If you’ve paid attention to the presidential campaign, you’ve heard the neopopulist story line. C.E.O.’s are seeing their incomes skyrocket while the middle class gets squeezed. The tides of globalization work against average Americans while most of the benefits go to the top 1 percent.Sharp-eyed bloggers were all over this one: Economist's View has a roundup of the smackdown. The quote above provides two good examples of how easy it is to deceive with statistics:
This story is not entirely wrong, but it is incredibly simple-minded. To believe it, you have to suppress a whole string of complicating facts.
The first complicating fact is that after a lag, average wages are rising sharply. Real average wages rose by 2 percent in 2006, the second fastest rise in 30 years.
The second complicating fact is that according to the Congressional Budget Office, earnings for the poorest fifth of Americans are also on the increase. As Ron Haskins of the Brookings Institution noted recently in The Washington Post, between 1991 and 2005, “the bottom fifth increased its earnings by 80 percent, compared with around 50 percent for the highest-income group and around 20 percent for each of the other three groups.” ...
- Brooks uses average wages, rather than median wages - rising incomes of the top few will increase the average, without making people in the middle of the income distribution better off.
- The overall rise in incomes of the poorest fifth from 1991 to 2005 is the end result of an increase between 1991 and 2000, followed by a decline since then.