"The income of the top 1 percent nearly quadrupled from 1979 to 2007, but the typical family’s incomes barely budged," Obama said in the July 24, 2013, speech. When we asked the White House for supporting evidence, a spokesman pointed us to a study published in late 2011 by the Congressional Budget Office, the nonpartisan budget-analysis arm of Congress. The study looked at income trends between 1979 and 2007 for various income levels, including the top 1 percent. CBO found that over that period, the top 1 percent’s inflation-adjusted, after-tax income rose by a cumulative 275 percent. Over 28 years, that averages to almost a 10 percent increase each year. That’s not quite quadrupling -- a 300 percent increase would have been a quadrupling -- but Obama did say "nearly quadrupled," and we think that qualifies. As for Obama’s claim that the "typical family’s incomes barely budged," that seems on target, too. For the 60 percent of the population in the middle of the income scale -- that is, excluding the top one-fifth and the bottom one-fifth of earners -- the cumulative growth in inflation-adjusted, after-tax household income was just under 40 percent. That may sound like a healthy increase, but it actually averages to just 1.4 percent per year. While an income increase of 1.4 percent a year above inflation does mean the middle 60 percent advanced economically during the period studied, the increase was only about one-seventh as fast as it was for the top 1 percent. In this context, we think the description "barely budged" is reasonable.
Posted on: Fri, 26 Jul 2013 07:26:22 +0000
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