That’s what the NY Times tells us this morning:
Economic inequality in the United States has been receiving a lot of attention. But it’s not merely an issue of the rich getting richer. The typical American household has been getting poorer, too.
The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially.
The Russell Sage study also examined net worth at the 95th percentile. (For households at that level, 95 percent of the population had less wealth.) It found that for this well-do-do slice of the population, household net worth increased 14 percent over the same 10 years. Other research, by economists like Edward Wolff at New York University, has shown even greater gains in wealth for the richest 1 percent of households.
Now if you were a low information voter, you might conclude from that excerpt that it is the rotten rich who are responsible for this decline. To do that you have to believe that the economy is a finite pie and when someone takes a big slice, everyone else gets smaller slices. But that’s not the case is it. This really doesn’t have anything to do with income inequality, as the left would have you believe.
Think about it – average income is a total divided by a number. That means that the total income of everyone working is divided by the number of families out there.
So if that’s the case, what’s the key? The number of people working. No work, no income. The families still exist in the same numbers, but the income that has been supporting them is down due to what? Unemployment.
And, of course, because it is bad news for Democrats, we don’t hear much about that anymore. A simple graph, however, will help pinpoint the problem:
The problem certainly isn’t “income inequality”, is it?