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In the early 1970s, WSJ writers could have written an article pointing at how much better the middle class in the US had done over the past 40 years. Now they

In the early 1970s, WSJ writers could have written an article pointing at how much better the middle class in the US had done over the past 40 years. Now they have to resort to this sophistry. When they admit the average hourly wage of nonsupervisory workers has remained about the same, what that actually means it is lower than it was in the early 1970s, adjusted for inflation. So one point they make is workers are paying more to their HMOs than ever, so the % of fringe benefits to wages has increased. This is proof against a stagnant middle class? Then that a one income household can not cut it any more is mentioned. What does this have to do with a stagnant middle class? "The U.S. economy was [and is] flexible and strong". No kidding, I can see GNP going up as well. This has nothing to do with a stagnant (falling, actually) middle class. The mention of 32% of disposable income - again, money is going to HMOs that went to nicer housing, cars, clothes etc. Also, I don't know what NBER report they're citing, those numbers look much lower than other reports I have seen. To believe this you would have to believe the middle class today has 68% play money with the 32% covering housing, cars and essentials. "Joe Six-Pack when making a similar trip on a commercial jetliner. But unlike his 1970s counterpart, Joe routinely travels the same great distances in roughly the same time as do the world's wealthiest tycoons." I know many people in their 20s and 30s with middle class jobs, many of them have never been on an airline ever. that airplanes have been improved means little to them. The article sounds like just a lot of sophistry. The fact is that inflation-adjusted hourly wages are lower today than they were in the early 1970s. Even if you don't give a flying fuck about the average American, it means there are less consumers to buy new commodities coming out. They can go into debt to get it, but we all just saw what happened when the whole system is gamed so that these now poorer middle class people can buy houses with sub-prime mortgages. Personally I don't have a Robert Reich/Paul Krugman/Keynesian view of this. My personal view is the economic system has much greater essential underlying weaknesses that little Keynesian measures won't fix over the long run. Which is just to say that just because I think Boudreaux and Perry are wrong doesn't mean I think Reich's suggested minor tweaks to the economy would work either.

twoodfin 14y ago
In the early 1970s, WSJ writers could have written an article pointing at how much better the middle class in the US had done over the past 40 years. You really think you'd rather be the median income 25 year old in 1973 vs. 2013? It's not sophistry to point out that today's median 25 year old has massive advantages in health, education, technology and basic quality of life over his 1973 equivalent. The real average wage captures none of this improvement, which is the point of the piece.
- malyk 14y ago
  What about happiness? Hope for the future? Ability to have your spouse raise the kids at home while you earned enough to pay for a house and car? And the idea that life expectancy is what counts is absurd. 79 years of fighting for jobs where you're worked like mad fighting every week to stay out of debt while trying to get your kids some semblance of education in shittier and shittier school systems sure sounds a hell of a lot nicer than the past because what, iPhones exist?
  - twoodfin 14y ago
    I think you are looking at the past with rose-tinted glasses if you think "hope for the future" was on a real win streak in the '70s. (See: Vietnam, Watergate, Arab oil embargo, stagflation...) Also, in the '70s, it wasn't the "spouse" raising the kids at home, it was the wife. The huge increase in available roles for women is another thing not captured by the average real wage (and as the piece points out, probably had a negative impact on it).
    - malyk 14y ago
      You are definitely correct. My post was a little snarky and written way too quickly to get any real point across. My real point is that, regardless of whether or not wage stagnation has occurred, the "middle class" is not in a good position. Median household income is $52,000. You can survive on that while raising 2 kids, paying rent or a mortgage, and paying for a car if you are smart about it. But you aren't very well positioned to get ahead and you certainly aren't in a position to have a couple of smartphones, premium cable tv on a big flat screen tv, with the newest computers, etc. like we are taught to aspire to. Yes, there is more tech, better healthcare, etc., but your money goes a lot less far than it did when you could have a single worker earning enough to afford the "same" (relatively) overall quality of life. It's not a perfect comparison by any means, but saying wage stagnation doesn't exist and therefore we shouldn't care about it seems utterly bizarre when you look at what most of the nation has to live on. I just can't wrap my head around how anyone can look at this article and especially that horrible infographic that the WSJ published and think anything except how out of touch and frankly stupid people are about the reality of our collective situation.
yummyfajitas 14y ago
So one point they make is workers are paying more to their HMOs than ever, so the % of fringe benefits to wages has increased. This is proof against a stagnant middle class? No, the point is that compensation/worker is up, but wages/worker is down, implying that non-wage compensation/worker is up. Then that a one income household can not cut it any more is mentioned. Define "cut it". If "cut it" means "purchase the same basket of goods and services that the typical family had in 1970", they almost certainly can.
- CleanedStar 14y ago
  The thesis of the article is middle class stagnation (the actual truth is, inflation-adjusted hourly wages have fallen since the early 1970s, they have not stagnated). These "increased benefits" are due to skyrocketing health costs which the employer has been paying, not any new fringe benefits. Because employers in the US have been fighting universal healthcare for decades, unlike every other industrialized country. They fight tooth and nail to stop universal health care with campaign donations, then cry how much they have to pay into the HMOs of their workers. A worker who purchases the same basket of goods and services that the typical family has in 1970 is not going to "cut it". To make the same wage he did in 1970, he will now have to pay for his own job training, college degree and so forth. Employers now require more education from workers. The typical family is now forced to pay a new expense in their basket - their own training and educational costs - forced meaning if they want to remain a typical family, and not fall further then they already have.
  - yummyfajitas 14y ago
    Medical treatments invented between 1970 and 2013 are not new fringe benefits? The skyrocketing health costs pay for fancy new treatments which didn't exist in 1970. CPI includes no hedonic adjustment to health care - it focuses and ignores benefits. (In contrast, some categories such as food and housing attempt to incorporate hedonic adjustments.) Last Feb I had spine surgery that didn't exist in 1970, guided by a scanner which didn't exist in 1990. This Feb I'm on track to deadlift well over my bodyweight. None of this was free. Suffering back pain in 1970 was. I'm quite happy to pay a bunch of money today for these benefits, happier than I would have been suffering with back pain in 1970. I.e., my real wage went up relative to my hypothetical 1970 self because of health care.

