There is a bit of a statistical sleight of hand going on here. If a smaller segment of the population (such as the top 10%) is earning a growing proportion of total national income, this will inevitably push down the median income.
When framing the discussion as “earning more than their parents,” what they are actually looking as it the median income of one generation versus another. The researchers are not actually looking at individual American families (which raises another complication—the impact of immigrants on the data). They are speaking broadly about population cohorts.
The researchers acknowledge that even if real income growth for younger generations were much higher (like it was in the decades following World War II), the percentage “earning more than their parents” would not be terribly different. The main driver of the results is the distribution of income.
Even a casual look at chart raises issues. The data itself is at least 8 years old. It’s worth observing as well that the vast majority of the reported decline took place between children born in 1940 and the mid-1960s.
It makes perfect sense that a child born in 1940 would normally do much better financially when he was 25 years old in 1965, versus his father who was perhaps born in 1910 and would have spent his early adulthood surviving the Depression (or if born later, fighting the Axis powers overseas).
Any graph with a pronounced downward trend is eye-catching when flashed on a television screen. But the vast majority of the reported decline relates to a generation of Americans who are now in their mid-eighties versus those who are now in their mid-sixties. Perhaps they can all fight about it in the retirement community! This has little to do with the current generation of workers.
While Galloway’s graphic is manipulative, we are nonetheless very sympathetic to the plight of young people today and to the broader claim that the Baby Boomers who control public policy do so in a self-serving way. A very entertaining and thought-provoking book on this topic was written several years ago called A Generation of Sociopaths: How the Baby Boomers Betrayed America by Bruce Cannon Gibney. Excellent beach reading!
At the same time, we do need to be very careful around income inequality claims. These typically translate into calls for some form of wealth taxes, which Galloway seems to be advocating. While even Europeans now realize wealth taxes are counterproductive and ineffective, Democrats are warming to it.
Former Senator Phil Gramm (a Ph.D. economist who was a professor at Texas A&M back in the sixties and seventies) wrote a book on this topic in 2022 called The Myth of American Inequality: How Government Biases Policy Debate. He carefully parses the data and picks apart many of the prevailing claims about “rising inequality” that circulate nowadays. Dan Crenshaw did a memorable interview with Senator Gramm about a year ago.
