Alan Reynolds on Mobility

by Will Wilkinson on May 19, 2005

My colleague Alan Reynolds had an outstanding op-ed in the WSJ yesterday that sheds much needed light on the income mobility hullabaloo.

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monkyboy 3 years ago 1 point
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The average income of families in the bottom quintile has not changing in 25 years. It sits about $11,000/year, same place as it was the year Reagan took office.

From the article:

Could anyone really believe most workers have rarely had a real raise in three decades? Real income per household member rose to $22,966 in 2003 from $16,420 in 1983 (in 2003 dollars)--a 40% gain.

Workers at the upper reaches of income have had large gains in the past 25 years. When spread across all workers, it looks pretty good.

Not a very well resaoned article from Mr. Reynolds

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Nicholas Weininger 3 years ago 1 point
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monkyboy, you've been flogging this one statistic a lot, and have never bothered to address the obvious problems with it. Go look at Russ Roberts' recent series of posts on Cafe Hayek:

http://cafehayek.typepad.com/hayek

entitled "Inequality I-IV." All of the points he makes about the problems with measuring inequality in general apply to your statistic in particular. Household sizes change, time spent in education changes, and immigration rates change, and all these affect average household income independently of any actual change in income mobility. So your favorite statistic simply does not show that there is any significant percentage of Americans whose incomes have stayed flat over 25 years.

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Nicholas Weininger 3 years ago 1 point
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Oops: I forgot to mention that John T. back in the comments a few threads ago made a bunch of these same points (the education pt is actually his, not Russ Roberts'), and you didn't bother to address them then either.

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monkyboy 3 years ago 1 point
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How is, "you should have gone to Harvard" any different than, "Let them eat cake?"

The fact is, life ain't so great at the bottom of the American ladder and it's not getting better. Whether your stay there is 10 years or 50 years is not the point.

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Will Wilkinson 3 years ago 1 point
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Anecdotal evidence of income mobility. My income this year is more than twice what it was last year. And last year's was less than half of the year before. I'm moving all over the place!

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Alan Reynolds 3 years ago 1 point
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My first job after college, as a trainee with JC Penney in Sacramento, paid $5400 in 1965. Within three years I had two kids to support, but my income was up to about $7500. I worked 48-54 hours a week and did grad studies at night at Sacramento State. We had a 1956 Buick and a 1960 VW. In 1971, I started writing about economics on the side.

My labor income peaked around 1999 (by working three jobs) and is now about a fourth of what it was then. I know something about the lower and upper fifths of the income distribution and also about mobility between them.

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http://reformclub.blogspot.com

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