Census numbers don't tell the whole story

Posted: Oct 02, 2000 12:00 AM
On Sept. 26, the U.S. Census Bureau released data on poverty and income for 1999. In its press statement, the Bureau emphasized the rise in median household income to its highest level ever, and decline in the poverty rate to its lowest level since 1979. No mention was made of the sharp rise in income inequality during the Clinton years. The fact is that since 1992, the share of total household income of the bottom 80 percent of households has fallen. Every income quintile (20 percent) now has a smaller slice of the income pie than it did then. The bottom quintile -- those with incomes below $17,196 -- fell from 3.8 percent to 3.6 percent; the second quintile ($17,196 to $32,000) fell from 9.4 percent to 8.9 percent; the third quintile ($32,000 to $50,520) fell from 15.8 percent to 14.9 percent; and those in the fourth quintile ($50,520 to $79,375) fell from 24.2 percent to 23.2 percent. By contrast, those with the highest incomes have gained more during the Clinton years than during the comparable period under President Reagan. The top quintile's share of total income has risen from 46.9 percent in 1992 to 49.4 percent in 1999. The top 5 percent of households saw their income share rise even more, from 18.6 percent to 21.5 percent over the same period. The 2.9 percent rise in the share of the latter group compares with a 2.4 percent rise between 1980 and 1987. Of course, simply because a group's share of total income falls does not necessarily mean that anyone is worse off in absolute terms. Indeed, the average real income of every quintile rose last year over 1998, and is well above that in 1992. This means that standards of living have risen even for those whose share of total income has fallen. The problem is that this was true in the 1980s, as well -- yet that period was frequently called the "decade of greed." Year after year, when the income data were published, one saw banner headlines in every major newspaper declaring that the rich were getting richer and the poor poorer. These stories were always based on the distribution of income, not on average incomes, which, in fact, were rising. The implication was that the size of the income pie is forever fixed. Hence, one group's gain must mean that others were worse off. A classic example of this occurred during the presidential election in 1992. On March 5, the New York Times published a major front-page story declaring that the top 1 percent of households got 60 percent of all income gains in the 1980s. Bill Clinton read this story and "went crazy," according to his press secretary Dee Dee Myers. He went on to excoriate George Bush at every opportunity for enriching the rich and impoverishing the poor with his policies. It later turned out that the Times story was completely wrong. The top 1 percent of households did not get anything close to 60 percent of total income gains in the 1980s. What happened is that the average income of this group rose 60 percent faster than the average income of other groups. That is a very, very different thing than what the Times actually said. It acknowledged this fact by changing the story in later editions to more accurately reflect the truth. However, the Times never published a correction, and allowed people like Clinton to continue citing the false data throughout the campaign. The Census Bureau contributed to the erroneous impression that Reagan's and Bush's policies aided the rich at the expense of the middle class. Although it is the source of the raw data used in almost all income analyses, the Bureau refused to issue any sort of statement refuting the Times story, citing its policy of staying out of politics. On other occasions, the Bureau issued studies it knew to be highly charged politically without offering any guidance to the media. The worst example of this occurred in 1992 when the Census Bureau issued a study called "Workers With Low Earnings: 1964 to 1990." Its most sensational charge was that a declining number of workers had incomes high enough to support a family of four at the poverty level. Liberal papers like the New York Times trumpeted the study. The truth, however, was that the study was comparing apples to oranges -- single workers without families to those with families. The implication that workers were having a harder time supporting families simply was not true. The Census study was extremely shoddy and never should have been released, certainly not without a press statement explaining the methodology more clearly. In contrast to the Reagan-Bush years, under Bill Clinton the Census Bureau now does everything it can to put a positive spin on its income data. Just weeks before releasing the 1999 data, for example, the Bureau issued a study on "The Changing Shape of the Nation's Income Distribution." This report basically throws cold water on whether the rich are getting richer at the expense of everyone else. It says that changes in how the Bureau collects income data and structural changes in the economy are the major causes of rising inequality, not taxes or other administration policies. It is hard not to draw the conclusion that during the Reagan and Bush years, the Census Bureau in effect took sides against those administrations on the class warfare issue. During the Clinton years, it has gone out of its way to protect the administration from the kind of attacks that did much to cause George Bush's defeat in 1992.