Regarding the composition of the labor force changing, keep in mind the substantial immigration we've had, with most immigrants coming in at the bottom of the income distribution. If the median income is just keeping up with inflation, that's pretty impressive given the many poor people who are now part of our labor force.
Chris
· 3 years ago
I'm curious as to how 401K and similar programs effect the sage vs total compensation numbers. I contribute >10% to 401K, does this voluntary forfieture get counted as wages or benefits? And does the participation in such plans signifigantly change the way the numbers look to the early 70s (the "golden age" of wages) before 401K was even an option.
beeper
· 3 years ago
The entire notion of stagnating standard of living is since 1973 is nonsense. Our material lives are easier and more interesting than ever.
Have these people been to Best Buy?
I think aritlces like the original are no less that an attempted media coup against the Republicans.
Kevin
· 3 years ago
There would be a keen way to understand REAL standard-of-living changes, but I'm not aware of any economist doing this treatment -- although Don Boudreaux was on the right track with his old Sears catalog some time ago.
That would be to examine the actual, typical household budget of 1973; the portion of household income it consumed then; and the portion of today's household income that that ** 1973 mix ** of goods would consume.
If people of today were content to buy just the same basket of goods and services typically purchased in 1973, I expect nearly everyone would be running huge surpluses, and it would be quite clear that today's incomes are far higher.
(Of course it would be extremely difficult to find low-enough quality goods to fairly replicate life in 1973, so you'd just have to buy the crappiest stuff availble. Unlike Paul Krugman, I remember what working class families actually bought in the 1970s.)
But people take advantage of today's increased wealth to buy a more attractive mix of goods and services.
As far as I know, this long-term change is lost on the government statisticians and agencies that attempt to estimate inflation, those actual efforts being focused on short-term and one-year changes.
You can make a decent estimate of inflation from 1973 to 1974, or from 2005 to 2006, although there is certainly persistant error there with a bias toward overestimating inflation. But it does not follow that you can just do the arithmatic for the past 30 year series to add up total inflation, as you could do with a bank account drawing interest over time.
The basket has changed much too radically for that to have much meaning, and the year-to-year errors have stacked up hugely. It would be as if the money in your bank was periodically replaced with fruit or shoes, and your monthly statements had mathematical errors every month biased in one direction. You wouldn't have a clue how much money you actually had at the end of it all.
Yet that irrelevant and fallacious bit of arithmatic is what underlies all these census bureau-type of estimates of relative income over time.
triticale
· 3 years ago
Youu can find low-enough quality goods to replicate 1973's lifestyle. You buy them at thrift stores for the classic "ten cents on the dollar". I recently even found some of the mushroom kitsch I complained about in the Sears catalog post I did around the same time as Don's.
As a matter of fact, we do most of our merchandise shopping at thrift stores. This is one of the reasons why my wee wifey and I are living a life we consider luxurious on about Don's earlier mentioned inflation-adjusted 1973 median. We shop aggressively for food bargains, and were able to fill the freezer of our upstairs fridge recently with ground beef and boneless skinless chicken breasts (brine-free) bought at the $.99 a pound we struggled to afford many years ago. If the economists who figure the CPI would do the same, the statistics would be very different.
All Comments
Regarding the composition of the labor force changing, keep in mind the substantial immigration we've had, with most immigrants coming in at the bottom of the income distribution. If the median income is just keeping up with inflation, that's pretty impressive given the many poor people who are now part of our labor force.
I'm curious as to how 401K and similar programs effect the sage vs total compensation numbers. I contribute >10% to 401K, does this voluntary forfieture get counted as wages or benefits? And does the participation in such plans signifigantly change the way the numbers look to the early 70s (the "golden age" of wages) before 401K was even an option.
The entire notion of stagnating standard of living is since 1973 is nonsense. Our material lives are easier and more interesting than ever.
Have these people been to Best Buy?
I think aritlces like the original are no less that an attempted media coup against the Republicans.
There would be a keen way to understand REAL standard-of-living changes, but I'm not aware of any economist doing this treatment -- although Don Boudreaux was on the right track with his old Sears catalog some time ago.
That would be to examine the actual, typical household budget of 1973; the portion of household income it consumed then; and the portion of today's household income that that ** 1973 mix ** of goods would consume.
If people of today were content to buy just the same basket of goods and services typically purchased in 1973, I expect nearly everyone would be running huge surpluses, and it would be quite clear that today's incomes are far higher.
(Of course it would be extremely difficult to find low-enough quality goods to fairly replicate life in 1973, so you'd just have to buy the crappiest stuff availble. Unlike Paul Krugman, I remember what working class families actually bought in the 1970s.)
But people take advantage of today's increased wealth to buy a more attractive mix of goods and services.
As far as I know, this long-term change is lost on the government statisticians and agencies that attempt to estimate inflation, those actual efforts being focused on short-term and one-year changes.
You can make a decent estimate of inflation from 1973 to 1974, or from 2005 to 2006, although there is certainly persistant error there with a bias toward overestimating inflation. But it does not follow that you can just do the arithmatic for the past 30 year series to add up total inflation, as you could do with a bank account drawing interest over time.
The basket has changed much too radically for that to have much meaning, and the year-to-year errors have stacked up hugely. It would be as if the money in your bank was periodically replaced with fruit or shoes, and your monthly statements had mathematical errors every month biased in one direction. You wouldn't have a clue how much money you actually had at the end of it all.
Yet that irrelevant and fallacious bit of arithmatic is what underlies all these census bureau-type of estimates of relative income over time.
Youu can find low-enough quality goods to replicate 1973's lifestyle. You buy them at thrift stores for the classic "ten cents on the dollar". I recently even found some of the mushroom kitsch I complained about in the Sears catalog post I did around the same time as Don's.
As a matter of fact, we do most of our merchandise shopping at thrift stores. This is one of the reasons why my wee wifey and I are living a life we consider luxurious on about Don's earlier mentioned inflation-adjusted 1973 median. We shop aggressively for food bargains, and were able to fill the freezer of our upstairs fridge recently with ground beef and boneless skinless chicken breasts (brine-free) bought at the $.99 a pound we struggled to afford many years ago. If the economists who figure the CPI would do the same, the statistics would be very different.