FACT CHECK: "Missourians earn $5,000 less than they did at the start of the century"

1 year 8 months 2 weeks ago Sunday, February 07 2016 Feb 7, 2016 Sunday, February 07, 2016 7:16:00 PM CST February 07, 2016 in News
By: Katie Moeller, KOMU 8 Reporter

JEFFERSON CITY - Ranked 47th in the nation by Business Insider, Missouri’s seemingly stagnant economy has been a talking point for politicians across the state in recent months.

Speaker of the House Todd Richardson recently weighed in on the discussion, particularly addressing the state of income and earnings for Missourians.

On “This Week in Missouri Politics”, Richardson said “Missouri families earn 5000 dollars less, their earning power is about 5000 less today, than it was at the turn of the century.” 

But is Missouri’s economy really moving backwards that much?

We were directed by Speaker Richardson’s office to the United States Census Bureau’s statistics on median household income. When adjusted for inflation, the median Missouri family brought home $56,360 in 2014, while in 2000, the median family brought home $61,995.

Those numbers do support Speaker Richardson’s statement – the middle Missouri family earned $5,365 less in 2014 than they did in 2000.

But the years 2000 and 2014 are just a snapshot in time, and not necessarily a full accounting of the years that fall just before or in between. For example, in 1998, the average median household income in Missouri was $58,355. One year before that, the state’s median household income was almost $5000 less at $53,778. And in 2013, Missouri’s median household income was $47,601 – significantly lower than the statistic for 2014.

Associate Professor of Public Economics at the University of Missouri Saku Aura said the high median household income in 2000 could have a number of explanations. “Whether it’s just an outlier, a peak year for economic development, or just the last year before 9/11 and the recession hit can be debated,” Aura said. “What’s not debatable is the fact that Missouri’s economy has undoubtedly had very little to no positive growth in the last 15 years or so.”

Aura cautioned against using the median household income calculated by the US Census Bureau as indicative of Missouri’s economy. “The Census Bureau is usually striving to see a national picture, so unless it’s a census year, they don’t usually take large enough samples in individual states to have a low standard error,” Aura said. In other words, the Census Bureau’s statistic for 2014, $56,630, could be off by a fairly large margin – potentially up to $3,030 off, to be exact.

The numbers Richardson quoted from the Census Bureau are also adjusted for inflation, which, according to Aura, could paint a bleaker picture of the state of Missouri’s economy than is truly accurate. “On average, we over-estimate inflation,” Aura said. “Most of the time it’s because we undervalue new products as they hit the market.”

The changing size of families is another factor to consider. “Since 2000, we’ve seen household size, the numbers of members per household get smaller,” Aura said. “If there are less people in each family, it would make sense that perhaps there is less money being earned per household.”

Speaker Richardson got his numbers right when he said that Missouri’s families’ “earning power is less today than it was at the start of the century.” But there’s more to those numbers’ story - median household income in Missouri in 2000 and 2014 could be affected by standard error, adjustments for inflation, and changes in household size.

Check in on Sunday nights at KOMU.com for more fact-checking political coverage. 

 

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