The rich get richer … and, oh yeah, so do the poor.

Punch line: President Obama has has oft-repeated that  “For many years, middle class Americans have been working harder, yet not enjoying their fair share of the fruits of a growing economy.”

Au contraire, mon ami.

But a new working paper titled “A “Second Opinion” on the Economic Health of the American Middle Class”  NBER and Cornell researchers provides new evidence that the growth in after-tax household income has been substantial for all economic strata.

Specifically, by taking into account previously unmeasured shifts in household size and the tax units in them, taxes paid, transfer payments received, and the increasing importance of fringe benefits, the researchers found that:

  • The growth in after-tax household income for the lower income strata was about 25% between 1979 and 2009.
  • The growth in after-tax household income for middle income strata was about 35% between 1979 and 2009.
  • The growth in after-tax household income for the highest income strata was about 50% between 1979 and 2009.

Bottom line: a slowly rising tide has lifted all boats … albeit at different rates.


Source: Prof Mark Perry

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