In a column headlined " The Gelded Age: The inequality bed-wetters are misleading you," Kevin Williamson of National Review informs us of the following:
"The inequality police are worried that we are living in a new Gilded Age. We should be so lucky: Between 1880 and 1890, the number of employed Americans increased by more than 13 percent, and wages increased by almost 50 percent. I am going to go out on a limb and predict that the Barack Obama years will not match that record; the number of employed Americans is lower today than it was when he took office, and household income is down. Grover Cleveland is looking like a genius in comparison."
Unfortunately, Mr. Williamson is misleading his readers from his opening paragraph, and pretty blatantly at that. He claims that the number of employed Americans is lower today than in January 2009; in reality, the number of employed Americans today is 5.1 million higher than it was when Obama took office.
This is not exactly a secret. In fact, here's a graph from the Bureau of Labor Statistics documenting it pretty clearly:
The chart begins in January, 2009, the month of Obama's inauguration, and runs through the latest data available. And as you can see, the line at the far right is quite a bit higher than where it starts on the left.
Now about that 13 percent number: While we cannot know what the future may hold, let's assume that the current, rather moderate rates of job growth hold steady. It could accelerate, it could decline, but let's assume that it keeps plodding along. If it does, we will indeed see a 13 percent increase in employed Americans by 2019, a decade after Obama's inaugural.
Williamson is on slightly firmer ground in his observation that household income has dropped, because it certainly has.** However, while attributing the decline to Obama might be ideologically reassuring, it too fails the accuracy test, as this chart from the Federal Reserve of St. Louis (known by its nickname "FRED") documents:
As you can see, median household income peaked back in 1999 and has been in gradual decline ever since. It recovered briefly from 2005-2007, during what we now know to be the false prosperity of the bubble years, but after 2007 it went into a sharp fall that has moderated only in the last two years. This is the core issue of the economic debate now confronting our country.
It also leads us to what I take to be the core of Williamson's argument, even if it's a little hard to discern amidst all the anger contained in his jeremiad:
... (leftists) treat "inequality" as though it were an active roaming malice on the economic landscape, and argue that incomes are stagnant at the lower end of the range because too great a "share of national income" — and there's a whole Burkina Faso's worth of illiteracy in that phrase — went to earners at the top. It simply is not the case that if Lloyd Blankfein makes a hundred grand less next year, then there's $100,000 sitting on shelf somewhere waiting to become part of some unemployed guy in Toledo's "share of the national income." Income isn't a bag of jellybeans that gets passed around."
But actually, in some ways income IS a bag of jellybeans, as our friends from FRED help us document:
As the chart above indicates, labor is now collecting a significantly smaller share of our national GDP in paychecks and benefits -- fewer jellybeans, so to speak -- than it did a generation ago. The decline has been particularly stark since 1999. In fact, by my calculations, the decline in labor's share of our national economic output since 1999 represents an annual income shift of $750 billion away from workers.
I think it takes an enormous amount of chutzpah to try to claim that the decline in median household income is not directly related to the declining share of national income going to labor. But that's essentially the argument that many conservatives try to make.
And if labor's share of the total jellybean output is declining, where are those missing jellybeans going?
FRED, can you help us out here?
Thank you FRED.
That's an awful lot of jellybeans. Of course, Williamson and his friends would have us believe that there is no connection between declining median household incomes and the declining share of GDP that is distributed to labor, and no connection between the declining share of GDP distributed to labor and the growing share of GDP distributed in the form of corporate profit to Lloyd Blankfein and his colleagues. It's as if the laws of basic mathematics have been suspended.
BTW, here's what corporate AFTER-TAX profit looks like when expressed as a share of gross domestic income:
Again, it rises as the labor share falls.
And maybe it's just coincidence, but look at when corporate profits peaked as a share of gross domestic income: 1929 and 1930. If you're read this far, you're interested enough in economics to know what happened right around then.
Now note its next highest peak: 2007 and 2008. Hmmm.
But of course, WIlliamson tells us this is nothing to be concerned about. In fact, he says, it ought to be celebrated.
"Further, if your assumption here is that this is about redistribution," he writes, "then you should want the billionaires’ incomes to go up, not down: The more money they make, the more taxes they pay, and the more money you have to give to the people you want to give money to, e.g., overpaid, lazy, porn-addicted bureaucrats."
I really don't know what to say about stuff like that.
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** It's a funny thing, and maybe you've noticed it too: Conservatives will argue until they're red in the face that income inequity is not a real problem, that it's some figment of the liberal imagination, EXCEPT when they get a chance to blame that income inequity on Obama. Then they'll eagerly trot out the very statistics that they had previously dismissed as misleading.
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