According to Yale’s Jacob Hacker, the average family had a 7 percent chance in the early 1970s of seeing its income drop by half or more. By 2002, that probability rose to nearly 17 percent.
This statistic raises more questions than it answers. For example, consider the three hypothetical families below, each of which has $40,000 in income in 2000 and takes a 50 percent hit to income in 2002.
|A||$40 K||$40 K||$20 K||$20 K||$20 K|
|B||$40 K||$40 K||$20 K||$50 K||$60 K|
|C||$40 K||$80 K||$40 K||$40 K||$40 K|
I can see feeling sorry for family A, with their permanent loss of income. However, family B recovers nicely, and family C “suffers” from a spike in income in 2001.
Jacob Hacker leads you to think in terms of family A, but I would like to see what proportion of the families who suffer 50 percent income drops in a year represent family A. What if it turns out to be small?
Hacker’s book, The Great Risk Shift, also says this (p. 96):
The problem is often called the “middle-class squeeze” (a term [Elizabeth] Warren coined), and it’s certainly real. According to a recent analysis of consumer spending and family income, a typical two-earner family in which both partners work full time had to work 28.7 weeks in 1979 to pay for housing, medical care, college tuition, transportation, and taxes. By 2005 a typical two-earner family had to work 32 weeks just to pay these basic expenses (despite the fact that they were working about 2 weeks fewer a year to pay their taxes). [emphasis mine–AK]
I would say that if you have to include college tuition and omit food as a “basic expense” in order to show middle-class squeeze, then middle-class squeeze is probably a myth.
I expect academics to write with a respect for readers and, above all, for the truth. When they write for the general public, they should take particular care to try to avoid the use of misleading statistics. Most academics, regardless of politics, try to live up to those standards. I am happy to engage those with whom I disagree.
When it comes to dealing with dishonesty, however, I believe in trying to police your own side. That means that it’s up to someone other than me to blow the whistle on Hacker.