>Focusing on income ignores the plummeting costs of goods, what they can buy is much better and more plentiful than they could in the 70s.
Actually the most important good, a house, is much more expensive to buy/rent than in the 60s/70s.
There were times when a middle class family with one working member could afford a house and send the kid to college without huge debt - something near impossible now even with 2 working members.
As for goods, those are hardly a compensation, if people work crazy hours, with stagnant pay, and get less share of _their_ society's wealth (their current society's, not compared to 20, 30 or 1000 years ago, which is what matters. We don't compare ourselves with medieval serfs or cavemen to see if we're doing OK, and we don't pat ourselves in the back in 2019 if we live in a trailer park because we have electricity and some rich person in 1800 wouldn't).
So, yeah, thanks to cheap foreign manufacturing one can have more stuff (just not the important stuff, like house and healthcare and education and better job conditions).
>I agree that the aggregate standards and quality of life are much improved over 20, 40, or 60 years ago
Over 100 years ago sure. Over 40 or 60 has it really? People usually consider more stuff (access to cheaper and more gadgets, the internet, etc) as an improved standard of living or quality of life. In other words they conflate technology making some products cheaper for a better standard of living.
But even more important factors, for a large part of society is access to healthcare, education, house, etc -- all of which have gotten more expensive. There was a time when a single earner could buy a house at 25 or 35 and get their kids to college. Now two earner families often struggle.
Middle class jobs have also become more stressful and pressing, while many middle and working class wages, inflation adjusted, have stagnated for decades, despite the increased stress, working hours, and productivity gains.
> It’s also true that an average wage earner today enjoys a higher standard of living than at any point in history - bigger house, more cars, tvs, and luxury items.
I really disagree with that. I'm a 35 year old single man with no kids and a well payed software developer, better paid than 90% of the population. At this point in life my father had a stay at home wife, 2 kids and was working for near minimum wage as a cleaner.
He had a huge 4 bedroom house, double garage, large backyard with a swimming pool, 2 cars etc and was close to paying off the house at my age. Meanwhile I'm looking forward to pay off a tiny studio apartment in a few years.
Yes we've got bigger TV's and smart phones now, but they don't contribute to a high standard of living.
> Additionally, crappy wages and unrealistic job descriptions.
What’s interesting, is from what I’ve seen, a lot of stuff is paying a lot better than I remember seeing a decade ago. However, the costs, notably the cost of things you need to survive (especially housing) has managed to far outpace those wage gains in a much shorter period of time. Although that might be specific to my location.
> Lots of middle class professionals have essentially the same output as their forebears did 40 years ago.
No, they have much higher output.
> They are not expanding the pie.
They are.
> They are nonetheless richer in absolute terms
They are not. It takes two incomes to do what one income used to pay for. Lots of middle class people cannot afford to even buy a house. Something most of their parents managed to do at a young age.
> but have pulled away in relative terms
Yes, this has also happened.
> those that are much more productive than their fore-bearers.
Much more productive? That's also not true.
> This is perfectly fine but for envy.
If it were envy, the middle class wouldn't be asking for better wages. They would be asking to become rich. It's not envy.
> Which they are not: real wages for the bottom four quintiles have been stagnant since the seventies and the 1% have captured essentially all income gains from productivity growth since then. That is the source of the discontent.
I'm talking globally. The American middle class has done uniquely poorly during this period. (I'm not American)
Still - if you can tell me with a straight face that you'd rather be poor in the 70s vs today, I would label you crazy. It's almost impossible to account for the changing quality and abundance of goods - huge advances in medicine, computation, a plethora of high quality goods and services. Life today is qualitatively different than it was 40-50 years ago.
>You're trying to pull a fast one here. The statistic about "a billion people have been lifted out of poverty" has been greatly overblown: it's technically true, but it turns out most of those people are in China
How is that a fast one? A billion people is a billion people. If the fact that they're primarily Chinese bothers you we'll need to have a different discussion.
> "It's only class warfare when we fight back".
Who are we fighting? This is an entirely unhelpful rhetoric.
Simply not true; there was a time in this country when a middle class lifestyle worked on one income leaving one parent free to raise kids. Those times are over, the middle class has been virtually destroyed and two income families are now the norm just to get by. That's not a relative comparison, that's an absolute decrease in lifestyle. That technology has progressed making computers cheap means diddly squat.
