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Change Midwest to auto industry and you're headed in the right direction.

If we look at median income in by state in the late 1920's versus the late "oughts", we find only two states that were significantly above the median in per capita income in the late 1920s but are now below the median per capita income: Michigan and Ohio.

CHANGES in MEDIAN income start with the PREVIOUS median income. If you look at median income by state, you see different pictures, and some which explain why some states have increased. For example, if you are a state with low median income relative to other states, and your median income increases faster than states with higher median income, then you would stand out on this chart. Similarly, if energy or ag prices increase during this period, your median income in a low population state would also increase. (Remember 15 years ago when North Dakota was getting depopulated, or remember the energy collapse in Texas and La. in the early 80's).

By the way, regarding MEDIAN income, I hope you understand the problem with using median income over a period of time. First, median from one period is necessarily different from median from another period if the composition of the population changes, ie, more 25 year olds in one period, fewer in another, more part time retired one period, less another.
Second, what should be measured is the median for a cohort over a time period...track the median of 25 year olds, track the median of 26 year olds the next year, etc.. Third, median is simply a midpoint---so if we have increasing concentration of income among a few, the median may be the same or a little lower, masking the real change, greater income inequality.

You might want to look at some of the work by Robert Shapiro who has looked at the rate of adjusted medians by cohorts....and, guess what you'll see. Adjusted cohort medians increased by 2.8 to 3.2 percent from 1977 to 2001, and declined to .5% between 2001 to 2009. Think globalization.

Here is a link to median income adjusted for cohorts: http://www.sonecon.com/docs/studies/Report_on_Income_Progress-Shapiro_Oct-23-2012.pdf

Here is the conclusion regarding medians by cohorts:

The record is clear: Average Americans achieved steadily rising earnings through the
economic expansions of 1970s, 1980s and 1990s. In the Reagan expansion of 1983-1989, for
example, the median earnings of Americans born in the early 1950s and those born a decade later
increased an average of 3.2 percent per-year, as they aged. Similarly, in the Clinton expansion of
1992-2000, the earnings of working Americans born in 1950, 1960, and 1970 grew an average of
3.8 percent per-year, as they aged through the expansion. This pattern ended, however, with the
expansion of 2002-2007, when the earnings of those born in 1950, 1960 and 1970 and working
in those years increased on average by just 0.5 percent per-year. The financial meltdown of
2008-2009 and the deep recession and slow recovery which have followed did not create this
problem but rather, as would be expected, exacerbated the new pattern. (Table 1, below)

Interesting.

Bill,

I agree 100%. Cohort analysis, in principle, is the obvious way to understand what the hell is going on. Thomas Sowell agrees.

If economists want to improve their profession's contribution to the public policy dialogue, I can't think of a more obvious area of analysis.

I skimmed the Shapiro piece, and there is a fair amount of sloppy reasoning from the data, but he is absolutely on the right track here, and the conclusion, that has yet to sink fully into the national consciousness, that Reagan and Clinton were pretty damn good presidents, I endorse.

I recommend #1. Funniest thing I've seen this week.

1) Well shoot, Tyler, costly article for me: "“Jesus,” S. said. “Aren’t you ever off the clock?”" generated a massive coffee spit-take right into my imac. Well worth it, of course.

"4. What does the great stagnation look like for journalists?

5. What do animals think of their dead?"

Very droll.

+1

Also: Sartre was an animal. He thought about death. #1. and #5. can be merged.

I have had this for over a month now. It arrived prtopmly and was very easy to put together. So far, I am very pleased with its performance. I was replacing a canister vac that I had used for several years. The Shark Navigator definitely picks up more dirt and pet hair. I have cats and dogs, and this vac really sucks up the hair. The dust cup is a little small – I have to empty it multiple times when vacuuming the entire house. But that is really not a problem because it is so easy to empty. Right now it is a great vacuum, and I am certainly hoping that I will say the same thing about it a year from now.

4. What does the great stagnation look like for journalists?

Seems like economics journalists like Tyler Cowen are doing quite well during the "great stagnation". Oh, did you mean how are uninformed journalists that don't server their customers doing? Not nearly as well. Seems that would be an improvement in efficiency and wealth though, wouldn't it?

The thing about 3) is that it focuses on median income but doesn't examine cost of living at all. In any case, one of the pretty significant effects is housing policy (as well as housing price declines) that make it easier to move to some states but harder to move to others.

It's possible for a state to raise its average median income by making it harder for lower middle class people to live there, while other states like Texas are more welcoming of them. (Lower housing prices in Texas overwhelm state welfare programs.) That's not necessarily something to cheer about in the restrictive states, any more than I cheer restrictive immigration in general. Virginia Postrel had a column recently about some research on this subject-- the growth in interstate inequality in recent years is almost entirely determined by richer states making it harder for people to move there.

The interesting thing is that Mass and New Hampshire are on the top performing list.

But their strength is not due to energy or agricultural.

Massachusetts is the prime example of the post-industrial economy where growth is pulled up by the education intensive industries -- tech, finance, medicine and education.

Moreover, much of New Hampshire's growth is the spill over from Mass into the southern part of that state -- really just an extension of the Boston suburbs.

Yes, the cost of living is high in Mass and what we think of as blue-collar middle class can not afford much of the area. But, the jobs being created in Mass are not the blue-collar, middle class jobs we typically think of.

The migration pattern is for movement in both directions as highly educated, well off, knowledge workers move into the state -- often coming to school here to begin with and just staying after school -- while the individual with less than a college education move to other parts of the country where the cost of living is lower and more jobs suited to their skill level are available. I kid that after my sons sister-in-law moved from Mass -- she was a high school graduate working as a hair dresser -- to Nevada -- where she worked as a card dealer and a real estate salesperson -- the average IQ and income in both states improved.

But if we really believe in the education model for the US it means the rest of the country will become more and more like Mass and we will need to deal with the issue of how to deal with the segment of the population not qualified to work in the post-industrial industries.

5. I conducted just such an experiment in my home. Upon discovering ants in my downstairs kitchen, I killed them and cleaned up the ants. More of their brethren returned. The second time I squished them and left the bodies. No more ants returned. I might have killed the last of them, but I doubt it.

The real income of the median household peaked in 1999 at $54,932 and has since fallen back to a level first attained in about 1996—over a decade and a half without a real income gain.

The first question you have to ask is whether they are comparing like with like. US households changed quite a lot over this period. As part of the on-going decline of marriage in the West. So are households getting smaller? Do we have more single mothers? Do we have more post-divorce singletons? I think the answer to that is obvious. That will influence the results. Have they corrected for it? I can't see they have.

I thought it would be interesting to take a look at some of the geographic disparities in real income growth over that time period. At right you can see a look at the top and bottom ten states for real median household income growth for 1999-2007 and 1999-2011 (to illustrate the impact of the crisis).

A few things stand out. Places that enjoyed strong real income growth over the past decade tend to either be large, sparsely populated plains states or states with a thriving energy industry (or both). Greater Boston seems to show up here quite strongly, and government appears to have buoyed Washington and Virginia. A bad real income performance seems to be strongly related to share of manufacturing in the economy.

Another thing stands out - and it is embarrassing to mention it, but someone ought to - race. Plains states tend to be White. States with a large share of manufacturing tend not to be quite so much. Recent economic growth in the US does tend be in (and to move towards) places with fewer minorities. I don't think they need to base their whole analysis around it - although obviously Detroit is not going to be a powerhouse any time soon - but they should mention it.

#1: Very funny. Woody Allen used to write this sort of stuff.

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