Fall Out of the Income Gap

As Income Gap Widens, Uncertainty Spreads
More U.S. Families Struggle to Stay on Track

That's the ominous headline of a front page Washington Post story today. It includes a couple of truly hard-luck stories–of workers who have been displaced and who are now struggling to make ends meet. But the large point of the piece–as summarized by the headline–is bullshit.

Check out the chart accompanying the story carefully and you'll note that 22.3 percent of households were in the middle income quintile as of 1967–a figure that shrunk to 15 percent in 2003 (all corresponding money amounts are in constant 2003 dollars); that's supposed to be bad news.

Note also that in 1967 52.8 percent of households were in the bottom two income quintiles–a figure that had dropped to 40.9 percent in 2003; that should be very good news.

And note further that the percentage of households in the top two quintiles had risen from 24.9 percent in '67 to 44.1 percent in 2003. That is, arguably, better news still.

So significantly more households were in the top two quintiles in 2003 than in 1967–and significantly fewer were in the bottom two. That this gets spun as bad news is pretty amazing–especially in an economy with relatively low unemployment and historically high home ownership rates and near-record levels of high school seniors going on to college.

Some commenters at Arnold Kling's invaluable economics blog point out that you should properly account for household size, female participation in the workforce, etc. You can also make the case that it's really godawful that the top 5 percent of households (or whatever) are getting all the gains (not true, but you can argue it if you want). That's all fine and dandy.

But so is the simple fact that in the middle of a story about how tough things are for the (statistically) middle class, the main data suggest a very different development: There's fewer people in the middle class because they've bumped up to the next two levels.

A far more interesting–and relevant–story could have been around built Scott Clark, the 51-year-old former factory worker who opens and closes the story. Clark is now driving a mail delivery van at a fraction of his former salary, putting finanical strain on his family. It would be interesting to know what sorts of retraining programs–whether funded by the state or the private sector–actually help people in such situations. But that sort of story never seems to be worth writing at all, much less getting front page ink.

Update: The purpose/gender of the delivery van has been corrected from "male" to "mail."