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An Open Letter to a Politician

Rep. Barbara Lee (D-CA)
Capitol Hill
Washington, DC

Ms. Lee:

Your essay yesterday at Medium.com is a textbook example of demagoguery fueled by arrogance, ignorance, and (what I will assume is careless) misinterpretation of statistics (“CEOs Are Rewarded for Keeping Their Employees in Poverty. It’s Time to Change That”).  An example of the latter is your claim that “[s]ince 1987, pay for the average worker has barely budged…. Families got squeezed as prices rose and paychecks froze.”  But as every respectable economics undergraduate student knows, a measure of average wages can be highly misleading about changes in the pay of flesh-and-blood people, especially if (as is true for the U.S. workforce) there are changes in the population from which the average is calculated.

Here, from the U.S. Census Bureau, are more-revealing, inflation-adjusted data that expose as spurious your suggestion that an ever-increasing percentage of Americans have fallen into poverty since 1987.  In 1987, 13.3 percent of American households had annual incomes of less than $15,000 (reckoned in 2013 dollars); in 2013 (the latest year for which data are available) that percentage was lower, at 12.7.  Likewise, the percentage of households in 1987 with annual incomes of $75K or less was 69.1; by 2013 this percentage had fallen to 65.6 – meaning that in 2013 the percentage of households with annual incomes above $75K was 3.5 percentage points higher than in 1987.  Indeed, the percentage of U.S. households in 2013 with annual real incomes of $100,000 or more was 22.5, compared to only 17.8 in 1987.

I realize, of course, that you’ll ignore these Census Bureau data because they undermine your efforts to stir up the juvenile envy that you hope will give you and your power-mad colleagues even more political clearance to further raid the paychecks of taxpayers and override the business decisions of entrepreneurs.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030


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