Average Income Drop "Not Interesting" - Political Forum

Wheeldog · 08-21-2007, 01:55 AM

Average Incomes Fell for Most in 2000-5 - New York Times

Americans earned a smaller average income in 2005 than in 2000, the fifth consecutive year that they had to make ends meet with less money than at the peak of the last economic expansion, new government data shows.
.......

Nearly half of Americans reported incomes of less than $30,000, and two-thirds make less than $50,000. ....

The fact that average incomes remained lower in 2005 than five years earlier helps explain why so many Americans report feeling economic stress despite overall growth in the economy. Many Americans are also paying a larger share of their health care costs and have had their retirement benefits reduced, adding to their out-of-pocket costs. ....

Tony Fratto, a White House spokesman said the fact that nearly all of the growth in incomes was among those in the upper reaches of the income ladder and that the majority of investment tax breaks went to those making more than $1 million “is not a very interesting story.”

The decline in purchasing power among all but the extreme upper income earners may not be "very interesting" to this administration, but it is certainly more than interesting to the great majority who have to get by on much less.

Brother Oz · 08-21-2007, 06:33 AM

Wow, I'm shocked at those figures. Your incomes are tiny.

iTaliAN_ICe · 08-21-2007, 01:13 PM

...And the gap grows wider.

Authority · 08-21-2007, 03:32 PM

Considering that the United States has had an average annual inflation rate of 2.48% from 2001 to 2005, that's pretty disheartening.

That works out to a 12.4% average reduction in buying power.

perdidochas · 08-21-2007, 04:19 PM

Quote:

Originally Posted by Authority

Considering that the United States has had an average annual inflation rate of 2.48% from 2001 to 2005, that's pretty disheartening.

That works out to a 12.4% average reduction in buying power.

The drop in salary is if inflation is considered. The reduction in buying power is about .9%

rsather139 · 08-21-2007, 06:54 PM

Well, the US still has a bigger middle class than most, but I'm getting really sick of everything about this administration. Catering to the rich like this cannot be that good for the economy in the long run.

Wheeldog · 08-21-2007, 09:20 PM

Quote:

Originally Posted by rsather139

Well, the US still has a bigger middle class than most, but I'm getting really sick of everything about this administration. Catering to the rich like this cannot be that good for the economy in the long run.

The middle class has been on a downhill slide for several years. Historically, the foundation for our middle class was largely the manufacturing sector. U.S. mill and factory workers were not rich, but most earned a good wage and had health and retirement benefits. However, with the rise of globalization, so-called free trade and multinational corporations, products once made in America are outsourced to third world countries where living standards are a fraction of those in the U.S.. In these countries the workers cannot have unions to bargin for better wages. Safety and environmental protection is virtually non existent. Laborers are abused and may not even be paid for their efforts. The products they produce are dirt cheap, so corporations that import them to the U.S. reap large profits. And the U.S. middle class continues to shrink.

There will always be those who are richer and those who are poorer for a variety of reasons. Ideally, the wealth scale is relatively well-ballanced with a gradual curve from the poorest segment of the population to the richest. When there is a large gap between a tiny number of the wealthy and the great majority of the rest of the population social and political tensions rise accordingly. That was the case just before the beginning of the Great Depression in the 1920s. It is happening again.

perdidochas · 08-22-2007, 09:54 AM

Quote:

Originally Posted by Wheeldog

The middle class has been on a downhill slide for several years. Historically, the foundation for our middle class was largely the manufacturing sector. U.S. mill and factory workers were not rich, but most earned a good wage and had health and retirement benefits. However, with the rise of globalization, so-called free trade and multinational corporations, products once made in America are outsourced to third world countries where living standards are a fraction of those in the U.S.. In these countries the workers cannot have unions to bargin for better wages. Safety and environmental protection is virtually non existent. Laborers are abused and may not even be paid for their efforts. The products they produce are dirt cheap, so corporations that import them to the U.S. reap large profits. And the U.S. middle class continues to shrink.

