Who’s responsible for the boom (and the bust)?

What if one of the shibboleths of our time is wrong? For years I’ve read that incomes have declined for everyone not in the top one percent since the late seventies. But a new study says that median household income increased for everyone under Reagan and Clinton:

Robert J Shapiro, a former economic adviser to Bill Clinton who now runs the Sonecon consultancy in Washington, grabbed the opportunity to look at the raw census data when the US statistical office published it a few years ago.

He tracked the median incomes of average households as they travelled through the decades, checking on the progress of men versus women, Hispanic people versus black and white people, college graduates and different age groups. The report presents us with a more nuanced picture of the workforce and how it has fared.

He found that the 1980s boom, which gained traction in the middle of the decade, boosted the wages of all but the oldest group of workers. So large, steady income gains characterised the average household whether they were headed by men or women, or by people with high school diplomas or college degrees, whatever their ethnicity.

As Shapiro said: “This evidence contradicts the narrative told by those who track the value of aggregate income from the 1970s to present the claim that most Americans have made little progress for decades.”

The momentum dissipated in the first Bush presidency between 1989 and 1993 and accelerated again in the Clinton years before running out of steam in the early 2000s.

Where we find consensus is, where else, the George W. Bush administration’s policies of tax and interest rate deductions.

The article errs in placing Donald Trump and Bernie Sanders in a binary. Trump has no policies. Insofar as he does, the record puts him closer to Sanders than to any GOP candidate. Furthermore, under Reagan the non-rich saw more money drain after Social Security and so-called sin taxes. Clinton’s mild palliatives in 1993 were Reaganism with a Democratic face.

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