Re: richer or poorer?

[robert <http://dummy.us.eu.org/robert>]

 > From: Noelle <http://dummy.us.eu.org/noelleg>
 > Date: Wed, 23 Mar 2011 11:37:56 -0700 (PDT)
 >
 > what do you think of his argument?

It's very hard to tell without his citing specific income brackets for the
percentile breakdowns.

I would very much doubt the "class mobility" cited, but, again, it's hard
to tell without specific income levels.

Also, the "four times as many workers" argument, too, is hard to evaluate
without specific numbers.

Does this person have a blog?  Can you ask him?

 > Steven R. Cunningham: Are rich getting richer and the poor poorer?
 >  	March 23, 2011
 >   Print    Send to Friend
 > 
 > One of the most enduring economic myths in our society is that the rich keep 
 > getting richer, while the poor keep getting poorer. It isnâ??t true. When most 
 > people think of the rich, they probably are thinking of people with great 
 > wealth. When they think of the poor, they probably are thinking of people with 
 > low incomes.
 > 
 > While thereâ??s obviously a correlation between wealth and income, theyâ??re 
 > not the 
 > same. And we shouldnâ??t confuse them. A retiree who has $1 million invested in 
 > 
 > CDs is a millionaire; most people would consider this person wealthy. But at a 
 > 2.5 percent rate of return on the CDs â?? about twice what the typical bank is 
 > paying today â?? this person could have an annual income of just $25,000.
 > 
 > We donâ??t have to rely on hypotheticals to illustrate this. The households of 
 > people ages 70-74 have the highest average wealth of any age group in America, 
 > but less than half the income of those in the 35-44 age bracket.
 > 
 > Government data, if misunderstood or improperly used, can lead to many false 
 > conclusions. For example, from 2000 to 2009, inflation-adjusted household 
 > income 
 > fell 4.5 per cent, but consumer spending increased 22.4 per cent. This raises 
 > an 
 > obvious question: How did people dramatically increase spending on shrinking 
 > paychecks? The answer is: They didnâ??t. They did increase spending. But 
 > paychecks 
 > werenâ??t shrinking. Instead, the number of individuals per US household was 
 > shrinking, which lowered the average.
 > 
 > Real disposable income, which is essentially total after-tax income, rose 25.2 
 > per cent from 2000 to 2009. At the same time, however, households got smaller, 
 > as more people divorced, or rejected or delayed marriage. So total spending 
 > went 
 > up, while average household income â?? due to the larger number of households â?
 > ? 
 > went down.
 > 
 > Like household income data, income distribution data often are misunderstood. 
 > For purposes of analysis, the Census Bureau divides households into fifths â?? 
 > or 
 > quintiles â?? yielding the bottom 20 per cent of income earners, the next 20 
 > per 
 > cent, and so on, up to the highest 20 per cent. While this is a reasonable 
 > approach, it can be extremely misleading.
 > 
 > We often hear that the top 20 per cent of US households receive roughly 50 per 
 > cent of total income, while the bottom 20 per cent receives less than four per 
 > cent. According to the Census Bureauâ??s household data and quintile 
 > distribution, 
 > this is correct. The problem is that we are not told that the top 20 per cent 
 > of 
 > households includes four times as many workers as the bottom 20 per cent, and 
 > nearly six times as many full-time, year-round workers. Knowing this makes a 
 > lot 
 > of difference in interpreting the original statement.
 > 
 > Income distribution data provide, at best, a snapshot, but this snapshot tells 
 > us little about movement within the economy. Yet, economic mobility is a 
 > characteristic that helps differentiate the US from many other countries. 
 > Between 2004 and 2007 roughly a third of the households in the lowest income 
 > moved up to a higher income group, while roughly a third of the households in 
 > the highest income group moved down.
 > 
 > Another study  examined income tax returns from 1996 and 2005. Over the period, 
 > 
 > the median income of the study group rose by 24 per cent. Almost 58 per cent of 
 > 
 > those in lowest income group in 1996 moved to a higher group by 2005. About a 
 > fourth of them rose to middle- or upper-middle class incomes; more than five 
 > per 
 > cent made it into the highest income group â?? in 10 years. The only group 
 > experiencing a decline in income was the richest one per cent.
 > 
 > Is US income growth stagnant? Are the rich getting richer and the poor getting 
 > poorer? Neither is true. The power of the American economy is that it provides 
 > opportunity. The income mobility numbers make this abundantly clear.
 > MCT