Incomes and 2016

From:rshapiro@sonecon.com To: podesta@law.georgetown.edu, jpodesta@amprog.org Date: 2015-03-17 12:44 Subject: Incomes and 2016

John, About a week ago, Brookings issued a study I worked quietly on for the last year and which has large implications for HRC: It's an analysis of what has actually happened to the incomes of working-age households over the last 35 years. Rather than simply look at a time series of aggregate median household income-the conventional but very flawed approach-I use "age-cohort" analysis, applying tens of thousands of data points to track the actual paths of household income as the heads of those households aged from 1980 to 2013. I also disaggregated to chart the income paths of households headed by men and women; whites, blacks and Hispanics; and people with college degrees, high school diplomas or no degrees at all. The results reframe the current income debate and tell us how HRC should cast her economic message. The results show, first, that contrary to the left critique, every demographic group enjoyed large, steady income gains as they aged through the expansions of the 1980s and 1990s, and suffered small income losses during the recessions. WJC and Reagan got the basics right, and everybody benefitted. The results also show that since 2002, a majority of American households have suffered through significant income declines. The bottom line: The 1980s and 1990s were much better than is conventionally understood, especially here in DC; and the last 15 years have been worse than conventionally believed, again especially here in Washington. Consider one set of data and what they imply for the 2016 message. In 2000, two-thirds of households were headed by people without college degrees -- 15 percent were headed by people without high school diplomas, and 51 percent by people with high school diplomas. In the 1980s and 1990s expansions, the incomes of households headed by HS dropouts grew an average of 2.9 percent to 3.5 percent per year as they aged through those expansions, and the incomes of households headed by HS graduates rose 2.6 percent to 3.2 percent per-year through those expansions. From 2002 to 2013, the incomes of households headed by HS dropouts declined an average of 1.8 percent per-year as they aged through those years, and the incomes of those headed by HS graduates fell an average of almost 1.0 percent per year. That means that nearly two-thirds of American households suffered serious income losses of 15 percent to 23 percent as they aged from 2002 to 2013. The only good news is that these losses have been a little less under Obama than under Bush. And even among households headed by college graduates, average income gains fell from around 4 percent per-year in the 1980s and 1990s to 1.2 percent to 1.4 percent per-year for households headed by people of comparable from 2002 to 2013. That's the essence of the current incomes crisis. We now know that it's not about gender; it's not about race; and it's not even about education. And as a result, a majority of the country is increasingly angry and disaffected from government.. BTW, the results show that WJC has the best record on incomes of any of the last five presidents - and the two Bush's have the two worst records. And BTW, I also put together a policy program to help revive rising incomes -- it's drawn partly from what worked under Clinton and Reagan, and partly from an analysis of the new forces blunting normal income progress since 2000. I've attached a copy of the study. I'd like to sit down with you and discuss its results, any time that you have the time. Let's get it right again, John. Rob Robert Shapiro Chairman, Sonecon, LLC 325 7th Street, NW Suite 250 Washington, D.C. 20004 202-393-2228