Many economists and other social scientists determine well-being by looking at income brackets instead of people. When one looks at people, he finds considerable income mobility. According to a report by the Department of the Treasury titled "Income Mobility in the U.S. from 1996 to 2005," there was considerable income mobility of individuals in the U.S. economy during that period (http://tinyurl.com/5sv8799). Using Internal Revenue Service tax return data, the report says that more than half of taxpayers moved to a different income quintile over this period. More than half of those in the bottom income quintile in 1996 had moved to a higher income group by 2005. The mobility also goes in the opposite direction. Of the highest income earners in 1996 -- the top one-hundredth of 1 percent -- only 25 percent remained in this group in 2005. The percentage increase in the median incomes of those in the lower income groups, between 1996 and 2005, increased more than the median incomes of those initially in the higher income groups.
Boudreaux and Palagashvili conclude that "middle-class stagnation and the 'decoupling' of pay and productivity are illusions. Yes, the U.S. economy is in the doldrums, thanks to a variety of factors, most significantly the effect of growth-deadening government policies like ObamaCare and the Dodd-Frank Act. But by any sensible measure, most Americans are today better paid and more prosperous than in the past."
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