Tuesday, July 16, 2013

About That "Incomes Are Rising" Claim...

by Charles Hugh Smith

This is how State-corporate media propaganda works in our era.

The mainstream media is claiming that "The aggregate amount of money in paychecks is increasing about twice as fast as GDP." (Source) This story points to Bureau of Labor Statistics data to support this claim.

Rising aggregate household income doesn't tell the real story, which is:

1. Most of the income gains flow to the top 10%

2. Thanks to rising taxes, healthcare and other costs, household net income for the bottom 90% is declining.

The mainstream media's parroting of aggregate household income increases is used to suggest the economy is improving. But the truth is the economy is only improving for a thin slice of households.

According to articles such as this one, Income Inequality May Take Toll on Growth, the top 1 percent of earners took fully 93% of the income gains in the first full year of the recovery, and the top 10% take home 50% of all household income.

This is not a new trend. The trend started in the early 1980s, with the advent of financialization.

Rising aggregate household income doesn't account for higher taxes and soaring healthcare insurance. Let's say a dual-income household with an income of $80,000 has managed a 5% gain in gross income over the past few years. They now make $84,000, and the data reflects a healthy gain in income.

But let's say the household's healthcare insurance costs have risen by $5,000 over the same period (a realistic number, as anyone who pays 100% of their healthcare insurance costs knows) and incremental tax increases (property tax, income tax, etc.) have siphoned off another $3,000 a year.

The household's net discretionary income actually declined by 5%. Apologists will claim that the government statistics account for inflation, but this claim is specious, as healthcare costs alone have risen faster than income for many of us. Our own healthcare insurance costs now exceed $13,000 a year, a 50% increase in a few years, and we are not alone.

Even if we accept the government's calculation of inflation as accurate, income for most households has declined:

Aggregating income purposefully ignores the distribution of that income and the real-world expense side of the household ledger. This is how State-corporate media propaganda works in our era.

See the original article >>

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