Currently, GDP Metric Alone Provides Incomplete Picture Of Economic Realities Across Different Segments Of Economy—For Decades, Federal Government Has Not Accurately Measured Whether Middle-Class Americans Have Experienced Economic Growth In Line With GDP Growth
Schumer-Heinrich Bill Would Establish New Metrics To Help Provide Clearer Picture Of How Economic Growth May Be Benefitting The Top 1 Percent Of Income Earners Compared To Middle-Class Americans
Schumer And Heinrich: Americans Need A Clearer Picture Of Who The Economy Is Really Working For
Washington, D.C. – Today, Senate Democratic Leader Chuck Schumer (D-N.Y.) and U.S. Senator Martin Heinrich (D-N.M.), Member of the Joint Economic Committee, introduced the Measuring Real Income Growth Act of 2019, which would require the Bureau of Economic Analysis (BEA) to report how economic growth is distributed across the income spectrum. Gross domestic product (GDP) numbers alone provide an incomplete picture of income growth across our economy and can obscure the troubling economic reality experienced by many American families—stagnating wages, skyrocketing costs of living, and a widening income inequality gap. This new data would help to put quarterly GDP growth numbers in context by providing a breakdown each quarter of the economic benefits seen by individuals across income levels. In short, this bill would provide policymakers with metrics that better reflect the economic experiences of all Americans, and would play a key role in helping to develop solutions that will allow us to build a robust, equitable economy that works for everyone.
The Washington Center for Equitable Growth today announced 58 economists and other social scientists—including former Chair of the Board of Governors of the Federal Reserve Janet Yellen, former Chairs of the Council of Economic Advisers Jason Furman and Laura Tyson, and Nobel laureates Robert Solow and Joseph Stiglitz—have endorsed the Measuring Real Income Growth Act of 2019.
“While the economy is growing, hardworking families across the country are still struggling to make ends meet,” said Leader Schumer. “Too often, when we hear that GDP is rising and the economy is booming, we assume that all Americans are reaping the benefits equally – but the reality is that wages for middle-class workers remain relatively flat, the income inequality gap continues to widen, and those at the top are reaping vast economic rewards. This new data will provide us with a new tool to help take a deeper look at economic progress at all levels of the income spectrum and present a clearer, more accurate picture of who the economy is really working for, and who’s getting left behind.”
“Instead of focusing on one economic indicator closely watched by investors, we should be examining data that captures why many families are still struggling to make ends meet,” said Senator Heinrich, Member of the Joint Economic Committee. “Only looking at headline GDP growth numbers to assess the state of our economy simply does not paint the whole picture, and leaves out the reality that many Americans have not seen their wages rise for years. Our priority should be ensuring that every New Mexican – and every American – can succeed in today’s economy. This legislation would provide Congress with the information to take real steps needed to finally address income inequality and the economic needs of all Americans.”
“Passing the Measuring Real Income Growth Act is key to understanding how the U.S. economy is—or is not—working for most families,” said Heather Boushey, President and CEO of the Washington Center for Equitable Growth. “Currently, we measure only whether the economy is growing, but we don’t measure who is actually benefiting from growth. Understanding how the economy is performing for families up and down the income ladder is increasingly important because economic inequality in the United States has now reached levels not seen since the 1920s. The evidence shows that inequality obstructs, subverts, and distorts the way our economy functions. By passing this legislation, we will have a more complete understanding of who is prospering when the economy grows, which is essential to delivering growth that is strong, stable, and broadly shared.”
Relying on top-line GDP numbers masks important trends and may lead to policies that are not accurately informed by the economic reality of most families in America. Currently, the lack of consistent and up-to-date reporting on income growth distribution means that policymakers have no real-time sense of whether or not the economic growth we see today reflects trends of growing income inequality.
Specifically, the bill would require the BEA to produce distributional measures of economic growth, called Income Growth Indicators (IGI), by each decile of income earners, as well as the top 1 percent. This new data will allow us to measure whether economic growth is being shared by all Americans and accurately assess how it compares to those at the very top. It would also require the Bureau to report the most recent IGI estimates each quarter alongside the quarterly estimates of GDP growth.
Congresswoman Carolyn B. Maloney (NY-12) has introduced a companion bill in the House.
A summary of the Measuring Real Income Growth Act of 2019 is available here.