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Don’t believe the naysayers: Capitalism is healthier than it appears

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This is a strange time to be debating whether capitalism is broken, at least in the United States.

The economy has added jobs every month since October 2010 for a total of over 20m net new payroll jobs. The unemployment rate is below 4%, lower than it has been since 1969. Wage growth is finally accelerating, clocking in at a rate well above 3% a year for typical workers.

The workforce participation rate for people ages 25 to 54 has increased by 1.6 percentage points since 2015, wiping out half a decade of decline. There are more job openings than unemployed workers in the US. The number of workers experiencing long-term unemployment is lower today than it was when the Great Recession began.

So much for a stagnant economy. What about inequality? A recent report from the nonpartisan Congressional Budget Office belies the general claims that economic divisions are rapidly widening. The CBO examined inequality on several measures: income generated in markets (employment, business and capital income); the sum of market income and payments from social insurance programs; and income with and without safety net benefits and services and before and after federal tax payments.

Across these different measures, inequality rose between 1979 and 2006 by between 24 and 28%, depending on the precise definition of income. (The report uses the standard “Gini coefficient” inequality measure.) But since 2007 inequality has leveled out or even declined. Market income inequality has increased by 3%; once government transfer payments and federal taxes are taken into account, however, inequality has actually narrowed by 5% over the last decade.

To be clear, I am more concerned about the absolute condition of low-income workers and households, as well as the opportunities available to them, than I am concerned about relative inequality. But if we are going to analyze inequality it is important that we base our analysis on the latest and best statistics.

Here, the US economy is delivering even better results. Since 2016, weekly earnings for the........

© The Guardian