Fact: incomes today are more than three times higher than during the Great Depression, even factoring for inflation.
Over the summer, several social media videos went viral with people showing data that real income is lower today than it was in the 1930s. A Washington State University economist is working to debunk those claims with his own posts.
Most of the videos refer to IRS income tax records from the ‘30s. But in that period, only a tiny fraction of people, generally very wealthy, actually filed income taxes, said Christopher Clarke, an assistant professor in WSU’s School of Economic Sciences.
The IRS data shows the average wage in 1932 was just over $4,000, which is the equivalent of over $90,000 today. But, Clarke said, looking deeper into available data shows that the actual equivalent income is closer to $18,000.
“Quality data from the Great Depression is difficult to find,” said Clarke, who has also gone viral with his economic videos on TikTok and Twitter. “It’s tough to find comparable measures from over 90 years ago and modern data gathering was in its infancy in the ‘30s.”
Clarke looked at other available data to dig out the more accurate Depression-era income rates. That level of research is what an economist with a PhD does, after all. And he didn’t stop with income rates.
Other video creators have talked about housing costs being significantly higher today, compared to during the Depression, again factoring inflation. Those videos don’t measure housing in absolute terms, however. Today’s homes are significantly larger, all have indoor plumbing, showers, and construction is more regulated and safer, Clarke said.
To correct these claims, Clarke has made a series of his own videos earnestly, but factually, debunking each video. And it’s not that Clarke thinks the economy is great now, just that it doesn’t match the depths of the Depression. He thinks that period is easier to compare to modern times because there so few still alive now who lived through the full Depression.
“People don’t realize that there was literally no food for a lot of people,” Clarke said. “My grandparents only ate what they grew or hunted off the land. That’s unfathomable for most people today.”
The one measure that he said is relatively similar to the 1920 and 1930s is income inequality. The income gap between the poorest and wealthiest people in the United States closed significantly from the ‘30s until the 1970s. But since then, it has returned to the wider gap of the Depression era. Accurate data is the key on such comparisons.
“The goal of the economics profession is to bring prosperity and happiness to everyone,” Clarke said. “We can’t do that unless we accurately explain the world around us. So correcting these videos, which have been seen tens of millions of times now, is important.”
Clarke makes a point of not being confrontational in his debunking videos, just politely explaining what data means and how some of the data used is flawed.
“I treat most of these videos as made by people who genuinely believe what they’re saying,” he said. “The conversation should be about the human experience and a lot of people are suffering today. Just because it’s not as bad as it was during the Great Depression doesn’t lessen people’s experiences today.”