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Sorting out the truth in politics

PolitiFact: Inflation-adjusted family incomes down more that $4,000 over five years

The statement

"The average family (is) now bringing home $4,000 less than they did just five years ago."

U.S. Sen. Rob Portman, R-Ohio, March 8, in a Republican weekly address

The ruling

Economic stagnation is an issue that has become a major talking point for both parties.

Take President Barack Obama's most recent State of the Union address, in which he said that during the past four years, "average wages have barely budged." We rated that claim True.

Now, Sen. Rob Portman, R-Ohio, has offered an even more ominous statistic for working Americans.

"The average family," he said in last weekend's weekly Republican address, is "now bringing home $4,000 less than they did just five years ago."

We wondered whether Portman's claim was correct. So we turned to data from the U.S. Census Bureau.

The bureau collects data on family income, and we found that Portman is correct as long as the dollar amounts are adjusted for inflation. We looked at both the mean family income (that is, total family income divided by the number of families) and the median family income (the middle value when all family incomes are lined up from biggest to smallest).

For the inflation-adjusted mean, family income fell from $87,312 in 2007 to $82,843 in 2012, the most recent year for which data are available. That's a drop of $4,469, making Portman correct. In fact, he underestimated a bit.

The difference is even more stark if you use the inflation-adjusted median. By that measure, family income dropped from $67,943 to $62,241 over the same period. That's a drop of $5,702 — an 8.4 percent decline over five years.

So Portman's only shortcoming was to lowball the size of the family income decline.

We should note that choosing 2007 as the starting year maximizes the decline, since the last recession began in December 2007. But we have no quarrel with the use of this period because, when looking at income trends, it seems reasonable to look at how big an impact the recession has had.

We'll also note that Portman wouldn't be correct if noninflation-adjusted figures are used. Without an inflation adjustment, both mean and median family incomes went up from 2007 to 2012 — about 5 percent for mean family income and 1.4 percent for median family income. But economists generally prefer inflation-adjusted data for situations such as this, since the adjusted data take into account the most important aspect of income — what it can actually purchase.

We rate his claim True.

Edited for print. Read the full version at PolitiFact.com.

PolitiFact: Inflation-adjusted family incomes down more that $4,000 over five years 03/14/14 [Last modified: Friday, March 14, 2014 5:14pm]
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