Friday
Compensation and Living Standards Have Greatly Improved In Recent Years
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Mostly from article “What Democrats get wrong about the middle class” - James Pethokoukis, August 2015:
Obamanomics and the modern Democratic party are constructed around this core economic claim:
“America's three-decade, free-market experiment of tax cuts and deregulation was a failure for the middle class.”
Democrats claim from Ronald Reagan through George W. Bush, the 1% got even richer, while the other 99% of us saw incomes stagnate.
Stagnationists often point to U.S. Census Bureau data as proof the typical American family is little better off than when Reagan took office in 1981.
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Economist Martin Feldstein recently pointed out:
“Census data falsely supports the claim the rich has gotten richer and everyone else not so much.
Census data shows real median incomes rose just 0.3% annually from the middle 1980s through 2013, or about 10% total.
That data looks especially bad when one considers real per person economic growth rose by 1.8% annually over the period.
The data falsely paints a dim picture that the economy grew much bigger than wages.”
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A University of Chicago poll of top economists earlier this year found 70% agreed the census conclusion "substantially understates how much better off people in the median American household are now economically, compared with 35 years ago."
He says the census data fails to take into account rising company benefits, shrinking household size, increased government benefit transfers, and changes in tax policy.
The census data also measures inflation in a way some experts think overstates the true rise in living costs.
When the congressional budget office took all those factors into account, it found median household income had risen by 53%, not 10%, since 1980.
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Feldstein calculates median household income has risen by 2.5% a year over the past 30 years, not 0.3%.
That would be a doubling of living standards over the past generation.
Even those figures ignore welfare gains from rising life expectancy, which economists Charles Jones and Peter Klenow think could equal a full percentage point a year.
Government data ignores the consumer value of free internet services like Facebook, Google, and Twitter.
Consider this simple thought experiment from Washington Post reporter Matt O'Brien:
"Adjusted for inflation, would you rather make $50,000 in today's world or $100,000 in a world of the 1980s?"
Is that added income enough for you to give up your flat-screen television, smartphone, and internet access?
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Democrats pride themselves as rationalists who live in the "reality-based community."
If that's true, they should stop denying Americans are a lot better off in the age of the iPhone than they were in the age of Atari.
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This is a helpful short video:
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How much better off are Americans now in 2026 compared to in 1980?
ChatGPT:
Compared to 1980, Americans today are generally wealthier and live with a much higher level of technology, convenience, and access to goods and services.
The U.S. economy produces far more per person than it did in 1980, and everyday life has been transformed by smartphones, the internet, streaming media, GPS, modern medical advances, safer cars, and inexpensive computing power.
Many products that were once expensive luxuries —or did not exist at all— are now common even in middle-income households.
Homes are generally larger, consumer goods are higher quality, and communication and travel are faster, easier, and often cheaper relative to what people received in return.
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At the same time, many Americans feel financial pressure because some major living costs have risen much faster than wages.
Housing, healthcare, college tuition, and childcare consume a much larger share of income for many families than they did in 1980, especially in large metropolitan areas.
Income inequality has also increased, meaning the gains from economic growth have not been shared evenly.
So while Americans today are materially richer overall and enjoy a higher standard of technology and consumption, many households still feel achieving a stable middle-class life —buying a home, raising children, saving for retirement— is more difficult than it was for many families in 1980.
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So, the perception among many is we're no better off now than in 1980? CGPT:
Yes, many Americans feel that way, even though the country as a whole is substantially richer than it was in 1980.
The perception comes largely from the fact that while technology and overall economic output improved enormously, many everyday middle-class goals became more expensive and sometimes harder to achieve.
A person may have a far better smartphone, car, television, and access to information than someone in 1980, yet still feel financially strained by housing costs, medical bills, student debt, childcare, or retirement savings.
For many people, especially in expensive metro areas, those pressures dominate their sense of economic well-being more than advances in technology or consumer convenience.
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There is also a psychological comparison with earlier generations.
Many people look back at the 1970s and 1980s and see households where one income could more easily support a home purchase and family life, particularly for workers without college degrees.
Whether that memory is fully accurate nationwide is debated —1980 also had high inflation, high interest rates, lower-quality products, and less access to modern healthcare and technology— but the comparison strongly shapes public perception.
So the modern debate is often not about whether America is richer overall —it clearly is— but about whether ordinary workers have shared enough in that growth relative to rising costs and expectations.
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A “get more want more” mentality, so never satisfied? CGPT:
Many economists, psychologists, and social critics argue part of modern dissatisfaction comes from a “get more, want more” dynamic: as living standards rise, expectations also rise, so improvements that once would have seemed extraordinary quickly become normal.
Air conditioning, smartphones, internet access, streaming entertainment, advanced medicine, and instant communication are now often viewed as basic necessities rather than luxuries.
People also compare themselves not only to their own past circumstances, but to higher-income peers seen constantly through media and social networks.
As a result, even during periods of real material progress, many individuals may not feel substantially happier or more secure because expectations, lifestyle standards, and social comparisons keep moving upward alongside prosperity.
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