economics

Is Middle Class Stagnation a Myth?

Economics, George Mason University
Economics, CUNY
Genesis
Response
Penultimate
Finale

Donald J. Boudreaux

Economics, George Mason University

September 11th, 2020
I’m a time traveler from the 1970s. Born in 1958 into a working-class American family, I lived through the 1970s. And while it took me several decades to arrive in the year 2020, now that I’m finally here I can report that my recollections of the 1970s remain vivid. Here’s the bottom line: Ordinary Americans today have a material standard of living that is vastly higher than was the standard of living of ordinary Americans forty or fifty years ago.
Examples of this improvement are legion. Smartphones, personal computers, the Internet, overnight package delivery, GPS navigation, streaming music, hi-definition television, on-line debates – these are only some of the goods and services that are today readily available to most Americans but which in the 1970s were either utterly unavailable or available only to the ultra-rich. We Boudreauxs would have danced with delight had we in the 1970s been given access to any one of these wonders. The thrill that would have overcome us from gaining access to them all is impossible to describe.
But drawing comparisons from personal experience isn’t science. Data on living standards are much more reliable. Fortunately, we’ve got plenty of these – such as, for example, those found in Michael Strain’s new book, The American Dream Is Not Dead. (I bought my copy on-line – a task impossible until relatively recently.) Strain’s data convincingly show that ordinary Americans’ access to real goods and services has increased impressively over the past few decades.
Start with the hourly wage for production and non-supervisory (that is, ‘ordinary’) employees. Adjusted for inflation, this wage, after declining slightly from a peak in 1973, is now 34 percent higher than it was in 1990.
Further, this result isn’t driven by wage hikes for relatively well-off ordinary workers. Strain’s data reveal that real wages increased also for workers at the low end of the pay scale. (It’s unsurprising, then, that – as Strain also notes – the inflation-adjusted median net worth of an American family was in 2016 87 percent higher than in 1983.)
These wage increases occurred because the productivity of American workers rose. As Liya Palagashvili and I reported a few years ago, the claim that worker pay has become “de-coupled” from worker productivity is a myth.
Yet these dollar figures inadequately convey the extent of the improvement in 0rdinary Americans’ lives. Realities such as the following are even more remarkable:
- The mortality rate from cardiovascular/renal disease was 40 percent lower in 2007 than in 1970.
- The average worker with five years of job experience got 16 days of paid time off in 1970; that worker today gets 22 such days off.
- While in 1980 commercial air-passenger fatalities were 100 per 100 billion passenger miles, today these tragedies have all but disappeared despite a huge increase commercial air traffic.
Strain’s conclusion – which is consistent with the results of my own research – is succinct: “The argument that life hasn’t improved for typical households in decades is absurd.”
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