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Economic stagnation is an issue that has become a major talking point for both parties.
Take President Barack Obama’s most recent State of the Union address, in which he said that during the past four years, "average wages have barely budged." We rated that claim True.
Now, Sen. Rob Portman, R-Ohio, has offered an even more ominous statistic for working Americans.
"The average family," he said in the March 8, 2014, weekly Republican address, is "now bringing home $4,000 less than they did just five years ago."
We wondered whether Portman’s claim was correct, so we turned to data from the U.S. Census Bureau.
The bureau collects data on family income and found that Portman is correct as long as the dollar amounts are adjusted for inflation. We looked at both the mean family income (that is, total family income divided by the number of families) and the median family income (the middle value when all family incomes are lined up from biggest to smallest).
For the inflation-adjusted mean, family income fell from $87,312 in 2007 to $82,843 in 2012, the most recent year available. That’s a drop of $4,469, making Portman correct. In fact, he underestimated a bit.
The difference is even more stark if you use the inflation-adjusted median. By that measure, family income dropped from $67,943 to $62,241 over the same period. That’s a drop of $5,702 -- an 8.3 percent decline over five years.
So Portman’s only shortcoming is to lowball the size of the family-income decline.
We should note that choosing 2007 as the starting year maximizes the decline, since the last recession began in December 2007. But we have no quarrel with the use of this period, because when looking at income trends, it seems reasonable to look at how big an impact the recession has had.
We’ll also note that Portman wouldn’t be correct if non-inflation-adjusted figures are used. Without an inflation adjustment, both mean and median family incomes went up from 2007 to 2012 -- about 5 percent for mean family income, and 1.4 percent for median family income. But economists generally prefer inflation-adjusted data for situations like this, since the adjusted data takes into account the most important aspect of income -- what it can actually purchase.
Portman said "the average family (is) now bringing home $4,000 less than they did just five years ago." According to Census Bureau data, the decline is even greater, making Portman’s overall point even stronger than the data he offered. We rate his claim True.
U.S. Census Bureau, Table F-5 -- Race and Hispanic Origin of Householder--Families by Median and Mean Income, accessed March 12, 2014
PolitiFact, "In State of the Union, Obama says average wages have 'barely budged' over past 4 years," Jan. 28, 2014
Email interview with Tara Sinclair, George Washington University economist, March 12, 2014
Email interview with Caitlin Dunn, spokeswoman for Rob Portman, March 12, 2014
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