly measured – rose 36.7%, not 3.2% as Piketty and Saez argue.

I actually wrote about this earlier in the year.

Check it out!

5 thoughts on “A chat with Richard Burkhauser on income inequality

  1. No need to torture your brain as to how the interview subject tortures the data. The Cliff Notes:

    Census’ Current Population Survey does indeed show a dramatic disparity in income growth between the middle class and the well-to-do but ….

    Household income is more important because of shared expenses and the disparity is less. (Translation: the missus is much more likely to work today than she was in 1979. Missing in this discussion, how much household expenses increase because the missus is much more liked to work today than shew was in 1979.)

    Even household income doesn’t give us a true picture because it does not count transfer payments from the govt. (Translation: inflation indexing keeps SS benefits on pace with inflation. What’s missing: People living on the average SS benefit of $1230/month might not see this as largesse.)

    And we haven’t counted taxes yet! (Translation: child credits, education credits and such ease the burden. What’s missing: All things considered, carried interest is a much better deal.)

    So, does any of this matter? Well, no. The data series ends in 2007. Household income took a major hit in the recession and then it got worse. http://articles.washingtonpost.com/2012-08-23/business/35493412_1_household-income-median-income-income-decline

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