Brookings Institution economic studies fellow Scott Winship has tested the Obama administration’s recent claims about economic inequality and immobility. As documented for National Review Online and in a follow-up article for the print publication, the results are less than favorable for the president.
Follow the link or buy the magazine for the full story, but please allow me to highlight a couple of key findings.
In contrast to the president’s claim of declining mobility, I found that the percentage of poor children who made it to the middle class or even rose above it had not declined. Rather, their chances rose from about 50 percent to about 55 percent. Partly because of data limitations, the increase is not statistically reliable, but there is certainly no evidence of the sort of decline that the president claims has happened.
Winship also probed the notion — set forward by Council of Economic Advisers chairman Alan Krueger — that the middle class has “shrunk.”
Krueger presented estimates that the percentage of American households in the middle class fell from 50 percent in 1970 to 42 percent in 2010. …
… I reran the numbers using the same data source as Krueger and found that the entire reason the middle class has “shrunk” is that more households today have incomes that put them above the middle class. The share of households with income that puts them in the middle class or higher was 76 percent in 1970 and 75 percent in 2010 — figures that are statistically indistinguishable. A shrinking middle class is a problem only if it reflects fewer people’s reaching the middle class. That is clearly the impression the administration wants to give, but it is not the truth of the situation.
I, for one, am shocked — shocked! — at this misuse of economic data. It must be unprecedented.
