The Annoying Persistence of the Income Stagnation Myth

Dear Capitolites,

Given all of the policy wonkery that arose last week, especially at the presidential debate, this will be the first in a four-part series detailing each major issue that—hahahahaha. 

Anyway, back to reality. A frequent response to articles like last week’s criticism of Trump’s tariffs is “Okay, so tariffs don’t work, but what would you do about the stagnation of middle class incomes?” (Often a “smart guy” is thrown in there somewhere.) It’s a difficult question because tariffs’ harms and inefficacy are a sufficient reason to avoid them, and, more importantly, because middle class incomes aren’t actually stagnating

No, really. They’re not.

This might come as a surprise to many readers who for years have listened to politicians and pundits decry income or wage “stagnation” as one of the biggest problems of our time (and a big reason why capitalism or “libertarian economics” or whatever needs to be jettisoned).  It’s a conventional wisdom that arose, in my opinion, because: (1) popular, but inaccurate or incomplete, measures of “middle class incomes” once showed stagnation; (2) few people updated their priors when new, more accurate data emerged; and (3) by that time the “stagnant incomes” talking point had become embedded in the national political psyche.

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