Politics of the Headline
“Census Reports Slight Increase in Incomes,” said the headline in Rick Lyman’s front-page story in the New York Times today. Bush officials smile even wider, with a spokeswoman for Bill Frist saying the data show “the economy remains strong.”
A few alternative headlines would have captured the data better: “Families get ahead only by working more”
“Same work, less money”
“5.9% decline in families' incomes since 1999”
“One-Earner Families Squeezed Harder”
“Number of Uninsured Increase 1.3 million 2004-2005”
The Times commissioned a report analyzing newly released Census data. It is a thoughtful, reliable account of a study by a reputable group. But to describe the rise in family income as a “glimmer of improvement” when it was accomplished only by putting more people in the workforce is just plain wrong.
When more people work, household incomes should go up. Of course, expenses will go up too if these new workers have to pay for gasoline, buy clothes, eat lunches or put children in daycare. By the time all the costs—financial and otherwise—are included, it is fair to say that an increase in family income that is driven entirely by putting more people in the household tells us very little about the rising or declining total fortunes of the family.
My coauthor (and daughter) Amelia Warren Tyagi and I wrote a book about these harder-working, but not better-living two-income families, The Two-Income Trap: Why Middle Class Mothers and Fathers Are Going Broke. The New York Times data are just the microcosm of a trend started in the 1970s—the only way middle class families can keep up with rising expenses is to send more people into the workforce.
What the headline doesn’t say is that workers are participating in rising productivity. It doesn’t say is that even a tiny bit larger share of corporate earnings are going to workers. It doesn't say that after accounting for inflation, a fully-employed male is making a little more money than he was making in 1972. It doesn’t say those things because they aren't true.
The study also includes data on poverty. Perhaps they deserve their own headlines. The same number of people remained in poverty over the past year. (Smiley face headline: Despite current policies, the number in poverty didn’t grow!) And the fact that those in poverty actually got poorer. (Smiley face headline: The poor now have more incentives to work!)
Ah, the power of the headline.
By the time all the costs—financial and otherwise—are included, it is fair to say that an increase in family income that is driven entirely by putting more people in the household tells us very little about the rising or declining total fortunes of the family.
I would disagree- the fact that the increase in family income is acheived by putting more people in the workforce tells us a whole lot about the total fortunes of the family- and almost none of it's good. After you discount the increasingly few happy parents with decent careers (not just jobs), It tells us that parents are more stressed, children less well-cared-for, and that the safety net is gone. The old idea was that, in an emergency, one could send the non-working spouse into the workplace, or have the teenagers work for their own band uniforms, or get a second job. But what happens in 5 or 10 more years to the family that's already done all that?
August 30, 2006 11:00 AM | Reply | Permalink
Many times, depending on the tax bracket and the level of the second income, the second job actually costs the family money after income tax. In Southern California LA/Orange County area, the incomes are usually higher than other areas as are the costs of housing and other things. So tax brackets are higher. If the spouse goes out and gets a second job, unless that job is also in the six figure range, it is entirely possible that after the increased expenses related to taking that second job and the additional income tax paid at the incremental tax rate for the household (all inclusive would likely be about 50%) the job doesn't contribute anything to the family's bank account at the end of the year. It is easily possible it drains the bank account more than it contributes.
It is common, however, to dismiss that concept out of hand, because it seems proposterous, and simply an excuse not to get a job. We are more concerned about people working and collecting a paycheck than we are with the economics of running a successful household. I think it is because we have come to the point that our identities are tied to what we do careerwise. Without a career, we have no identity of any value.
People need to start looking at their finances more objectively, and quit doing what everyone else does, because they think that is how they keep up. Perception, not factual information, is their reality.
Jim Anderson
The Truth About Credit
August 30, 2006 4:44 PM | Reply | Permalink
If you look at the numbers full time male workers are making less, full time female workers are making less. The increase in household income is entirely the result of somebody in the household working more parttime hours. The numbers don't tell you who.
The comments made by both Bama Belle and Jim suppose one of the parents in the household has elected to take a parttime job. For the median to move we are not talking about the top earners. Forget about some female physician or television personality going back to work part time. The below median couples I have met don't live an Ozzie and Harriette lifestyle. Both parents have long since gone to work. What we are looking at is something else.
I think it might have to do with low skill young adults failing to launch. Unable to pay the high cost of housing they come home to stay with mom and pop. They become part of the household and their fast food jobs increase family income just a bit.
I don't have time to study the numbers, but I would suggest a close look for changes in household size and age might be productive.
Ron Byers
August 30, 2006 9:30 PM | Reply | Permalink
Wealthy Americans Show Healthy Gains
August 31, 2006 7:01 PM | Reply | Permalink