It is the primary liberal argument that America’s primary economic problem is growing income inequality.
For three decades, in this view, the rich have grown richer while middle-class incomes have stagnated. This emphasis on economic discontents is purposeful. Any political coalition for income redistribution that does not include middle-income voters will fail. So the message has been: Suburbanites of the world, unite. You have nothing to lose but your student loans.
The response of many conservatives has been that the growth of income inequality is a “myth” and that any mention of the topic is class warfare.
The reality, as usual, is less ideologically satisfying for all concerned. Economic inequality among U.S. households has increased in recent decades — but one of the main causes is a shift in the composition of households themselves.
“Married-couple households,” writes economist Terry Fitzgerald of the Federal Reserve Bank of Minneapolis, “have much higher incomes than other household types, and there has been a large decline in married-couple households. . . . As an extreme but illustrative example, consider what would happen if one-half of all married couples were to divorce next year. Median household income would plummet as each higher-income married couple household is dissolved into two lower-income households — the same income is spread across more households.”