Pethokoukis, Economics, U.S. Economy

Jimmy Carter: Today’s middle-class has ‘become more like poor people than they were 30 years ago’

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Former US President Jimmy Carter offered a curious bit of economic analysis recently at a Habitat for Humanity construction site in Oakland:

The middle class has become more like poor people than they were 30 years ago. So I don’t think it’s getting any better. … The richest people in America would be better off if everybody lived in a decent home and had a chance to pay for it, and if everyone had enough income even if they had a daily job to be good buyers for the products that are produced.

I am not sure Jimmy Carter uttered a single correct sentence. In fact, I am pretty sure he didn’t.

1. While the portion of American households that are middle-income has declined since the late 1960s, that drop was more than offset by share gains in the upper income levels. “America’s middle class did start largely disappearing in the 1970s — but it was because they were moving up to a higher-income category,” writes AEI economist Mark Perry at his Carpe Diem blog.

2. Research from economists such as Cornell’s Richard Burkhauser and the University of Chicago’s Bruce Meyer finds total median household income, adjusted for inflation, up roughly 40 to 50% since the late 1970s.

3. AEI’s Aparna Mathur finds “that people at all income levels now have access to many more material possessions than they did in the 1980s.” For instance:

The percentage of low-income households with a computer rose from 19.8 percent to 47.7 percent in 2001. The percentage of low-income homes with six or more rooms (excluding bathrooms) rose from 21.9 percent to 30 percent over the same period.

In terms of appliances, the percentage of low-income homes with air-conditioning equipment rose from 65.8 percent to 83.5 percent; with dishwashers from 17.6 percent to 30.8 percent; with a washing machine from 57.2 percent to 62.4 percent; and with a clothes dryer from 44.9 percent to 56.5 percent.

The percentage of low-income households with microwave ovens grew from 74.9 percent to 92.4 percent between 2001 and 2009. Fully 75.5 percent of low-income Americans now have a cell phone, and over a quarter of those have access to the Internet through their phones.

4. I’m sorry, is Carter suggesting government do more so lower-income people can own their own homes? Did he not notice how America’s 70-year experiment with consumption-driven “mortgage Keynesianism” just ended? Did he miss the housing collapse?

We can deal with today’s economic challenges for the poor and middle-class without distorting the past. But for some, fudging the historical record makes a particular economic agenda more salable and fumigates their own legacy.

9 thoughts on “Jimmy Carter: Today’s middle-class has ‘become more like poor people than they were 30 years ago’

  1. Carter is the one who is correct. You are seriously out of touch with reality. Why is it that the right wing is so fact and math challenged ?

  2. This is a troubling topic for those who lived through the 1960s…the numbers show higher incomes today…but I can remember factory workers in Los Angeles easily finding jobs and buying houses…one-income households doing fine…now you have mom and dad putting in 60 hours a week each…not sure economists really have a handle on this…

    • It’s called inflation, and Mr. Carter should have a much better sense of what that consists of than he displays. You can pick almost any concrete metric (house, car, silver, how long you have to work to pay for any of those, etc.) from 1979 and compare it to now, and you’ll find about a 5:1 deterioration in buying power of the dollar. Throw in the modern desire to have those nicer things in life Right Now, and people able to borrow the money easily, and before you know it, both spouses have to work.

  3. My long-time observation is that decades of growing government consumption of America’s productivity would have collapsed everyone’s standard of living long ago but for a list of facts: 1) For good or ill, Mommy doesn’t stay at home like decades ago but is now often a co-bread-winner along with Daddy. 2) Computerization has increased efficiency of all types of businesses using B2B, CRM, just-in-time, etc. 3) Globalization provides cheaper products for all, keeping up everyone’s standard of living. 4) Relying on factors listed already, there are new business models that have made possible great cost-cutting business such as Wal-Mart, Amazon, PayPal, etc., etc. But all this efficiency and productivity just offers the government more opportunities to tax and hinder.

    • Agreed, with two additions. Dual earners are a definite “ill” for household budgets, which skews the transfer payment argument that Mr P loves to make. Granny is less likely to live in proverty than back in Jimmy’s day, but five-year-olds are more likely.

      Secondly, America had a substantial blue-collar middle class when Jimmy was inaugurated — steelworkers in Pa with hunting cabins and autoworkers in Michigan with lake homes. As Jimmy says, those Americans are falling out of the middle class the wrong way.

    • Mises inferred Fed inflation and predicted depression in the technologically progressive 1920s because prices were stable. Tech lowers prices.

  4. Excellent analysis. This is a fallacious statement that liberal/statist politicians love to make.

    Dr. Thomas Sowell dedicates an entire chapter to this in his book “Economic Facts and Fallacies”.

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