Reading this article might have given someone the impression the middle class has been doing just splendid in recent decades and no one should be complaining about the pre-Depression-like levels of income inequality in the U.S. But a closer look at how this data is presented might tell a completely different story. In fact, it might even suggest a reality that would look like the complete opposite of what the author, Ron Haskins, is trying to argue.
Initially, some figures with little supportive data are given that show the top 20 percent did better than everyone else since 1979 but everyone did well overall (a 50 percent gain in income for the top 20, a 40 percent gain for most others). Then comes a common point made by people trying to fend off this debate: “Households in the top 1 percent pay about 40 percent of federal income taxes, and the top 10 percent pays nearly 75 percent.” This then gets turned into social services. Let’s examine this nugget of info a little further.
A quick Google search finds this article from Haskins’ employer which states the top 1 percent paid 15 percent of the taxes in 1979. They now account for 40 percent. This increase in their share has occurred despite the fact their tax rate, as everyone knows, has dropped dramatically. So less money is coming out of their checks for taxes yet they are accounting for much more of the total dollars going to the government. Long story short, these people did not do well. They did really, really, really (times a lot) well.
Then comes the blatantly obvious distortion of data. Haskins essentially states two married people, with no out-of-wedlock children, and both having jobs have only a 2 percent chance of living a life of poverty. He adds, “if the same share of adults were married today as in 1970, poverty would be reduced by more than a quarter.” Let’s examine a couple of aspects here a little closer.
Picking 1970 is, of course, somewhat brilliant but really a sneaky and almost dishonest option. This year would be toward the beginning of a larger portion of the female population entering the workforce. Which would mean two things relating to this data. One, families in the past were able to be middle class with likely only one person (typically the male) in the household having a job. Now, both need to have jobs in order to ensure they stave off poverty. In other words, someone in 1970 might say, “My spouse can work but it isn’t necessary for us to stay out of poverty.” Nowadays, “My spouse has to work for us to stay out of poverty.”
The second factor here is that women no longer need to get married to have someone financially take care of their needs as they would have in the past because of workplace discrimination. A woman can choose to fend for herself more easily now than before so the option to live the single life is more available for both sexes instead of just one. Perfect equality has not been reached but that is for another discussion. Haskins is letting his personal views get in the way of his argument here stating people must be married to avoid the bottom of the economic barrel. Marriage should be mostly irrelevant in a discussion of how workers are faring from the 1970s to now.
One last distortion is the following: “Consider also that children of parents whose income was in the bottom 20 percent have a 45 percent chance of remaining in the bottom themselves. But if they get a college degree, they cut those odds by nearly two-thirds and quadruple their chances of earning more than $100,000.” A final closer look.
To begin, no statistic is given as to what the chances are of earning $100k without a degree so the quadruple effect could be not as bountiful as it sounds. Suppose this stat is say, 1 percent. The college degree now ups it to 4 percent. Doesn’t sound quite as good when stated that way and I’m guessing that’s why the stat was omitted. In fact, I would assume it might even be less than 1 percent which would make showing the number even less impressive.
The two-thirds cut in the chances someone in the bottom stays there when they get a college degree sounds great but hold on. That still gives a roughly 20 percent chance of staying in the bottom even after getting the education that is supposed to get you out. Shouldn’t that be far less? Shouldn’t cracking the middle class with that degree hanging on the wall be almost a given? Unless, of course, working on your own without getting married doesn’t get you out of the bottom.
I wonder what the chances are for kids of people in the top 1 percent to end up in the bottom 20 with only a high school diploma and no college education? I’m guessing far lower than 20 percent. But then again, asking that question is class warfare and we aren’t allowed to have that in our countries’ economic debates.