Economics

About that ‘Great Stagnation’ for the median American

Jim Sullivan of Notre Dame and and Bruce Meyer of the University of Chicago just gave a terrific presentation about what has happened to the material well-being of the poor and middle class in the United States over the last three decades. Contrary to much received wisdom, the poor and middle class are significantly better off today. This slide is but one example from their presentation.

You can see the whole presentation here (Gary Burtless of Brookings made several excellent points in the discussion).

Of course, things have not been great for the past several years, but it is hard to argue that living standards haven’t improved over the last 30 years. It would be great to see a debate between, say, Pikkety and Saez on one side and Meyer and Sullivan on the other about what’s happened to the American middle class over time.

9 thoughts on “About that ‘Great Stagnation’ for the median American

  1. The real problem is that we’re ungrateful about what we have, and we spend all our money on stupid junk we don’t need. This short-sighted whining about a living standard that is vastly better than 99% of human beings who have ever lived on this planet is amazingly destructive and stupid.

  2. A big part of the “non-cash benefits” is the health insurance premium paid by employers. For most employees health insurance coverage has gotten worse and they have to pay more of their after tax income for medical care or insurance premiums. I don’t think anyone thinks material well being has gotten worse than it was in 1980 but almost everyone thinks thinks they have made no progress for the last decade and many think they have fallen behind where they were. Stocks haven’t appreciated, real estate hasn’t appreciated, employment has become more difficult to obtain, travel has become more inconvenient whether on planes, trains or automobiles.

  3. One little problem with this iffy analysis. Much of the consumption of the last 10 years was funded by borrowing which has created the huge debt overhang which is one of the principal causes of current economic weakness. I presume this is intended to be some sort of counter to that new CBO analysis on stagnant real incomes for 80% of the country. Somehow I don’t think it’s going to play in Peoria.

  4. There’s also something funny about the money income line. According to the official stats real incomes actually fell slightly between 2000 and 2007. It won’t be long before Krugman and co are all over this.

  5. “Contrary to much received wisdom, the poor and middle class are significantly better off today”
    “it is hard to argue that living standards haven’t improved over the last 30 years”

    The increase in median household income (which is of course dwarfed by the increase at the top) is almost entirely due to women’s entering the workforce. Median wages have been flat for, not just thirty, but FORTY years. One way to look at it is to say that if it weren’t for the feminists, we would have been seeing people in the streets protesting inequality a couple of decades ago.

    As for living standards, is is much more debatable than you pretend. The (relatively small) increases in median household income have come at a real cost. My own household is a kind of counterexample. I am very happy that my wife doesn’t work a full time job; although it does mean that our income is lower than it would be otherwise, we have a better life overall. We have made a conscious choice (and my income is high enough that we feel comfortable making that choice) to do the opposite of what the US as a whole has done, and I think our “living standards” are better as a result. If our household increased its hours of work, as most have done over the past thirty years, our living standards would, I think, go down. So it’s kind of amusing to see conservatives effectively urging women not to stay at home…

  6. In the late 1800′s a Philadelphia steel worker owned his own house, his wife stayed at home and he had 5 kids. True, he worked long hours and his wife wasn’t watching TV, but all taxes combined came to less than 10% and it didn’t take a lifetime to pay off the mortgage.

    Advances in technology have contributed tremendous wealth and benefits over the past 150 years, but governments have expanded accordingly, scooped up most of this bounty and prevented middle income people from reaching their full potential.

    Excessive government growth is the enemy of propsperity.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>