Townhall.com Staff
Recommend this article

Written by Jarrett Skorup, with the Center for Vision and Values at Grove City College.

“No matter your thoughts about the Occupy Wall Street movement, the protesters were right in at least one respect: The rich are getting richer, and the poor are getting poorer.”

Variations on this statement were repeated in dozens of blogs, commentaries, and even news reports in the past months. The claim comes via a Congressional Budget Office analysis that shows incomes for the top 1 percent of Americans growing by 275 percent between 1979 and 2007, while the lowest 20 percent saw their inflation-adjusted incomes grow by “only” 18 percent.

The numbers from the report are correct, but the assertions based on it are true only because of careful wording. While the “top 1 percent” had the highest growth of income, if broadened to include the top 20 percent (the usual way of analyzing such figures), the growth rate was a far less stratospheric 65 percent. This contrasts with about 40-percent growth for the middle three-fifths of all wage earners, and 18 percent for the lowest one-fifth.

Statistically, the lowest 20 percent of households are poor for one main reason: They don’t work as much. Among the causes are medical issues, disability, and bad incentives. Not surprisingly, households in the top 20 percent are far more likely to include people with jobs. Here’s how professor Mark Perry, a member of the Mackinac Center’s Board of Scholars and chairman of the economics department at the University of Michigan-Flint, described it:

"American households in the top income quintile have almost five times more family members working on average than the lowest quintile, and … are far more likely … to be well-educated, married, and working full-time in their prime earning years. In contrast, individuals in low-income households are far more likely to be less-educated, working part-time, either very young or very old, and living in single-parent households."

Recommend this article