# News Terrible Economics in USA Today

1. Sep 18, 2009

### Staff: Mentor

USA Today is a half decent paper and has a good website format, so it is one of my primary sources of news. Nevertheless, it, as most news sources, sometimes produces some real crap. I'm not sure what motivates articles like this, but it is horribly wrong and misleading and since economics is largely a matter of psychology, they can be damaging.

Here's the story:
http://www.usatoday.com/news/nation/census/2009-09-17-young-people_N.htm
Here's the census data on which it is based:
http://www.census.gov/hhes/www/income/histinc/incpertoc.html [Broken]

First, the title and the first half of the first sentence:
8 year nose dive means they have been declining for 8 years, right? One would think, but no. 2000 was the peak of one economic cycle and 2008 was a year into a downturn following another peak in around 2007 (not all income groups peaked or troughed in the same years, though...more on that later). So looking at the table they have for the 18-24 age group, and looking at table 10 in the census bureau link (i'm not interested in the change between the sexes), we see that the 18-24 median income peaked in 2000 at $10,466, wiggled down to$10,050 in 2004 and went back up to $10,576 in 2006. It roughly stagnated in 2007, but dropped to$9,862 in 2008. That's a drop of 6.8%, over two years. It hasn't been declining for 8, it is just showing cyclical variation. I suppose one could suggest they have fallen off a cliff since 2006 or 2007, but that's a short enough timeframe people remember that that's the start of the current economic problems in the US.
Justifying that data requires cherry-picking the single highest peak in the 1970s, $9,561, which is still lower than 2008, but due to the recession it will no doubt drop some more this year. Still, one year does not "the 1970s" make, and every other year in "the 1970s" was lower. And in the 1981, it was A LOT lower. This is intentionally misleading at best. Next: Well, this recession started officially at the end of 2007. So they are certainly losing ground quickly, but they are mixing timeframes in a misleading fashion and the word "unprecidented" is wrong. From 2007-2008 (caveat: it will get worse this year again), income for that group dropped 6.2%, but from 1980 to 81 it dropped a whopping 39.5%! Unprecidented indeed! This one's probably true. We've had plenty of income inequality discussions, and I won't rehash the basics here. But there are new aspects being reported here: Have they? What's "old"? Ok, so for it is for those over about 55. But a four decade run? Does that mean up every year? How about up the last year or two? Since we're mixing timeframes in other places, lets examine several here. For the 55-64 age group, 1975 was the first trough we see in the data (it starts in 1974), at$25,452. In 2008, it's $32,077, an increase of 26.0%. Impressive, but it isn't like there haven't been ups and downs along the way. There was a nasty drop in the early 1980s to a low of$23,042 in 1983 (25 years ago, not 40). There was a peak in 1989, a slight drop for the next few years to a low in 1993, increases until 2003, then a 1 year drop, then increases again until 2007. But wait: this group also saw a drop from 2007-2008 (and no doubt will again in 2009). So much for the "run".
Well that's technically true, but it is also true that every generation including that one is "now" sinking! Technically true but rediculously misleading. And as I pointed out before, incomes even for that 18-24 group are up since the 1970s. Should we call that a "four decade run" too?
I don't see the table that comes from. It doesn't make sense, as "households" don't have ages. But lets look at individuals and see if we can glean something matching what they show there (a 10.7% drop). From the table I was using earlier, we can see that individual incomes in that group were 8.4% lower in 2008 than 2000. So ok, that data fits close enough. Lets take a closer look. The income was $39,271 in 2000 and$35,982 in 2008. But neither of those represents a peak. There was a peak in 1999 at $39,679 and another in 2005 at$38,791, a difference of 2.2% from one peak to the next. The drops in 2006 and 2007 were both less than 1% a year and again, as with the other groups, the major drop was in 2008. So the "plunge" is only really one year, not 8, and even the upper age group had large drops.
Well the 55-64 group is up over the 8 year timeframe, and it is the only one still up, but again, we're not at our unemployment peak yet, so it is reasonable to expect them to lose some more ground. They lost 6.1% from 2007 to 2008. I don't know if that qualifies as a "plunge", but it seems significant to me.

More to the point, perhaps, we already know that the unemployment jump of this year hurt older people more than younger people, as reported 7 weeks ago by the same USA Today author!
http://www.usatoday.com/money/economy/employment/2009-07-29-oldermales_N.htm

One other point - part of what keeps young people from moving up faster is when older people delay retirement. So particularly for people in their 60s, income increases can be just because they didn't retire and those increases come directly out of the pockets of younger workers.

Anyway, misuse of income data has actually been a pretty common theme over the past 8 years - we've had the discussion before a number of times before on this site even. To me it reeks of bias, but it could also just be bad reporting.

Last edited by a moderator: May 4, 2017
2. Sep 19, 2009

### WhoWee

3. Sep 20, 2009

### mheslep

Last edited by a moderator: Apr 24, 2017
4. Sep 20, 2009

### mheslep

Nor do I, the Census doesn't report Household incomes in any of the data, at least not on that web page.

5. Sep 20, 2009

### Staff: Mentor

Well, it is the measure that the Census Bureau uses and if used properly it is an ok metric, but the Census bureau should build into theh analysis a correction for how households have changed over time.

Last edited by a moderator: Apr 24, 2017
6. Sep 20, 2009

### mheslep

Yes, should, but they don't. I expect they don't because it is a figure they have historically reported for decades. They simply say in a footnote elsewhere:
http://www.census.gov/prod/2009pubs/p60-236.pdf, page 8

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