The biggest problem with US economic statistics

Unaccounted for.
Unaccounted for.
Image: Reuters/Stephen Lam
We may earn a commission from links on this page.

In September 2017, the US Census announced that the incomes of black households rose by 5.7% from 2015 to 2016, a rate nearly double national median-income growth rate of 3.2% (pdf). By this metric, the median incomes of black households were about 60.7% of those of white households. This would suggest that the difference has shrunk significantly since the early 1980s, when it was about 55%.

Unfortunately, these numbers are wrong. Like many US government statistics, the Census Bureau’s income estimates excludes the over 2 million incarcerated people. That cohort has “among the poorest economic fortunes of any social group, and their exclusion leads to a growing sample selection bias,” writes Becky Pettit in her 2012 book Invisible Men: Mass Incarceration and the Myth of Black Progress. “Including them in accounts of the well-being of the population contributes to a much less optimistic story of the relative economic standing of blacks in America.”

Pettit, a sociologist at University of Texas, explains that this bias is an unanticipated consequence of the way the US collects economics statistics. In 1939, when the government began collecting yearly annual household economic data, many fewer people were incarcerated. For most of the 20th century, the rate hovered around one out of every 1,000 Americans. Beginning in the late 1970s, due to harsher sentencing policies, more stringent policing and aggressive prosecutors, that rate shot up. Today, nearly 7 out of every 1,000 people are incarcerated. Over 93% of inmates are men.

Black Americans, particularly men, have always been overrepresented in terms of their incarceration rates. They make up only 13% of the US population overall yet account for about 40% of the prison population. As the prison population skyrocketed, the proportion of inmates that were black remained the same. By 2008, more than 11% of all black men between the ages of 20 and 34 were incarcerated.

Pettit writes that ignoring the prison population distorts a variety of commonly cited statistics, including those about employment, education, and earnings. (Her analysis uses data from 1980 to 2008, but little has changed in incarceration rates since 2008.)

She finds that while conventional government statistics show that the employment rate for young, low-skilled black men fell from 62% in 1980 to 42% in 2008, the reality is much worse. If incarcerated men are included, the rate is closer to 30%. For education, government statistics suggest that the high school graduation rates of black men are getting closer to those of white men. Pettit shows that the majority of the convergence is due to excluding the incarcerated. For earnings, she finds that the black-white wage gap has rapidly increased if the prison population is included.

Pettit’s book demonstrates that a true understanding of the US economy must include the incarcerated. The census bureau—and analysts of government statistics—must be better about not making them invisible.