…a new feature over at the NYT—the brainchild of long-time economics writer David Leonhardt—covering all kinds of interesting stuff in the intersection of econ, politics, and life. I’ll be writing for it, as it absorbs the Economix blog.
In the first issue (not the right word in digital world, I guess), Leonhardt and Kevin Quealy team up for a fascinating look at the progress of real income growth across countries and across the income scale, adjusted to be in comparable dollars.
The US problem relative to others is clearly seen in the table below: our real median income has been flat where other middle-incomes in other advanced economies rose from slightly in Germany to fairly strongly in Canada and the UK (the latter result is partly driven by stopping at 2010—since then the real UK median is down significantly—see this from the Resolution Foundation).
Source: NYT, Upshot
The other figures, including one that looks exactly like a bunch of games of pickup sticks, show that thanks to this post-2000 stagnation, the US is losing its lead, except of course, at the very top of the income scale, where we’re pulling away from the rest.
By way of explanation, the authors note our loss of relative ground in educational attainment—a key theme of Leonhardt’s—along with higher inequality, less collective bargaining and lower minimum wages compared to the other countries in the study. My readers are hopefully wondering about slacker labor markets in the 2000s, and that’s part of the problem too, though not uniformly across all of these countries (Ireland, UK, pretty strong; Germany, Canada, less so).
On the inequality point, I’ve lately seen some writing, partly in response to Piketty, that higher inequality is benign in terms of the income growth of lower-income households. Such a claim is far from obvious and justly counterintuitive. Clearly, the same amount of growth will reach fewer households amidst rising inequality. One could argue that progressive taxes and transfers and greater redistribution offset the tilted growth dynamic, but that is to be seen—these data apparently capture direct government benefits. And of course, amidst persistently rising inequality, that after-tax offset implies a constant increase of the redistribution function, something US politics at least will not abide.
At any rate, that’s the Upshot, and I’ll see you up there myself later this week with a scintillating look at the “rents” versus merit debate.