Are Americans Really Getting Poorer?

It all depends what numbers you pick and choose.


Some fine research from the Tax Foundation provides a nice reality check on the claim that Americans are poorer now than in 2000. Depending on how you measure income, the median household income fell by 3.8 percent from 2000 to 2006...or it rose by 3.1 percent ...or it did something in between.

Then there is this: Is it fair to use the year 2000 as a baseline year when incomes were inflated by a stock market bubble? My pal Jared Bernstein, an economist over at the Economic Policy Institute and author of a book on the so-called middle-class squeeze, said the following in front of a congressional panel this week:

The regulatory agenda is ultimately targeted at the longer-term problem of what might be called the shampoo economy of the last few business cycles, with their pattern of "bubble, bust, repeat." The last two, and possibly three, recessions were caused by bubbles that were fairly widely recognized as they inflated. Yet key policymakers ignored the signs, in some cases even nudging the bubbles along by endorsing the practices that inflated them. The economic pain caused by the inevitable implosion was, and is, deep. It is a major contributor to the middle-class squeeze, all the more unfortunate in that this economic pain is largely self-inflicted.

So isn't a bubbly 2000 thus a terrible year to use as a benchmark? Of course, many of the people saying Americans have gotten poorer since 2000 also say they have gotten poorer since the 1970s.