Monday, December 22nd, 2014

Is it true the rich are getting richer?

This chart from United for a Fair Economy makes the case that the gap between the wealthy and the middle is growing.
This chart from United for a Fair Economy makes the case that the gap between the wealthy and the middle is growing.

Did the song get it right that "the rich get richer, and the poor get poorer?"

With a showdown looming over raising the debt ceiling and Congress and the White House wrangling over how to move the nation out of the red, one group has been singled out for special attention -- at least by the Democrats.

"The tax cuts I’m proposing we get rid of are tax breaks for millionaires and billionaires; tax breaks for oil companies and hedge fund managers and corporate jet owners," said President Barack Obama in his press conference last week.

That would be the rich, the super-rich, the folks who are different from you and me. But just how different are they? And is that difference growing?

That question has come up frequently at PolitiFact, including this week when we checked a  chart posted at the website of MoveOn.org, a liberal group. It aimed to show how incomes across the board rose from the end of World War II until 1979. But then, starting in 1979, they slowed for lower-income Americans while accelerating dramatically for the richest.

The chart was produced by United for a Fair Economy, a group that "raises awareness that concentrated wealth and power undermine the economy, corrupt democracy, deepen the racial divide, and tear communities apart."

We found some differences with the numbers and a few questions about methodology, but overall story told by the United for a Fair Economy chart struck us as pretty accurate. So we rated the chart Mostly True.

It wasn't the first time we checked information from United for a Fair Economy. Last year, in a first for PolitiFact, we checked a bumper sticker that said: "CEOs now earn 431 times what their workers earn. Support unions."

We found a chart on the website  of United for a Fair Economy that showed CEO pay at 431 times the average worker’s pay. But the number was out of date: It was the number for 2004. A more recent study by another organization found the ratio had dropped to 263 times the average workers’ pay by 2009. We also found some fault with the methodology which compared compensation for a select set of bosses -- the heads of Fortune 500 companies -- with the pay of a much larger universe of workers. Still, the underlying point that there is a sizable gap between corporate executive pay and worker pay was correct, so we gave it a Half True.

Earlier this year we checked dueling assertions by the Wall Street Journal's Stephen Moore who appeared with MSNBC commentator Rachel Maddow on HBO's Real Time with Bill Maher show Jan. 21, 2011.

Moore said that low-income people had the biggest income gains in the 1980s. Maddow said that the incomes of the top 1 percent of earners went up 80 percent during the same time frame while the "median wage in the country over 10 years went up 3 percent."

We found that the lowest income earners actually had the smallest gain during the 1980s and rated Moore's claim False.

Maddow scored a Mostly True when we checked and found support for her numbers, although some economists we spoke to preferred to use figures that included capital gains, which show the top 1 percent saw an increase of 55 percent.

Our partners at PolitiFact Wisconsin also checked a statement by documentary film-maker Michael Moore that "400 Americans -- 400 -- have more wealth than half of all Americans combined." Moore was speaking at a rally in March against Republican Gov. Scott Walker's efforts to take collective bargaining powers from state and local government employees.

Moore based his claim about wealth at the top on Forbes Magazine, which said in a September 2009 article that the net worth of the nation’s 400 wealthiest Americans was $1.27 trillion. He contrasted it with information from a study by Edward Wolff, an economist at New York University and Bard College, which found that the poorest 60 percent of U.S. households -- possessed 2.3 percent of the nation’s total net worth.

Multiplying 2.3 percent by the nation’s 2009 total net worth of $53.1 trillion came out at $1.22 trillion, so we rated Michael Moore's claim True.

You can find other fact checks we've done on the issue of income inequality -- dating back to 2007, the year we began -- here.