In chatting with friends here in Cambridge, all of whom are, needless to say, angry Democrats who blame all of the world’s ills on George W. Bush, the conversation has turned to some cheerful holiday subjects…
- is the average working American better or worse off than in decades past?
- is it easier or more difficult for an American to achieve a reasonable standard of living?
- is all of the increased wealth of our society going to a handful of folks at the top enjoying a new gilded age?
For these diehard Democrats, the answer is clear: the average person is worse off; the rich are a lot richer. One statistic that seems to support this way of looking at the U.S. is a chart of real wages showing that the average weekly earnings, in 1982 dollars, grew to a peak of $332 in 1972 and has fallen to $278 today.
http://visualizingeconomics.com/2006/08/15/average-income-in-the-united-states/ and
http://en.wikipedia.org/wiki/Household_income_in_the_United_States
show that real household income is still growing, albeit at a slower pace than between WWII and the early 1970s. How to explain this difference? The fall in average wage might indicate an influx into the workforce of people who work only part time, e.g., mothers of young children. The rise in family income might indicate an influx into the workforce of people who hadn’t been working before, e.g., wives of guys with jobs (though the Wikipedia entry indicates that the number of married households with two working partners is decreasing as a percentage of the total, maybe an indication that divorce has become more common).
One thing that nobody seemed to consider was the effect of immigration. If a bunch of folks show up here with limited education and poor English skills we wouldn’t expect them to earn high wages. It might not be an indication of unfairness if real wages have stagnated. It might simply mean that immigrants are arriving in huge numbers. The natives are experiencing income growth but they are disappearing in the statistics under the tide of immigration.
http://encarta.msn.com/media_461544532/Immigration_to_the_United_States.html
shows that the modern stagnation in real wages coincides with a huge increase in the number of immigrants. Should we feel sorry for a guy from Guatemala who earns only $277/week? As long as his standard of living is higher than it was in Guatemala, we shouldn’t pity him on economic grounds. If his children are not as prosperous as the children of a Rockefeller, should we pity them or give the family a few more generations to build wealth?
Complaints about the plight of the average worker seem to be contradicted by everyday experience. Habitually drunken carpenters who seldom show up to work are driving around in $35,000 SUVs, living in brand-new sprawl housing, and buying $2,500 flat-screen TVs that nobody in the 1970s could have imagined a need for. Brazilian house cleaners with questionable immigration status are driving the 4-year-old SUV that was traded in on that new one. Whole Foods is packed with people willing to line up to pay $150 for a slice of cheese, plate of sushi, bowl of soup, and bunch of free-range carrots. It is tough to hire anyone competent. We see the oppressed masses in Michael Moore movies, but we don’t see them on the streets or in the stores agonizing over whether to buy bread or medicine.
My explanation for the apparent contradiction between what one sees at the car dealers and BestBuy and how folks in the Peoples’ Republic of Cambridge feel is immigration and population growth. I mentioned this to one interlocutor, 70 years old now, and pointed out that if the U.S. had remained a country of 150 million as it had been in her youth, the average wage might well be quite high because labor would be scarce. She was shocked and refused to believe that there had been such significant growth, but the Census Bureau backed me up. We asked her what she thought the best years to have been an American were and she said the 1950s, despite the fact that conservatism strangled her beatnik spirit. The population of the U.S. reached 160 million in 1953, compared to 303.5 million today.
What about the countries that we regard as workers’ paradises with 35-hour work weeks, national health care, and lavish pensions? Visit
http://www.usatoday.com/news/graphics/300million_popchart/flash.htm
and click on “International”. Then click “USA”, “France”, and “Germany.” Notice that the last two have flat population graphs since 1950. Click on France and Germany again to remove them. Then click Mexico. A session with Edward Tufte’s books would probably result in the graph being rescaled, but it is clear that we have more in common with Mexico than with France.
So… should we give thanks this holiday season that we have managed to introduce 150 million additional people to the joys of traffic jams, strip malls, materialism, borrowing money, printing money, and invading helpless Third World countries (i.e., all of the things that make America great)? Or should we be sad that we can’t have a country of 303 million where a fresh-off-the-boat immigrant earns as much as someone whose family walked off the Mayflower?
http://www.nytimes.com/2007/12/01/technology/01online.html says that income distribution hasn’t changed since Jesus Christ was in the Temple…
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electronic reader arrived in today’s mail. It took about 15 minutes from the time that I opened the box until I was reading the first book that I purchased, Joshua Ferris’s