The Great Recovery Equals Greater Income Inequality

Posted on September 4, 2013 by


A very interesting and a very telling bit of research from Sentier Research was released two weeks ago. Sentier analyzes data from the Current Population Survey to estimate trends in median household income. Yesterday, Steven Moore at the Wall Street Journal, published an op-ed piece based on Sentier’s analysis: Obama’s Economy Hits His Voters Hardest. During this recovery, median household income has fallen 4.4%. In the article Mr. Moore outlines the changes in income from several demographic groups. Younger voter’s incomes down  9.6%, single women’s incomes fell 7%, workers with high school diplomas or less about declined approximately 8%, black heads of households fell 10.9%, Hispanic heads of households fell a mere 4.5%. Groups voting heavily for President Obama in the 2012 election are losing income at a greater rate than the average loss of income.

While it is disconcerting to be discussing the fall in median household incomes during the “Great Recovery” it is perhaps equally disconcerting to note that income inequality among the specific groups mentioned and the average is growing. Moore goes on to point out how during the economic expansion of the 1980s and 1990s the same demographic groups had rapid increases in income. The chickens from Dodd-Frank and The Affordable Care Act are coming home to roost.

Economic policies laced with good intentions but based on wrong headed thinking produce bad results. President Obama had strong support from evangelical Christians at least partially because of a belief that greater government involvement and a larger welfare state would serve the needs of the poor better than the Bush Administration or what a Romney Administration might have done. Good intentions are no substitute for clear thinking on economic policy issues.


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