"Household income in America has gone down for families an average of $4,000 in the last four years" while it " went up $5,000" under Mitt Romney when he was governor of Massachusetts
Paul Ryan on Monday, August 27th, 2012 in a speech
Ryan says incomes went down nationally under Obama but went up in Massachusetts when Romney was governor
After distractions over social issues and tax returns dominated the run-up to the GOP convention, Paul Ryan put the focus back on Americans’ pocketbooks at a send-off rally in his hometown.
"Household income in America has gone down for families an average of $4,000 in the last four years," Ryan said in Janesville, Wis., on Aug. 27, 2012. "When Mitt Romney was governor of Massachusetts, unemployment went down and household incomes went up $5,000."
Romney, too, has hammered on this theme, painting President Barack Obama as a failed leader in hard economic times. Ryan, like Romney before him, made clear in his speech that Obama should be held accountable for any income drop. (For clarity, we’ll exclude the unemployment claim.)
First, the history of this line of attack.
Earlier this year, PolitiFact Wisconsin looked into a claim from Romney that the median income in America had dropped by 10 percent in the last four years. At that time, the drop was $4,600 or 8.3 percent, based on a study by former Census bureau income experts at Sentier Research.
We rated that claim Half True because the figure was outdated and somewhat off the mark.
Also in June, we looked at a Romney surrogate’s claim that "the average income for a family in Massachusetts went up by $5,500" when Romney was governor from 2003-2007.
That also got a Half True because the dollar figure, while accurate, was not adjusted for inflation. In addition, we ruled that governors have only marginal impact on their states’ economies.
In his Janesville address, Ryan tossed the Obama and Romney records into one claim.
That’s a claim-changer, because the numbers are apples and oranges.
The declining incomes Ryan cites in the last four years were in real dollars -- inflation adjusted to show the true effect on purchasing power -- while the gains in household income under Romney were not inflation-adjusted.
Applying the "real" dollar analysis to the income trend under Romney, there was a drop in Massachusetts household incomes, not a $5,000 bump up, a Massachusetts Taxpayers Foundation researcher told PolitiFact in June.
This week we asked Gary Burtless, a former U.S. Labor Department economist with the Brookings Institution, to check that. He found a $589 drop, about 1 percent, compared to a nationwide increase of 1.4 percent.
There’s nothing wrong with using unadjusted dollars, but economists we consulted said using real dollars is a better real-world way of gauging income trends.
And by mixing the two methods, Ryan creates a much larger gap between the 2003-2007 experience and the 2009-2012 numbers.
"It's definitely not kosher to use inflation-adjusted numbers in one case and nominal numbers in the other case," Daniel Mitchell, senior fellow at the libertarian Cato Institute, told us. When inflation is high enough to wipe away nominal gains in income, as in the Massachusetts example, "that makes it even more important to use apples-to-apples comparisons," he added.
Ryan talked about a decline in median household income "in the last four years."
That would reach back to mid-2008 near the end of the Republican administration of George W. Bush. The Great Recession began during the Bush era, in December 2007.
Let’s look back four years, using the Sentier Research study, which was the source used in a now-outdated Bloomberg News story that Ryan’s campaign cites to back up his claim of a $4,000 drop. (Though census data income data is the gold standard for these statistics, it has not been released for 2011 or 2012).
The Sentier data, current through June 2012, shows a $3,317 drop in median household income since June 2008. That’s a 6 percent dip.
Ryan said the decline was an "average of $4,000," so he’s off going back four years.
But if you assume Ryan was informally using "four years" as a proxy for Obama’s term so far, it’s a $4,019 drop.
Ryan said in a convention send-off speech that Obama deserves blame for household incomes nationally tumbling $4,000, while Romney deserves credit for incomes growing a substantial $5,000 in Massachusetts when Romney governed that state.
Earlier in the campaign, when Romney made these two claims separately, we found them partially accurate.
But when they are combined, they leave a false impression of polar-opposite trend lines because one is adjusted for inflation, while the other is not.
Applying the same inflation-adjusted methodology that Ryan chose to show the $4,000 household income drop under Obama, median incomes actually fell $589 under Romney during his earlier stint as governor.
Ryan also affixes too much blame or credit on the pair for the trends.
We rate this statement False.