Tim Scott’s misleading statements on median income, inflation

During a Fox News town hall, Sen. Tim Scott, R-S.C., criticized the economic stewardship of President Joe Biden, whom Scott is running to oust in 2024.

During the June 21 event, Scott said, "Median income in this country is … $35,000 a year. Because of Joe Biden's inflation, the average monthly expenses have increased by $500, almost."

Economists told PolitiFact Scott’s statement lacks important context.

When we examined available economic statistics, we found one measurement that was close to what Scott cited, but it’s not the most commonly cited figure for median income.

The U.S. Census Bureau has calculated "real median personal income" for decades. It refers to the median, inflation-adjusted income for Americans age 15 and older. 

This number is calculated annually, and the most recent year for which data is available — 2021 — produced a figure of $37,522. That’s close to what Scott said.

However, a more commonly used statistic is "real median household income," which uses households, rather than individual people, as the unit of measurement.

This produced a significantly larger figure for 2021: $70,784. That’s twice as high as what Scott said.

The big difference between the two metrics is that the denominator is much larger for the one Scott used. 

Many households have at least two members, and lots of them have one or more children. Some also include elderly relatives. Many of these children and elderly relatives will have little or no income, as will any spouses who don’t work outside the house.

Some economists say household income is a better metric. Most Americans, they argue, operate economically as a household unit by pooling their incomes and expenses.

"It’s more standard to use median family income," said Dean Baker, an economist and co-founder of the left-of-center Center for Economic and Policy Research. "Obviously, people can use other units, but I would say they have an obligation to at least clarify what number they are using. If Sen. Scott had at least said ‘per person,’ it would have been much clearer what he was saying."

Choosing between these two metrics depends on what you’re looking for, said Douglas Holtz-Eakin, president of the center-right American Action Forum.

The figure Scott used "makes sense if you’re trying to get a handle on someone’s earning power," he said. "Household income is better if you’re looking at standard of living."

So, if Scott is trying to argue that the economy under Biden has harmed Americans’ ability to make a living, he used the right figure, Holtz-Eakin said. But if he was trying to argue that their standard of living has suffered, he used the wrong metric.

Gary Burtless, an economist with the Brookings Institution, a Washington, D.C., think tank said both metrics are imperfect because they don’t include such sources of income as food stamps, housing assistance, the monetary value of employer-provided health insurance, Medicare, Medicaid and refundable tax credits.

Instead, he suggests a metric called "real disposable personal income per capita." This statistic divides the total national income by the population, after subtracting taxes paid.

That figure was $46,484 in April 2023, the most recent month available; that puts it between the two other statistics, though closer to Scott’s figure. Without the inflation adjustment, the amount would be $58,954; that’s the amount more people would recognize from their income inflows.

Economists generally give Biden some of the blame for the recent high inflation, but not all of it. The American Rescue Plan, a coronavirus relief bill, he signed in 2021 pumped money into Americans’ bank accounts, stimulating demand. But even without that government stimulus, supply shortages were already driving up prices.

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stated on November 15, 2010 in a letter to Congress.

Since the Fed was created in 1913, "the U.S. Dollar has lost 98% of its purchasing power." 

Scott’s campaign told PolitiFact that he was referring to a July 2022 article in the New York Post. Here are the key paragraphs:

"Moody’s Analytics senior economist Ryan Sweet crunched the numbers after federal data showed inflation jumped to 9.1% in June — outpacing economists’ expectations and matching rates of increase not seen since November 1981.

"The average household coughed up an extra $493 last month, according to Sweet — who calculated the figure based on average US household spending in June compared to what would have been spent in 2018 and 2019, when inflation paced at 2.1%."

By citing Sweet’s findings in this article, Scott used an out-of-date figure.

The $500 monthly increase Sweet noted referred to added costs at a time when inflation was 9.1%, year-over-year. That was the highest inflation since Biden entered office, and the highest in four decades.

For the most recent month, May 2023, the year-over-year inflation rate was less than half that: 4%.

Sweet, who has since joined the firm Oxford Economics, told PolitiFact that the figure is "outdated. ... The cost would be much lower today"

Another issue: "We all buy different things," Holtz-Eakin said. "So everyone’s inflation index will be different."

Scott said, "Median income in this country is … $35,000 a year. Because of Joe Biden's inflation, the average monthly expenses have increased by $500, almost."

One measure of median income offers a number close to what Scott said, but it’s not the most commonly used metric, and it’s one that moves the median income downward, since it counts children and nonworking spouses in its denominator.

Meanwhile, the $500 increase in costs was calculated based on a June 2022 analysis, when year-over-year inflation was 9.1%. Today, inflation is 4%, which suggests that the amount of cost increase would be lower in the most recent month.

The statement is partially accurate but leaves out important details or takes things out of context. We rate it Half True.