There will always be those who are richer and those who are poorer for a variety of reasons. Ideally, the wealth scale is relatively well-ballanced with a gradual curve from the poorest segment of the population to the richest. When there is a large gap between a tiny number of the wealthy and the great majority of the rest of the population social and political tensions rise accordingly. That was the case just before the beginning of the Great Depression in the 1920s. It is happening again.

The middle class in this country today, live like the rich did in this country 70 yrs ago.

red states rule · 08-22-2007, 10:56 AM

Considering wages did NOT drop over the entire time period - what is the issue?

The New York Times has to work very hard to make the performance of the economy during the past few years look bad. This morning, David Cay Johnston did his part.

Bear with the technical stuff for a bit; the meat will arrive shortly.

Every year, the IRS publishes information about the tax returns it received in the second preceding year.

2005's tax-return data was released yesterday (data referred to here is not linked because it is in PDFs and Excel files; anyone who wants to see the underlying data can e-mail me). Among the stats the IRS produces is one with the confusing name of "Adjusted Gross Income Less Deficit." I will call it "Revised AGI" for this post. "Revised AGI" adds a long list of items back to taxpayers' reported Adjusted Gross Income (the number at the bottom of Page 1 of the long-form 1040) in an attempt to approximate taxpayers' total income, whether it is taxed or not.

There are problems with the data I will note shortly.

As to Johnston's article, he and the Times chose the specious "2000-2005" reportorial spin noted above, even though:

The more important news by far is that the real increase in Revised AGI in both 2004 and 2005 is greater than during either of the final two good years of the Clinton economy;
The real decreases in 2001 and 2002 occurred largely because of the bursting of the Clinton-Era dot-com bubble and the September 11 terrorist attacks. The dot-com bubble got mentioned by the Times in the context of quotes from White House sources (the better to make it look like excuse-making); Johnston and the Times made the September 11 attacks invisible.
An obvious omission: The IRS does not include the Earned Income Credit (EITC) in its compilation of Revised AGI, even though the EITC represents real money that either reduces other taxes or goes directly into beneficiaries' pockets. Total EITCs claimed increased from $19.5 billion in 2000 to $42.4 billion in 2005, largely because of the credit's expansion in the Bush tax legislation of 2001 and 2003. Spread over the annual average of roughly 132 million tax returns filed during that period, the $22.9 billion increase in the EITC ($42.4 bil minus $19.5 bil) amounts to over $170 per return.

Don't forget the tax-rate cuts: Now add the benefit of the Bush rate cut in the lowest bracket, which has benefited all but the very top few percent of taxpayers. Since its inception in 2001, that rate cut from 15% to 10% -- never mind the reduction in higher brackets -- has reduced taxes for most single filers by at least $350 per year, and for most joint filers by at least $700.

The EITC expansion, the cut in the lowest rate just noted, and the reductions in the rates applied in higher income brackets, when combined, surely more than make up for the $477 difference ($55,715 minus $55,238) between 2000's and 2005's Revised AGI amounts. So while average pre-tax income may have fallen, average after-tax income has risen -- even during the Times's artificially induced period of analysis.

Johnston's obviously agenda-driven bottom line (see MY RESPONSE below for a revision of this assessment) is this:

The fact that average incomes remained lower in 2005 than five years earlier helps explain why so many Americans report feeling economic stress despite overall growth in the economy.

The growth in real incomes in the two years noted, the continuation of that growth in 2006, and the positive impact of the Bush tax cuts all make Johston's contention about the sources of whatever economic stress may exist absurd.

A more accurate revision to Johnston's claim would be this: "The fact that Old Media won't report the success of the economy since the Bush tax cuts took hold helps explain why so many Americans report feeling economic stress despite overall growth in the economy."

NYT Twists Data: Makes Great Personal Income News Appear Awful (UPDATE: Reporter Responds) | NewsBusters.org

red states rule · 08-23-2007, 06:32 AM

Yet everyones wages went up. I find it funny how libs constant bash and attack the rich - who are the ones who pay a huge majority of taxes, and finance their beloved social programs