JLF writers and analysts have devoted significant attention in the past to the familiar allegation that in recent decades, only the rich have gotten richer, the poor have gotten poorer, and the middle class has stagnated and/or shrunk. The numbers have never added up, nor does everyday experience in the economy even remotely resemble the caricature popularized by the likes of John Edwards and Paul Krugman.
Monday’s Wall Street Journal contained another piece making similar arguments, this one by economist Brad Schiller. It’s highly recommended, particularly this passage:
The Census data originate from an annual survey of
households. The data don’t track individual households from year to
year, but instead just take a snapshot of the households in existence
in March of each year. From these annual snapshots, we try to infer
what’s happening to the typical household over time.The “typical” household, however, keeps changing.
Since 1970 there has been a dramatic rise in divorced, never-married
and single-person households. Back in 1970, the married Ozzie and
Harriet family was the norm: 71% of all U.S. households were two-parent
families. Now the ratio is only 51%. In the process of this social
revolution, the average household size has shrunk to 2.57 persons from
3.14 — a drop of 18%. The meaning? Even a “stagnant” average household
income implies a higher standard of living for the average household
member.
As the Two Americas thesis is mostly a sentimental, or perhaps theological, one, I don’t expect it to disappear just because rigorous analysis does not confirm it.
