For reasons that have long escaped me, ABC News thinks it’s a good idea to have a fanatical libertarian pundit on their payroll and presented as a newscaster. They don’t balance him with any social conservatives. They don’t balance him with any liberals. They don’t even balance him with any opinionated moderates. Instead, ABC News puts out a product that’s mostly banal TV news and sometimes 100-proof “we should let corporations do whatever they want,” often riddled with errors. Apparently the pundit in question, John Stossel, has a special coming out later today and he’s been hyping it on various conservative media. Hence this exchange on the Bill O’Reilly show:
O’REILLY: Do you believe the middle class in 2009 is worse off than it was 20 years ago in this country?
STOSSEL: No, I think the middle class is much better.
O’REILLY: Because that’s the liberal line. The liberal line is the middle class get pounded and they need my money and your money. You make an enormous amount of money, Stossel. The middle class needs our money because they just can’t keep up. But what about the middle class?
STOSSEL: The middle class has gone from something like $25,000 average income in today’s dollars to $75,000 today.
The basic liberal line is that middle class wages have stagnated for decades while the rich have gotten richer. I think you can make a credible counterargument that since the CPI doesn’t properly account for “new goods” (nobody had an iPhone or a DVD player in 1988, etc.) that this factoid is unduly bleak and actually there have been modest improvements in living standards due to the improvements in available gadgets. Alternatively, you could argue that this is offset by things like the increase in commute times, the decrease in air travel quality, and other elements of quality of life that have been on the decline. What you can’t really argue with is this chart that shows that something’s gone amiss:
I got that chart from Heather Boushey, one of our economists here at CAP. The other salient point here, of course, is that it’s hard to understand where Stossel got this $75,000 figure. One assumes that the median American household has a middle class income. And the median American household has an income of about $50,000 a year. That’s a lot less than Stossel’s number. Heather and I both immediately thought of some work Third Way’s done that’s probably the source of Stossel’s “finding.” In particular, Third Way (a valued progressive ally!) points out that “in 2006, the median income of working-age husband-wife couples (ages 25–59) was $73,765.” By this standard, Stossel is only being a little inaccurate about the current level of middle class income, though nobody can say where this trend information comes from. On the other hand, it’s not clear why you would redefine “middle class” from meaning “similar to the typical American” to meaning “married couples aged 25–59.” It’s interesting that married couples ages 25–59 have an average income that’s a lot higher than the income of the median American, but it’s not clear what this tells us about middle class well-being.
Here’s another chart:
One thing you could say on behalf of the Stossel/ThirdWay approach is that the ideal of a married household ages 25–59 encompasses the very essence of middleclassitude and everyone else doesn’t really count. Thus it turns out that the average middle class family makes about $75 grand a year. But all that follows from this, if you look at the chart above, is the conclusion that the United States doesn’t qualify as a “middle class” society. Instead, perhaps, we’re a country like Pakistan or Brazil (SEE CORRECTION BELOW) where there’s a tiny hyper-wealthy elite such that one percent of the population monopolizes 20 percent of the income, then there’s a larger middle class, and then a broad majority of the population that has a sub-middle class standard of living.
That, however, isn’t the standard way of thinking about a developed world democracy, and I don’t see any particular reason we should adopt it. Instead, the typical American family is a middle class family, and it’s quite a bit poorer than Stossel suggests and has been suffering from a long period of wage stagnation. I would also note that the aforementioned Third Way report was from a little while back and includes the claim that progressives are wrong to worry about rising indebtedness because those debts have been paired with rising asset values. Joke’s on them. Or the American people.
Update:
CORRECTION: Reader S.A. observes that Pakistan’s Gini Coefficient is .330, about the same as Canada’s 0.331 and way lower than Brazil’s 0.6. I apologize for the error. Tales of Pakistani social dysfunction are very much in the air, which led to a lazy mistake that only re-enforces America’s hazy understanding of that country.