Mostly True
Pritzker
Since 2009, "after-tax incomes are up nearly 14 percent."

Penny Pritzker on Friday, May 13th, 2016 in a Medium post

Are after-tax incomes up 14% since 2009?

U.S. Commerce Secretary Penny Pritzker (pointing) tours the Port of Hamburg in Germany.

President Barack Obama has touted his administration’s record of overseeing economic growth since the Great Recession. But is it correct -- as Commerce Secretary Penny Pritzker wrote recently in Medium -- that since 2009, "after-tax incomes are up nearly 14 percent"?

To check Pritzker’s statement, we looked at two economic statistics compiled by the Bureau of Economic Analysis, which, as it happens, is part of the department Pritzker oversees.

One is real disposable personal income -- that is, the accumulation of all personal incomes in the United States, minus taxes and adjusted for inflation.

That statistic rose from $10.9 trillion in 2009 to $12.2 trillion in 2015, the last full year available. That works out to an increase of 11.9 percent.

Here’s a summary graph:

That’s lower than the 14 percent figure Pritzker cited, but it’s still a double-digit increase over six years, so it’s in the ballpark.

We didn’t hear back from Pritzker’s office, but Brookings Institution economist Gary Burtless said he suspects she arrived at her number through a different but reasonable calculation.

He said she was probably referring to a comparison of an average of the 12 monthly figures from 2009 and the three monthly figures (so far) for 2016. We double-checked Burtless’ math and found that it works out to be a 13.7 percent increase -- on target with what Pritzker said.

But while Pritzker is either correct or reasonably close when looking at the overall personal income numbers, it’s worth remembering that this number can be affected by population growth, even over a period as short as seven years.

Consider an alternative measure -- real disposable personal income per capita, which is the previous statistic, but adjusted for the size of the U.S. population.

That measurement has gone up from $35,616 in 2009 to $38,046 in 2015 -- an increase of 6.8 percent. That’s only half as fast as Pritzker said -- and it’s worth remembering that this was a cumulative rise over six years. As a result, disposable personal income rose by only about 1 percent a year above inflation during that period.

That doesn’t sound quite as exciting.

Why doesn’t this feel right to most Americans?

So if Pritzker’s claim about after-tax income growth is reasonably accurate, how does that jibe with equally accurate claims noting that "Americans haven’t had a raise in 15 years"?

For starters, as we’ve noted, there are various ways to measure income growth, each of them legitimate but some of them show different results.

"I agree that we want to think about some sort of per-person measure, but is the right measure per capita or per employed or per labor force participant?" said Tara Sinclair, an economist at George Washington University and the jobs site Indeed.

In addition, even if real disposable personal income is going up over time, that doesn’t mean it’s rising as fast as it once was. To measure this, we looked at the average annual increase in real disposable personal income during three recent periods.

From 1992 to 2000, real disposable personal income rose an average of 3.7 percent per year. From 2001 to 2008, it rose an average of 2.7 percent per year. And from 2009 to 2015, it rose by 1.6 percent per year. That’s a clear pattern of diminishing growth, even if it’s still growth.

Burtless noted that the lack of attention given to the role that rising population has warped perceptions of economic output and income growth.

Specifically, he said, the slowdown in population growth since the 1970s, especially in the age groups likeliest to be working, has made it harder for the United States to reach the once-common historical level of 3 percent annual economic growth.

Our rating

Pritzker said that since 2009, "after-tax incomes are up nearly 14 percent."

Using the most basic, aggregate measure, Pritzker is either on target or reasonably close. However, it’s worth noting that this accomplishment is not quite as impressive once you strip out population growth or look at growth levels historically. The statement is accurate but needs clarification or additional information, so we rate it Mostly True.

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