I have posted several excerpts from Alan Reynold’s Income and Wealth, a comprehensive look at a more accurate inclusion of factors omitted or distorted by those claiming that middle class incomes have stagnated for 30 years.

Excerpts from Rebel Yid Include:

The Snapshot Fallacy the snapshot fallacy– the erroneous belief that because half the population had not yet accumulated many assets in any particular year, that same half of the population (rather than a newer and younger group) would never accumulate much wealth over an entire lifetime.

Illuminating the Data on Income and Wealth Reynolds points out that the data used often compares weekly income rather than hourly, ignores benefits and transfer payments, excludes taxes, farm workers and many self employed. The data confuses the fact that more people are entering the upper income brackets with the perception that those in the upper brackets are making more.

Posted at Carpe Diem today (7/6/11) in Challenging the Middle Class Stagnation Myth: From 1979-2007 The Rich Got Richer and Poor Got Richer, Mark Perry refers to a new study A “Second Opinion” on the Economic Health of the American Middle Class by Richard V. Burkhauser, Jeff Larrimore, Kosali I. Simon for the National Bureau of Economic Research

An excerpt:

Conclusion: “These more inclusive measures of access to economic resources suggest that income inequality increased in the United States not because the rich got richer, the poor got poorer and the middle class stagnated, but because the rich got richer at a faster rate than the middle and poorer quintiles and this mostly occurred in the 1980s. Growth was substantial in all quintiles once the influence of government tax and transfer policy as well as the shift in compensation from wages to health insurance provided by employers and the shift to increased in-kind health insurance by government is more full recognized.

MP: The findings in this paper provide strong, empirical evidence contrary to the middle-class stagnation story, and in fact show that over the last thirty years “the rich got richer and the poor got richer” after making adjustments for household composition, taxes, transfer payments and fringe benefits to measure “access to economic resources.”

HKO Comments:

This newer paper makes some of the same points as Alan Reynolds made years ago. I challenge you to find a media outlet that will carry this research that contradicts the myth told so often that even the Republicans try to explain it or justify it rather than refute it.

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