U.S. Rep. Don Beyer, D-8th, recently called on Congress to "jump start" the economy for middle-class Americans.
"If you look at the income of average Americans -- working-class Americans, middle-class Americans -- they’re absolutely flat in constant dollars since 1979," Beyer said during a Feb. 4 speech to the Arlington County Democratic Party.
We reviewed his claim.
Tia Shuyler, Beyer’s press secretary, said her boss heard about the statistic late last year during an orientation for freshmen congressmen at Harvard University. She also sent us an October 2014 article from the Pew Research Center headlined, "For most workers, real wages have barely budged in decades." Pew relied on statistics from the Bureau of Labor Statistics.
Let’s take a closer look:
The data that measure Beyer’s claim are called "median usual weekly earnings." To compute it, BLS compiles the gross weekly paycheck earnings of a sample of all private sector employees in all industries, then establishes the midpoint figure at which half of the workers are earning more and half are earning less.
At the start of 1979 -- as far back as the data goes -- median weekly pay was $232 in unadjusted dollars and that rose to $796 during the final quarter of 2014.
When adjusted for inflation, the figures don’t move much. The early 1979 weekly pay is worth $757 in 2014 dollars. So in constant dollars, median weekly pay rose by $39 from the start of 1979 to the end of last year, a 5 percent increase.
Beyer, of course, said the inflation-adjusted numbers are "absolutely flat" since 1979. The BLS data support his claim if you start counting in the third quarter of 1979 when median weekly pay was worth $792 in today’s money. That results in a $1 weekly decline in median earnings over the last 35 years, or about one-tenth of 1 percent.
The status of the middle class is an emerging issue moving towards next year’s presidential elections. Several studies show that the holdings of the top 1 percent have soared during recent decades, spurring many Democrats to complain about a growing gap between the wealthy and the middle class.
The BLS figures Beyer relies on are not the final word on median income, according to Gary Burtless, an economist at the Brookings Institution, a nonpartisan research group. Another way of looking at it, he said, is to use data from the U.S. Census Bureau. It shows median household income before taxes, using 2013 dollars, rose from $49,225 in 1979 to $51,939 in 2013, an increase of 5.5 percent. That’s pretty close to flat growth.
But Burtless said widely used methods of examining gross income undercounts certain forms of compensation and gives short shrift to middle class gains over the decades.
Burtless prefers a broader measure of income used by the Congressional Budget Office in a November 2014 report. The CBO based it’s computation of household earnings on several factors, including after-tax wages, other earnings, retirement income and benefits including employer-based health coverage and government subsidies.
The CBO concluded that median household after-tax income, when adjusted in 2011 dollars, was $26,200 in 1979 and $38,500 in 2011, the latest year figures that were available. That’s a 47 percent increase. Broken down on an annual basis, that comes out to a 1.3 percent income increase each year.
Beyer says the income of middle-class Americans has been "absolutely flat" since 1979. He supports that claim by pointing to oft-cited Bureau of Labor and Statistics data showing little or no inflation-adjusted growth in the median gross wage of workers over the last 35 years. An analysis of Census Bureau data yields similar results.
Economists, however, define income in far broader terms than individual gross wages. A wider examination of income by the Congressional Budget Office -- which includes other earnings, benefits and tax payments -- shows median household income has increased by 47 percent over the last generation.
So there’s plenty of evidence backing Beyer’s claim, but it doesn’t win unanimous support from economists. We rate his statement Mostly True.