January 13, 2018


The American middle class is absolutely better off now than it was decades ago (James Pethokoukis, January 10, 2018, AEIdeas)

I wanted to highlight another bit from my recent interview with Bruce Meyer, a visiting scholar here at AEI and a professor at the University of Chicago's Harris School of Public Policy, on inequality and poverty.

In this exchange, we discuss whether US living standards have really been stagnant for decades as some researchers claim:

Pethokoukis: When people talk about inequality, usually in the next breath they'll say, "Listen, that top 1% is now getting a lot of the income, and at the same time, incomes for the middle class have been stagnant for 30, 40, maybe 50 years." Those two facts are used together, I think, to show a relationship between the two. Is that right? Because to me it seems intuitively, how could that possibly be right that the median American is no better off than he was sometime in the 1960s?

Meyer: I think you're right to not believe it, I think that statistic is wrong. If you look at the consumption of the median household, it's gone up a lot over the last 30 years. Part of the explanation for the difference between what I am saying and some of the conventional statistics that you might see from the census bureau is that we often use a way of adjusting for price changes that overstates the extent of inflation. So it makes it look like we are not doing well in the middle of the distribution even when we are.

There are very tangible things that you can look at to see that people in the middle of the distribution are better off than they were 20, 30 years ago. For example, if you look at the share of people in the middle of the income distribution that have central air conditioning, or maybe only a couple of room air conditioners, or have a dishwasher, or a washer and a dryer in their house or apartment -- those numbers for the middle look like the numbers for the top 20% as of 20 or 30 years ago. So there's been quite dramatic improvements if you look at tangible things like what kinds of appliances have in the house. You can also look at the size of people's houses or apartments -- square footage, number of rooms -- those things have gone up quite sharply for people in the middle of the distribution.

Posted by at January 13, 2018 8:53 AM