Warren’s Unwarranted Assertion

by Don Boudreaux on February 11, 2019

in Growth, Myths and Fallacies, Standard of Living, The Hollow Middle

Here’s a letter to the New York Sun:

In calling out Elizabeth Warren for demagogically spreading falsehoods and half-truths about the supposed domination of America’s rich over the middle-class and poor, Ira Stoll busts many myths (“Warren Forgets One Thing As She Announces,” Feb. 11). Yet the evidence is even stronger than Mr. Stoll reveals that Sen. Warren is far off base when she asserts that America has a “rigged system that props up the rich and powerful and kicks dirt on everyone else.”

Let’s look at the data.* The U.S. Census Bureau reports annually on the percentage American households earning different annual amounts of inflation-adjusted annual income – for example, households earning annually less than $15,000, households earning annually between $15,000 and $24,999, and so on up to households earning annually $200,000 or more.

Comparing the figures for 2017 to those for 1980 – the year Ronald Reagan was first elected president – we find that in 2017 smaller percentages of American households earned lower- and middle-incomes than earned such incomes in 1980. But we find also that the percentages of American households earning high incomes in 2017 were much larger than in 1980.

For example, in 2017 only 10.7 percent of American households had annual incomes of less than $15,000 while in 1980 this percentage was 13.0. A similar pattern holds for all annual-income categories ranging from $15,000 up to $99,999. But for all annual-income categories of $100,000 or more, the percentages of American households earning these high annual incomes are greater than were the percentages earning these high incomes in 1980. (Remember, these figures are adjusted for inflation.)

With the exception of a slight up-tick in the percentage of households with annual incomes of less than $15,000, the same happy pattern holds if we compare today (2017) to, say, 2001 – the year China joined the WTO.

If the rich are indeed kicking anything on less-rich Americans, it appears that what is being kicked isn’t dirt; it’s more real income.

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

* See here, and then scroll down to click on “Table H-17. Households by Total Money Income, Race, and Hispanic Origin of Householder”


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