Incomes At The Bottom Have Shown Almost No Growth In Decades; Stossel Calls It “Getting Richer”

Stossel: “The Rich Have Gotten Richer, But So Have The Poor.” From Fox News' Fox & Friends:

STOSSEL: There are just two myths. One is that the rich are getting richer and the poor are getting poorer. And the truth is yes, over time the rich have gotten richer, but so have the poor -- 20 percent richer since I was in college. [Fox News, Fox & Friends, 5/24/12]

CBPP: “The Era Of Shared Prosperity Ended In The 1970s.” From the Center on Budget and Policy Priorities report:

Census family income data show that the era of shared prosperity ended in the 1970s and illustrate the divergence in income that has emerged since that time. CBO data allow us to look at what has happened to comprehensive income since 1979 -- both before and after taxes -- and offer a better view of what has happened at the top of the distribution.

As Figure 2 shows, between 1979 and 2007, average income after taxes in the top 1 percent of the distribution rose 277 percent, meaning that it nearly quadrupled. That compares with increases of about 40 percent in the middle 60 percent of the distribution and 18 percent in the bottom fifth.

The report included this graph:

[Center on Budget and Policy Priorities, 3/5/12]

CBPP: In The 1970s, “Income Disparities Began To Widen, With Income Growing Much Faster At The Top Of The Ladder Than In The Middle Or Bottom.” From the Center on Budget and Policy Priorities:

Census family income data show that from the late 1940s to the early 1970s, incomes across the income distribution grew at nearly the same pace. Figure 1 indexes the level of income at several points on the distribution to its 1973 level. It shows that real (inflation-adjusted) family income roughly doubled over that period at the 95th percentile (the level of income separating the 5 percent of families with the highest income from the remaining 95 percent), the median (the level of income separating the richer half of families from the poorer half), and the 20th percentile (the level of income separating the poorest fifth of families from the remaining 80 percent). Beginning in the 1970s, income disparities began to widen, with income growing much faster at the top of the ladder than in the middle or bottom.

The report included this graph:

[Center on Budget and Policy Priorities, 3/5/12]

Fox Graphic Cherry-Picks Numbers To Mislead About Change In Incomes At The Bottom

Graphic: “Poorest Fifth Now 17% Richer.” From Fox News' Fox & Friends:

[Fox News, Fox & Friends, 5/24/12]

Fox's Numbers Are Deceptive; Average Income In Bottom Fifth Was Actually $11,034 In 2010. The figures in Fox's on-screen graphic represent income earned by a household at the 20th percentile of the income distribution, meaning that almost every household in the bottom fifth actually made less than $20,000 in 2010. At no point during the segment did Fox make clear that its figures represented the top income in the bottom 20 percent. [Census Bureau, September 2011]

Fox Cherry-Picked Its Data -- Income At The 20th Percentile Peaked In 2000 And Has Fallen By More Than 10 Percent. In 2000, a household at the 20th percentile of the income distribution earned $22,689. From the Census Bureau's “Income, Poverty, and Health Insurance Coverage in the United States: 2010”:

[Census Bureau, September 2011 (click to enlarge)]

Stossel Ignores Problems With Income Mobility In U.S.

Stossel: “The Poor Are Not The Same People” Because “There Still Is Income Mobility In America.” From the show:

STOSSEL: There's this myth that the poor have gotten poorer; it's not true. Also, the poor are not the same people. Oprah Winfrey was once on welfare, and now she's one of the richest people in the world. There still is income mobility in America. [Fox News, Fox & Friends, 5/24/12]

CRS: Empirical Studies Show “A Strong Positive Relationship” Between “Parent And Child Income In The United States.” From a report by the Congressional Research Service titled, “The U.S. Income Distribution And Mobility: Trends and International Comparisons”:

Intergenerational elasticity (IGE) measures how persistent position in the income distribution is from one generation to the next. IGE is a single number that indicates the extent to which parents' position in the income distribution explains their adult children's relative income. The lower the elasticity, the less likely inequality is to be perpetuated from one generation to the next; that is, the more mobile the society.

Empirical analyses have estimated a strong positive relationship -- about 0.5 -- between parent and adult child income in the United States. An IGE of 0.5 suggests that if the income of a child's parents was 30% higher than the average income of families in the parents' generation, then the child's income will be 15% above the average for his/her generation. In other words, in the United States, about 50% of the (dis)advantage of growing up in a (low) high income family may be inherited. [Congressional Research Service, 3/7/12]

CRS: Children Born Into Low Income Families “May Have Become Less Likely To Surpass Their Parents' Position At The Bottom Of The Income Distribution.” From the CRS report:

It is difficult to precisely answer the question of whether the importance of parents' relative income to adult children's relative income changed over the period that inequality has been increasing in the United States. This is partly the case because few sources cover multiple generations of adults for which data are available on family income at the time they were children. As described more fully below, empirical analyses suggest that children born into low-income families have not become more likely and may have become less likely to surpass their parents' position at the bottom of the income distribution. Put differently, mobility in the United States does not appear to have offset the increase in cross-sectional inequality in recent decades. [Congressional Research Service, 3/7/12]

CRS: “The United States Typically Is Found To Be Among The Least Mobile Of The Advanced Economies.” The CRS report notes that “although the rank of the United States differs somewhat from one study to the next, as discussed below, the United States typically is found to be among the least mobile of the advanced economies.” [Congressional Research Service, 3/7/12]

CRS: United States “Has Less Upward Mobility From The Bottom [Fifth] And More Low-Income Persistence” Than U.K. And Nordic Countries. From the report:

Jantti et al. developed comparable intergenerational samples for six countries from which they derived estimates of intergenerational mobility at different points in the joint distribution of father and son earnings. The estimation of transition matrices allowed them to compare mobility rates from one quintile to another in the distribution. The researchers found that the United States has less upward mobility from the bottom quintile and more low-income persistence than the United Kingdom and Nordic countries (Denmark, Finland, Norway, and Sweden) included in their analysis.

