Income Up, Wealth Down

A pair of interesting charts (via Kevin Drum) were released by the Pew Economic Mobility Program. They do some fancy statistical work to try to do an apples-to-apples comparison of today’s 45 year olds with the economic welfare of their parents’ generation at 45. The good news is that despite median wage stagnation, on this measure there have been income gains across the spectrum (citations of the median tend to miss the fact that the composition of the population changes over time).

But in terms of wealth, the situation looks much bleaker. Here you see gains for the top 40 percent. but not the bottom 60 percent.

I don’t have a thunderous takeaway from this, but it’s an interesting way of looking at the trends that’s a bit different from what we normally see. Something to note about this is that “income” measured in this way includes cash transfers from the government—things like Social Security payments and unemployment insurance—but not in-kind benefits. That’s a valid methodological choice for many purposes, perhaps including this one. But as a larger and larger share of government spending at all levels goes to the purchase of health care services through Medicaid and Medicare, it’s something to keep in mind. If we abolished Medicare and used the savings to make Social Security benefits more generous, that would register as incomes rising for the elderly and falling for doctors.