During an interview on Vox.com co-founder Ezra Klein’s podcast, Democratic presidential candidate Pete Buttigieg highlighted growing inequality in the United States.
In response to a question from Klein about the the conservative era ushered in by President Ronald Reagan, Buttigieg said the governmental approach at the time “had a lot do fo with the removal of regulation, the weakening of labor standards, and slashing taxes at every level, based on this presumption that this would grow the economy. And on one level it did. The top-line growth numbers were pretty great. On the other hand, if my numbers are right, since 1973, the income of the bottom 90 percent, so pretty much all of us, didn’t budge, or even retreated a little bit.”
Is he right that for most people, income levels — adjusted for inflation, which economists consider a necessity for such comparisons — haven’t increased since 1973? The data shows that income levels have actually risen beyond inflation during that period, but the share of income taken by the bottom 90 percent hews pretty closely to what Buttigieg said. (Buttigieg’s campaign did not respond to inquiries.)
Neither we nor economists we consulted with could find an exact data set that fit Buttigieg’s wording, but we found one that was close. It was calculated by the Congressional Budget Office, the nonpartisan number-crunching arm of Congress, and covered 1979 to 2015, most of the period in question.
The figures CBO used are adjusted for inflation and federal taxes, but not for for state and local taxes. They show income growth for people in four different economic ranges: the lowest 20 percent of the income distribution, the middle 60 percent, the 81st percentile to the 99th percentile, and the top 1 percent. These don’t mirror Buttigieg’s precise parameters, but economists told us they are useful for showing whether he’s broadly right or not.
Click here for a chart summarizing what Buttigieg found: The top 1 percent, in red, have the most unique and most impressive growth.
The other income groups are tightly clustered together. But look closely at the slope of the line: It heads upward. The rise is nowhere near as fast as it was for the top 1 percent, but it did increase after being adjusted for inflation.
This undercuts Buttigieg’s assertion that for most people, income “didn’t budge, or even retreated a little bit,” since the 1970s. And Gary Burtless, an economist with the Brookings Institution, added that the subsequent data since 2015 would likely show additional increases, since incomes across all the income distribution have improved since 2015. (He also said that adding in data for 1973 through 1978 would be unlikely to make a difference.)
Buttigieg’s statement “is very unlikely to be true,” Burtless said.
That said, other data supports Buttigieg’s claim more closely. Let’s look at wages, which are what you earn from your job; it does not include other types of income, including interest and payments from programs like Social Security or food stamps.
The following chart, drawn from data collected by the left-of-center Economic Policy Institute, shows inflation-adjusted data for wages going back to 1973. We’ve broken down the wage levels by 10 percent increments — the lowest 10 percent, the next 10 percent, and so on.