The authors suggest that, despite these results, Americans have been able to maintain the perception of living in a mobile society because transition rates of the middle three quintiles are similar in the United States and other advanced economies. “In the U.S., such middle class moves are associated with fairly substantial changes in real living standards (i.e., measured in actual dollars earned) ... [that] are experienced or witnessed by a substantial fraction of the U.S. population.”[Congressional Research Service, 3/7/12]

NY Times: “42 Percent Of American Men” Born Into Bottom Fifth “Stay There As Adults.” From The New York Times:

At least five large studies in recent years have found the United States to be less mobile than comparable nations. A project led by Markus Jantti, an economist at a Swedish university, found that 42 percent of American men raised in the bottom fifth of incomes stay there as adults. That shows a level of persistent disadvantage much higher than in Denmark (25 percent) and Britain (30 percent) -- a country famous for its class constraints.

Meanwhile, just 8 percent of American men at the bottom rose to the top fifth. That compares with 12 percent of the British and 14 percent of the Danes. [The New York Times, 1/5/12]

NY Times: 65 Percent Of Americans “Born In The Bottom Fifth Stay In The Bottom Two-Fifths.” From the Times:

Despite frequent references to the United States as a classless society, about 62 percent of Americans (male and female) raised in the top fifth of incomes stay in the top two-fifths, according to research by the Economic Mobility Project of the Pew Charitable Trusts. Similarly, 65 percent born in the bottom fifth stay in the bottom two-fifths. [The New York Times, 1/5/12]

Stossel Disappears Tens Of Millions Of Americans Shielded From Poverty By Federal Safety Net

Stossel: Idea That Government Can Alleviate Poverty “Is Just A Lie.” From the show:

STOSSEL: I'm not -- if you are mentally ill, if you're in a shelter, you can have a really tough life. I don't mean to make light of that. But this idea that government can fix it, and it's a horrible growing crisis, is just a lie. [Fox News, Fox & Friends, 5/24/12]

CBPP: Stimulus Programs Kept Nearly 7 Million People Out Of Poverty. From the Center on Budget and Policy Priorities:

Six temporary federal initiatives enacted in 2009 and 2010 to bolster the economy by lifting consumers' incomes and purchases kept nearly 7 million Americans out of poverty in 2010, under an alternative measure of poverty that takes into account the impact of government benefit programs and taxes. These initiatives -- three new or expanded tax credits, two enhancements of unemployment insurance, and an expansion of benefits through the Supplemental Nutrition Assistance Program (SNAP, formerly called food stamps) -- were part of the 2009 Recovery Act. Congress subsequently extended or expanded some of them.

To gauge the impacts of these initiatives on poverty, analysts cannot use the official poverty measure because it counts only cash income and does not take refundable tax credits, SNAP benefits, and other non-cash assistance into account. Therefore, we use a poverty measure that adopts recommendations of the National Academy of Sciences (NAS), and that most experts prefer to the traditional poverty measure. Using the NAS measure to analyze newly released Census data for 2010, we find that the six Recovery Act initiatives kept 6.9 million people above the poverty line in 2010:

• Expansions in the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) kept 1.6 million people out of poverty.
• The Making Work Pay tax credit, which expired at the end of 2010, kept another 1.5 million people out of poverty.
• Expansions in the duration and level of unemployment insurance benefits kept 3.4 million people out of poverty.
• Expansions in SNAP benefits kept 1.0 million people out of poverty. [1]

These initiatives had a wide reach across the population, reaching a majority of American households. The 6.9 million people kept above the poverty line in 2010 included an estimated 2.5 million children, 200,000 seniors, 3.1 million non-Latino whites, 1.3 million non-Latino blacks, and 2.0 million Latinos. [Center on Budget and Policy Priorities, 11/7/11]

CBPP: Social Security Keeps Nearly 20 Million Americans -- Including More Than 1 Million Children -- Out Of Poverty. From a Center on Budget and Policy Priorities report titled, “Social Security Keeps 20 Million Americans Out of Poverty: A State-By-State Analysis”:

Almost 90 percent of people aged 65 and older receive some of their family income from Social Security. Without Social Security benefits, 45.2 percent of elderly Americans would have incomes below the poverty line, all else being equal. With Social Security benefits, only 9.7 percent are poor. Some 13.2 million elderly Americans are lifted out of poverty by Social Security.

[...]

Social Security is important for children and their families as well as for the elderly. About 6 million children under age 18 (8 percent of all U.S. children) lived in families that received income from Social Security in 2008, according to Census data. Over 3 million children received their own benefits as dependents of retired, disabled, or deceased workers. Others lived with parents or relatives who received Social Security benefits. In all, 1.1 million children are lifted out of poverty by Social Security. [Center on Budget and Policy Priorities, 8/11/10]