So, were those who laughed at Ronald Reagan's "trickle-down" economic theory right? Not really, says TIME business writer Daniel Kadlec. "The trickle-down theory of economics does have some validity to it," he says, and should not be judged just by the numbers at the very top and very bottom. "A generally robust economy leads to overall financial health." In addition, says Kadlec, the latest tax incentives are geared toward helping the bottom half of income-earners. "The Roth IRA and child tax credit, for example, aren't even available to the wealthy," he says. "If these programs aren't helping the lower middle class, I'm not sure what can be done about it." It might be a start, some analysts say, to further raise the minimum wage so that everyone can actually partake in the boom.
The recent, well-documented urge to discuss our hyperbolic economy is a trend that transcends cocktail parties; academics and theoreticians, like those at the Center for Budget and Policy Priorities and the Economic Policy Institute, are also dissecting the economic upswing with barely contained vigor. And when statisticians at these think tanks took a hard-nosed look at the numbers, they concluded, in a joint report released Tuesday, that while the majority of Americans are doing exceedingly well, a full fifth of the population has been left far behind. According to the study, families whose income puts them in the top fifth of earners saw their income rise between 1988 and 1998 by an average of $17,870 to a total of $137,480, while those in the bottom fifth saw an increase of only $110 taking them to $12,990.