Mazzuca: What statistics don’t tell us
Statistics can deceive in insidious ways, and even when the data itself is trustworthy, anyone with an agenda can cite statistics that support a particular point of view. To illustrate: between the years 1969 and 1996, American household income adjusted for inflation increased by just 6 percent. However, during that same period, average income per person rose by 51 percent.
How can both statistics be true? That’s easy ” the average number of people per household declined during those years. Families, like households, vary in size over time, which means that statistics about “average” household incomes can be misleading. For example, as personal income increases more people will choose to live on their own and in separate dwelling units. While it’s true these individuals have more personal income, it’s also true that for statistical purposes, their household income has decreased.
Is it any wonder that politicians commonly cite household income when describing the “failed” economic policies of their rivals, but use per capita income to illustrate the “successful” economic policies of their party?
According to the 2000 U.S. Census, 64 million people live in households that rank in the top 20 percent of household incomes. Meanwhile, 39 million people live in households that rank in the bottom 20 percent. But what’s not included in those statistics is that 19 million, or 30 percent of the heads of households in the top 20 percent of incomes worked, while only 8 million, or 20 percent of the heads of households in the bottom 20 percent worked.
In addition, six times as many heads of household worked full-time AND year-round in the top 20 percent as did in the bottom 20 percent. Some would have us believe that income “inequality” in the United States is a societal rather than an individual issue. However, 60 percent of Americans in the top 20 percent of income earners graduated from college, while just 6 percent of the bottom 20 percent had college degrees. Financial resources factor into acquiring a college education, but the lack of resources does not explain a ten-fold disparity.
Did you know that Americans living below the official government poverty level spend $1.75 for every dollar of income? How can this be? Well, official statistics omit the monetary value of transfers those living below the poverty level receive via various government programs. And since people living in the lowest 20 percent receive approximately two-thirds of their income from transfer payments that are not statistically counted as income, the plight of the poor is frequently exaggerated.
There are innumerable ways statistics distort measurements of wealth and poverty in the United States, the following are just a few. Counting two single people living together, but who file separate tax returns as two families instead of one, reduces their “household incomes” for statistical purposes. Retirees with millions in assets but relatively low incomes are commonly lumped in with the “statistically poor;” so too are spouses of wealthy partners who earn little or no income. Prosperous investors having an off year frequently show “no income” on their tax returns, and people graduating from high school, college or post-graduate institutions mid-year will show only half the income they will earn the following year.
Twenty-first century America has a growing class of part-time workers. These workers earn less than full-time workers for two reasons: 1) they work fewer hours and 2) are frequently paid less per hour than their full-time counterparts. But many government statistics don’t account for the difference.
The majority of government statistics measure income before taxes, meaning variances in the tax code from one administration to the next distorts statistics regarding real income. If the Smiths pay $5,000 in taxes under Administration A, they might pay $8,000 in taxes under Administration B with no difference in income. The only difference was in the way their income was taxed. While the Smith family’s gross income was identical for statistical purposes, there was a significant difference in the amount of money available to pay the mortgage and buy groceries at the Safeway.
The overwhelming majority of America’s “statistically poor” own their own cars, DVD players, computers and microwaves; they live in air-conditioned homes and have equal access to education. Does that mean we should ignore these people? Of course not ” one measure of a society’s greatness is how it cares for its poor.
Nevertheless, taxpayers would be wise to question the statistics and agenda of politicians who come to us saying, “I’m from the government and I want to help ‘the needy’ with your tax dollars.” Because too often the “needy” are little more than specific demographic groups from whom voting support is being courted.
Quote of the day: “I don’t make jokes. I just watch the government and report the facts.” ” Will Rogers
Butch Mazzuca is a business consultant and writes a column for the Vail Daily. He can be reached at firstname.lastname@example.org.