Presenting data without appropriate interpretation or context can lead to faulty conclusions, and ultimately policies that make worse the problem you presumably want to solve.
One recent case is this post by the far-left NC Justice Center.
The top fifth captured 51 percent of all income in 2018, leaving less than half of the income for everyone else in North Carolina. As striking as that is, this fact alone doesn’t really reflect just how top-heavy our economy has become. The lowest-paid 20 percent of North Carolinians received only 3 percent of the income generated by our economy, one-fifteenth of what the highest paid group took home.
The intellectually incurious author, however, offers no further analysis on what constitutes the various income groups or any other characteristics within or between the groups.
The reader, of course, is supposed to see this as proof positive for the need for a still greater expansion of social welfare programs and government power to right such ‘wrongs.’
But there is much to the story that the author leaves out.
For starters, if the data is referring to household income, much of the income differences can be accounted for by the number of income earners in the households. As pointed out frequently before, North Carolina families with no father in the home are roughly five times as likely to be in poverty.
The article’s author fails to take this into consideration.
But even if the data refers to per capita income, and not household income, there is still much more highly relevant context that the reader is deprived of:
- The average age, work experience, education level and profession of those in each quintile. Naturally, those with more job experience, higher education levels and working in highly-paid professions will earn more.
- Claiming that the lowest 20 percent earned just 3 percent of the state’s income is also misleading. Does this leave out income and benefits from government social welfare programs? If so, this information paints a very incomplete picture. A more accurate representation of people’s standard of living would include these – that’s why many economists prefer a measure of household consumption as a better reflection of living standards and therefore a better comparison tool.
- The geography of those in each quintile. Of course those who live in urban areas like Charlotte and Raleigh will tend to have higher incomes than those in the rural parts of the state. This will skew the Justice Center data as well. But there are also cost of living differences, meaning someone in a lower income quintile living in a rural area could still afford a similar living standard as someone in the highest income quintile living in an urban area.
- The sluggish economic recovery of the last decade that featured massive government “stimulus” programs that included historic levels of new money creation by the Federal Reserve. The new Fed dollars largely helped inflate a stock market bubble – benefiting the wealthy far more than middle and lower income classes.
Should we be outraged that more experienced and educated workers are earning more than less experienced workers? Is it alarming that people in Charlotte suburbs earn more than those in rural counties? Of course not.
The Justice Center, however, doesn’t want you to think about such factors, only to uncritically look at their data and insist on voting to concentrate even more power into the hands of the ruling class in the name of fighting “unjust income inequality.” By not disaggregating the data, the Justice Center renders it virtually useless.
Moreover, they ignore more accurate measures of living standards because it might undercut their narrative.
There is, however, some income inequality that should be pointed out as unjust. Namely, riches earned by corporate cronies leveraging political favoritism; and – ironically – wealth accruing to those benefiting from mad money printing under the guise of government “stimulus” programs that the NC Justice Center fully supported.