twoodfin 14y ago

In the early 1970s, WSJ writers could have written an article pointing at how much better the middle class in the US had done over the past 40 years. You really think you'd rather be the median income 25 year old in 1973 vs. 2013? It's not sophistry to point out that today's median 25 year old has massive advantages in health, education, technology and basic quality of life over his 1973 equivalent. The real average wage captures none of this improvement, which is the point of the piece.

malyk 14y ago
What about happiness? Hope for the future? Ability to have your spouse raise the kids at home while you earned enough to pay for a house and car? And the idea that life expectancy is what counts is absurd. 79 years of fighting for jobs where you're worked like mad fighting every week to stay out of debt while trying to get your kids some semblance of education in shittier and shittier school systems sure sounds a hell of a lot nicer than the past because what, iPhones exist?
- twoodfin 14y ago
  I think you are looking at the past with rose-tinted glasses if you think "hope for the future" was on a real win streak in the '70s. (See: Vietnam, Watergate, Arab oil embargo, stagflation...) Also, in the '70s, it wasn't the "spouse" raising the kids at home, it was the wife. The huge increase in available roles for women is another thing not captured by the average real wage (and as the piece points out, probably had a negative impact on it).
  - malyk 14y ago
    You are definitely correct. My post was a little snarky and written way too quickly to get any real point across. My real point is that, regardless of whether or not wage stagnation has occurred, the "middle class" is not in a good position. Median household income is $52,000. You can survive on that while raising 2 kids, paying rent or a mortgage, and paying for a car if you are smart about it. But you aren't very well positioned to get ahead and you certainly aren't in a position to have a couple of smartphones, premium cable tv on a big flat screen tv, with the newest computers, etc. like we are taught to aspire to. Yes, there is more tech, better healthcare, etc., but your money goes a lot less far than it did when you could have a single worker earning enough to afford the "same" (relatively) overall quality of life. It's not a perfect comparison by any means, but saying wage stagnation doesn't exist and therefore we shouldn't care about it seems utterly bizarre when you look at what most of the nation has to live on. I just can't wrap my head around how anyone can look at this article and especially that horrible infographic that the WSJ published and think anything except how out of touch and frankly stupid people are about the reality of our collective situation.

yummyfajitas 14y ago

So one point they make is workers are paying more to their HMOs than ever, so the % of fringe benefits to wages has increased. This is proof against a stagnant middle class? No, the point is that compensation/worker is up, but wages/worker is down, implying that non-wage compensation/worker is up. Then that a one income household can not cut it any more is mentioned. Define "cut it". If "cut it" means "purchase the same basket of goods and services that the typical family had in 1970", they almost certainly can.

CleanedStar 14y ago
The thesis of the article is middle class stagnation (the actual truth is, inflation-adjusted hourly wages have fallen since the early 1970s, they have not stagnated). These "increased benefits" are due to skyrocketing health costs which the employer has been paying, not any new fringe benefits. Because employers in the US have been fighting universal healthcare for decades, unlike every other industrialized country. They fight tooth and nail to stop universal health care with campaign donations, then cry how much they have to pay into the HMOs of their workers. A worker who purchases the same basket of goods and services that the typical family has in 1970 is not going to "cut it". To make the same wage he did in 1970, he will now have to pay for his own job training, college degree and so forth. Employers now require more education from workers. The typical family is now forced to pay a new expense in their basket - their own training and educational costs - forced meaning if they want to remain a typical family, and not fall further then they already have.
- yummyfajitas 14y ago
  Medical treatments invented between 1970 and 2013 are not new fringe benefits? The skyrocketing health costs pay for fancy new treatments which didn't exist in 1970. CPI includes no hedonic adjustment to health care - it focuses and ignores benefits. (In contrast, some categories such as food and housing attempt to incorporate hedonic adjustments.) Last Feb I had spine surgery that didn't exist in 1970, guided by a scanner which didn't exist in 1990. This Feb I'm on track to deadlift well over my bodyweight. None of this was free. Suffering back pain in 1970 was. I'm quite happy to pay a bunch of money today for these benefits, happier than I would have been suffering with back pain in 1970. I.e., my real wage went up relative to my hypothetical 1970 self because of health care.