Sure, we can say that there has been some benefit to the middle class in the West through reduced price on some of the goods but certainly not on big bill items such as housing and education. It's great that I can buy a cheap jacket and keep some of my income, it sucks that my housing expanses went from 1/5 to 1/2 of my income (as an example).
Overall an American worker who lost his well paying manufacturing job and replaced it with a job at walmart lost massively.
> When economists say standards of living are higher they mostly mean life expectancy has increased and we have iPhones
This is incorrect.
> talk to some of the young people you know
We’re paying down our debt and buying homes. We’re more stretched than our grandparents were at our age, but our objective quality of life is far superior. I wouldn’t give up modern telecommunications for a bigger house.
> wouldn't they say that we are actually much wealthier per capita and more much productive than we were back then?
Wealthier (higher QoL, longer life expectancy etc) and more much productive, yes. However, affordability is lower precisely because everyone is more wealthy, so they demand more compensation (incentive to work), so every person has to now earn even more to afford to pay someone else more.
Globalization has put an upward pressure on wealth globally and has a deflating impact on affordability, which is in contrast to the unique position the U.S. was in allowing its citizens to enjoy extreme wealth growth right off WWII.
So yes, people are wealthier and more much productive, but they can afford less because everyone else are wealthier and more much productive as well and can compete for the same resources better than they were able to before (it's not that exciting to be a millionaire if everyone is also a millionaire).
> The US didn't have that stuff a century ago either, and the birth rate was higher.
Ah yes, back when one (1) unexceptional salary could actually support a few humans, shelter, etc.
> They drive up taxes, causing more families to feel they need two incomes...
I’m pretty sure the stagnation of wages while costs of living kept increasing played a way bigger part of this than a few percentage points of tax changes.
> People want the standard of living everyone had in the US decades ago, it costs much more now.
I think you are right. But all the CPI data and real income data says people are much richer than 40 years ago. And as someone who has spent a lot of time digging through the methodology of these time series, I don't see any bias or obvious error that should make me suspect the government data.
Then the next step is to say "yes, a car of today is much better than a car sold in 1980, so in real terms, maybe cars are cheaper but you can't buy those cheap cars now." But if you really think about it, that's not true, either. You can still buy cheap cars, for example used cars, that will last longer as they are better built. You can still buy cheap housing, just in a different location. Remember there were no mobile phones in the 1980s, no internet, no personal computers, etc. But if you want to live like someone in the 1980s, you can do that and have more money left over than someone would have in the 1980s.
So you point me to one thing and I will show you how, with today's income, you can get it at same or better quality and have more money left over than if it was 1980. Except healthcare, you can't get the cheaper version of healthcare from the 1980s (since that would be illegal). But other than that, you really can, and you can't pin the entire difference on healthcare.
The best I can think of is a vague notion that people have lost the skills to be able to live like they did 40 years ago, possibly because being able to live like that requires some community support, and we don't have that support anymore. As one data point, take the Amish, who live like they did 200 years ago. And they are not poorer. But they make sacrifices to live like that as an entire community. If an individual tried to do it on their own, they would fail. For one thing, no one would marry them once they found out about the lack of electricity and 18th Century amenities.
But I'm not too happy with this characterization, either. It's something that still puzzles me.
> larger proportion of the part that disappears every year becomes better off than worse off
I would hardly disagree with that statement.
Larger portion of the middle class gets downgraded not upgraded.
Some parts of their life get better due to advancements we make in science, but all other aspects are worse and worse.
An example can be “property ownership” - the amount of ppl that own property and are part of the middle class is decreasing year over year in developed countries.
We are slowly getting to the point where we can consider our grandparents or parents as millionairs in current standards.
Global inflation slowly kills middle class and no - ppl are not having it better in aspects that actually matter in long term. We are at crisis now.
> "it's easy to argue the average middle class worker is substantially worse off"
it's also easy to argue that the typical metrics used in this comparison are misleading.
A "typical middle class worker" in the early 1970s lived in a house that was built in the 1950s or earlier, around 1200 square feet, 1 bathroom, 2-3 bedrooms, without air conditioning or a washer/dryer, and had one vehicle available to the household [0]. Nowadays, we consider that "the projects", undesirable housing for poor people, while the "middle class" live in considerably larger dwellings with more amenities.
The reason I mention this is that real wage / purchasing power comparisons almost universally use "average housing costs" as a significant part of the metric, and "average housing costs" are in no way measuring the same thing. (
It so happens that I live in my childhood home, which my parents purchased in 1975 for $32,500 -- about 3.1 times the national median household income. I purchased it from them in 2012 for $135,000, a mere 2.7 times the median income.)
