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inequality

A Response to the Critics

I expected that there would be a lot of critical responses to my argument that Emmanuel Saez had “cooked the numbers,” in his study of income inequality,to show that virtually all of income growth during the “recovery” after the Great Recession went to the wealthiest 1 percent. I had a strong feeling that most people would miss my narrowly framed argument and think that I was belittling the negative effects of inequality on our population. Despite attempts to inoculate myself from this criticism by showing the relatively low share of income held by the top one percent in 1979, various commentators have criticized me on several grounds: not discussing wealth inequality; not seeing the long rise in inequality; picking selective years to make my points; helping the right wing; overemphasizing the effect of transfers because of the rise of Social Security and Medicare and failing to appreciate the difficulties of middle class people and exaggerating the effects on the rich.

I have an odd intellectual history in that I was one of the first researchers to report on rising inequality in the late 1970s  and 1980s, yet have for the

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Decoupling Revisited: Who is reaping the benefits of economic growth?

Economic growth is something that almost everyone agrees is important: it’s how we enlarge the pie so that incomes can rise. Still, it is theoretically possible for the economy to grow with the benefits only going to corporate profits or a few wage earners at the very top. When this happens it is called “decoupling” because wages and productivity stop rising in tandem. Recently, a number of people have been arguing that decoupling is indeed occurring.

However, it turns out that can be more difficult than you expect to determine whether decoupling is happening, and, if it is happening, what might be causing it. Simple graphs can be deceptive: What is meant by wage growth? Should mean or median wage be used? What subset of workers does it make sense to study? Should non-wage benefits be included? Additionally, there may be significant measurement issues associated with certain statistical series, particularly those involving inflation and measurements of value added because of their significant complexity.

Previous work from ITIF has shown that many of the claims of decoupling may be overstated due to the rise in benefits and several other factors. Now,

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