Income inequality is rising so fast our data can’t keep up

Posted by Economic Policy Institute on April 2, 2019

Increase in wage inequality moving too fast for researchers: report

Wages at the top of the income distribution continue to rise much more rapidly than wages for everyone else, according to an analysis of the latest federal data by the Economic Policy Institute, a progressive think tank.

But the data are just as notable for what they don’t say, according to the report by EPI economist Elise Gould. Increases in wages at the top are outpacing economists’ ability to measure them because the federal survey tracking the wage data “top-codes” the highest earnings amounts: For confidentiality reasons, wages are fully recorded only up to a certain threshold. The Bureau of Labor Statistics and the Census Bureau, which jointly administer the survey, haven’t changed that threshold in 20 years, even as top incomes have skyrocketed. As a result, the survey is capturing less information on top pay than it used to.

“All workers who report weekly earnings above $2,884.61 (annual earnings for full-year workers above $150,000) are recorded as having weekly earnings of exactly $2,884.61, to preserve the anonymity of respondents,” Gould writes. That top-code threshold hasn’t been updated since 1998. As a result, the survey is becoming less useful for tracking top incomes at a time when public concern over inequality is growing. Representatives from the Census Bureau did not immediately respond to a request for comment.

“In the overall wage distribution, over the period analyzed in this report, the share of workers reporting weekly earnings at or above the top-code rose from 0.8 percent in 2000 to 4.2 percent in 2018,” according to the report. “In 2018, the share of white workers with weekly earnings hitting the top-code was 5.2 percent. For working men, that share was 5.9 percent in 2018.”

From the Washington Post: https://www.washingtonpost.com/us-policy/2019/02/21/income-inequality-is-rising-so-fast-our-data-cant-keep-up/

Full report: https://www.epi.org/publication/state-of-american-wages-2018/