I hate losing an argument.

In my liberal soul, I was sure that the middle class had lost ground over the past 30 years.   And that the bottom 20% had lost even more.  In more precise terms, I was sure that real incomes from the bottom 20% had fallen during the last 30 years.   I was so sure that I bet my currency of choice, a donut, on the outcome.

Turns out I was wrong.

We agreed to look at after tax and transfer dollars, adjusted for inflation.   We found pretty compelling evidence across multiple sources.  Here, as an example, is a 2012 graph from the CBO.    Yes, it shows that things have gone well for those at the top.   But it also shows that incomes for the bottom 20% have gotten better over time.   Not a lot better.   Not as much of an increase as the top.   But better.

And so I had to watch someone eat my donut.

Income growth by group, over time

Finally, our argument surfaced a bunch of other areas to examine.    How has real wealth changed over this same period?   What has happened to real incomes since 2007?  (Incomplete evidence seems to say flat at the bottom levels.)  How do income changes filter through changes in underlying prices?   (Some items, like education and health have become more expensive, while others, like communications and technology have become less expensive.)    All good questions.   But I’m going to research them first, before betting another donut.




General Overview:

Trends in the Distribution of Household Income, 1979 – 2007, Central Budget Office

A Guide to Statistics on Historical Trends in Income Inequality, Center on Budget and Policy Priorities

Relevant Papers:

2012: Comparing Real Wage Rates, by Orley Ashenfelter.  (This is more international in focus.)

2004: Income, Poverty, and Health Insurance Coverage in the United States: 2003, by Carmen DeNavas-Walt,
Bernadette D. Proctor, and Robert J. Mills.

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