Why Oh Why Can't We Have a Better Press Corps? (David Leonhardt of the New York Times Edition)

Ah. David Leonhardt writes:

This Glass Is Half Full, Probably More - New York Times: David Leonhardt: Wages haven't been falling.... Up and down the economic spectrum, they have been higher in the last few years than they were at any point in the 1980's or 90's, according to inflation-adjusted numbers from the Economic Policy Institute. The median Kansas worker made $13.43 an hour in 2004, 11 percent more than in 1979, which might help explain why many people don't vote on bread-and-butter issues anymore.

Now, an 11 percent raise over the course of a generation -- which is similar to the national increase -- is not especially impressive. It's certainly smaller than the increase workers received in the 25 years leading up to 1979, and for the last few years, wages have not risen at all. But they did rise during the 1990's boom, and pretending otherwise does not jibe with most people's experiences....

Many luxuries of earlier generations -- owning a three-bedroom house, flying across the country, calling relatives who live overseas -- are staples of middle-class life. If all this doesn't add up to a rise in living standards, I'm not sure what the phrase means...

This will not do.

Our three-bedroom houses are further out from the center than our parents'smaller houses were. We spend a lot more time stuck in traffic. I'm higher up in the American income distribution now than my parents were when I was my children's age, but I couldn't touch their house. I certainly believe that my family is better off now than we were back then, but this is because I very much like the replacement of book-intellectual-culture by internet-intellectual-culture that has accompanied the extraordinary technological revolutions in computers and communications. Others with different preferences would think differently.

To try to balance and appropriately weight all the changes of the past generation, we construct index numbers: median national real hourly wages up $1.25--11%--since 1979; but median national real hourly wages for males down $0.50--3%--since 1979. And real hourly wages for males at the 95th percentile up by $10 an hour--30%.

Men with less than a high school diploma: down from $13.93 of today's dollars an hour in 1979 to $11.04 today. Men with just a high school diploma: down from $16.32 to $15.07. Men with some college but not a bachelor's degree: up from $16.98 to $17.03. Women with less than high school: down from $8.94 to $8.547. Women with high school: up from $10.60 to $11.87. Women with some college: up from $11.38 to $13.60.

To get an even half-complete picture of what has been happening in the middle of the income distribution, you need to know four more things:

• First, at least as important as the (small) rise in median wages and salaries since the 1970s has been a large rise in risk: Peter Gosselin makes a convincing case that America's middle class is anxious today because it knows that its middle-class status is surprisingly fragile. See http://delong.typepad.com/teaching_spring_2006/2006/02/covering_the_ec.html
• Second, these real wage numbers have been calculated using the CPI--the consumer price index. Use of the CPI understates economic growth: as relative prices change, people substitute toward items that become cheaper (i.e., iPods) and away from items that become more expensive (i.e., houses with short commuting times), and so wind up better off than CPI-based measures of real income indicate. How much is this effect worth? My guess is between half a percent and a percent a year--say ten to twenty five percent since 1979. See http://www.j-bradford-delong.net/Comments/FRBSF_fast_growth.html.
• Third, to the extent that income is a relative rather than an absolute concept--and to a big extent income is a relative rather than an absolute concept--America's middle class will become discontented when the gap between them and America's rich overclass widens. The gap between America's middle class and the rich overclass has widened extraordinariy over the past generation. And this is, I think, doing a lot to mask increasing absolute living standards.
• Fourth, America over the past generation has done a lousy job in translating the inventions of our scientists and engineers into boosts to the living standards of average Joes and Janes. Eleven percent over twenty-five years is only about one-fourth of what we would have seen, given underlying technological progress, if the relative income distribution had remained the same.

In sum, Leonhardt says that median incomes have risen by eleven percent and that this makes today "the best of times in many ways. Americans are wealthier than previous generations... enjoy a higher standard of living. The good old days simply weren't as good as the present day.... [B]y most broad measures -- wages, average life span, crime, education levels, home ownership and racial and gender equality, to name a few--life in this country has clearly improved over the last generation." It's much more complicated than that: America's middle class sees itself as insecure--a feature that doesn't show up in averages or medians but that is very important in assessing welfare. It sees itself as facing a broader gap than ever between it and the overclass--which means that the children of the overclass are starting life's race with an even bigger head start. And as for Leonhardt's belief that "up and down the economic spectrum, [wages] have been higher in the last few years than they were at any point in the 1980's or 90's," that's not quite right: you can't claim that real wages and salaries for white males without much education are any higher today than they were a generation ago.

It's not that we are in general poorer than we were a generation ago (although unskilled males probably are). It's that we've been wasting a great deal of the potential benefits that should have accrued to us from the ongoing march of science and technology.

Now Leonhardt wants to take this in a political direction:

Democratic politicians just don't seem comfortable talking about the ways that overall living standards have risen, focusing instead on the recent stagnation in wages for rank-and-file workers. "We do talk negative about the economy," Rep. Rahm Emanuel, an Illinois Democrat, told me yesterday, adding that it comes in part with being the opposition party. There is a fear that any good news will somehow help President Bush, and there is also the admirable liberal tradition of agitating for the little guy, a tradition that helped end the Depression, crush Jim Crow and open up the economy to women.

But the Democrats' approach has a downside. With Mr. Bush less popular than he has ever been, they have become even more downbeat about the economy at a time when more than half of Americans rate it as good.... A couple of weeks ago, the spokesman for one House candidate went one better, saying: "This economy is terrible. Republicans are using lies, damn lies and statistics to say otherwise." In a country founded on optimism, this is a tough sell...

But Leonhart gives no examples. Democratic politicians say stridently that George W. Bush has mismanaged the economy--as he certainly has. But John Kerry doesn't think the country was worse off than in the 1970s. Rahm Emmanuel certainly doesn't buy into Leonhardt's proposition that the country is worse off and poorer than it was back in the 1970s. And dollars will get you doughnuts that the unnamed "spokesman for one House candidate" doesn't do so either.

In fact, Leonhardt quotes only one Democratic politician at any length:

Senator Barack Obama, an Illinois Democrat, has become something of a rock star in the last two years, and I think a big reason is that he speaks eloquently about all the economic progress the country has made and all the problems it faces. When you listen to him, you have no doubt that too many people are still struggling.... But Mr. Obama doesn't confuse the new insecurity with a general decline in the quality of life, and he insists... that doing nothing about disappearing pensions and blue-collar jobs is simply not an option. "It's not how our story ends -- not in this country. America is a land of big dreamers and big hopes," he said at a college graduation last year. "And it is because our dreamers dreamed that we have emerged from each challenge more united, more prosperous and more admired than before."

I was taught in high school to be very distrustful of people who have no examples to cite: if you are going to criticize the Whig interpretation of history, you had better know something about some Whig historians.

So I emailed David Leonhardt to find out which Democratic politicians he was thinking of. His reply:

Thank you for taking the time to write. I read every e-mail that comes to this account and appreciate feedback.

If you are looking for details on research mentioned in the column, please go to http://www.nytimes.com/leonhardt. I often post studies and other information on that web site.

David Leonhardt

We really deserve better than this.