If you actually compare the goods a median-wage worker can purchase today to the goods a median-wage worker could purchase in the 1970s, there are definitely some things we have a harder time affording (like routine health care), but with the majority of material goods, you can get much bigger/better/faster/higher quality stuff for the same portion of the budget [1]. A modern middle class income gets you much better than 40-years-ago middle class living conditions.
> stagnating wages for everyone except owners of capital
I don’t think this tells the full story. I know I have somewhat esoteric views about finance, but I believe that wages in terms of what they can buy have in fact been increasing faster than you’d expect just based off of the dollar amount of wages. Even though minimum and average wages have increased more slowly, the buying power hasn’t decreased (and maybe even increased).
This is based on the rate of technological progress causing massive deflation in prices of things that can be made more efficiently by said technology. Our lives have also become more convenient in the last 20-ish years, with a significant chunk of inflation being caused by people actually buying more expensive versions of things.
Think of a 2005 cell phone. Motorola Razr era. Those things cost a few hundred dollars. You could buy something with comparable (or likely even better) capability today for pennies, or even find one for free. Which means massive deflation of comparable goods. You can get full-blown smartphones now for $50 total (budget android phones). Same thing applies to lots of products.
But our lifestyles have also gotten much more expensive — it’s fairly normal to spend 2-3x what we would’ve spent on the fancy Razr phone, or even more, because we want the latest and best. If we lag behind the cutting-edge with our purchases, we’ll find that we are spending less each year on comparable products.
Look through some of these[0] inflation charts — I tried apparel and bananas for example, but it looks like inflation has been extremely low on some standard household items (trying to ignore things that people are buying more luxury versions of these days).
All this to say — yes, income inequality is worth keeping an eye on. And yes, our tax system needs to be massively simplified to prevent loopholes. But some level of wealth inequality isn’t necessarily bad, it seems to be a pretty natural behavior that some small number of people hyper-optimize for some successful path & win — in all sorts of activities, not just wealth-building.
And, even though wages haven’t gone up a ton recently, neither have prices. People spend so much more of their money on luxuries now that it seems that cost of living has gone up, though. (Housing is an exception here that definitely has gone up)
> ... most western workers can afford much more from their flattened or fallen income than they could 10 years ago ...
Afford much more of what?
It's probably easy to find evidence that computing power in a smartphone is more affordable.
But, can people now afford more quality in their children's education or their family's health care?
And what about food? Maybe the price per calorie has actually decreased in real terms, but what about the quality of those calories? Is a calorie of corn equivalent to a calorie of fresh fruits and vegetables?
And housing? Is a condominium equivalent to a house with a yard? etc.
It seems like a mixed picture. Some things are more affordable, but some other important things appear to be more expensive.
>The rich people of the past had no internet, cars, air travel, or much health care by modern standards. The average 2022 American is vastly better off materially.
No, while rich people in the past had no iPhones or internet, they had something far more valuable than that: income generating businesses and appreciable assets like land, housing, gold, fine art, jewelery, etc.
And no, the average American is vastly poorer now as housing, stable well paying jobs, healthcare and education, are now massively out of reach for the average joe than they were a few decades ago. Having iPhones and internet doesn't make up for these.
>> In the past 50 years, despite overall economic growth, the quality of life for most Americans has declined
> I would like to see some citations for this because there are many things that make up quality of life, and many ways to measure them.
There's that famous graph that shows flat real wages from the 70s onward for most people, and very well-known problems with extremely important goods like healthcare access and housing.
Sure, most Americans (even poor ones) have gotten significantly larger and higher-resolution televisions and gizmos like cell phones during that time, but I think those things are actually pretty marginal (and perhaps even negative), from a quality of life perspective.
Actually the most important good, a house, is much more expensive to buy/rent than in the 60s/70s.
There were times when a middle class family with one working member could afford a house and send the kid to college without huge debt - something near impossible now even with 2 working members.
As for goods, those are hardly a compensation, if people work crazy hours, with stagnant pay, and get less share of _their_ society's wealth (their current society's, not compared to 20, 30 or 1000 years ago, which is what matters. We don't compare ourselves with medieval serfs or cavemen to see if we're doing OK, and we don't pat ourselves in the back in 2019 if we live in a trailer park because we have electricity and some rich person in 1800 wouldn't).
So, yeah, thanks to cheap foreign manufacturing one can have more stuff (just not the important stuff, like house and healthcare and education and better job conditions).
reply