The WSJ has opinions on non-rich folks again

Donald J. Boudreaux and Mark J. Perry at the Wall Street Journal would like you to know that the shrinking middle class is a mean and “spectacularly wrong” progressive trope; or rather, a “progressive” trope. Scare quotes are apparently necessary (link). Wanna have a look at their arguments?

First, the CPI overestimates inflation by underestimating the value of improvements in product quality and variety.

The what now? Variety I can understand, because increased variations on the same crap are how this consumer economy works. But how is making Planned Obsolescence into a basic production model, and how is lowering quality of products so they can be sold at a profit at Walmart an “improvement in quality”?

Would you prefer 1980 medical care at 1980 prices, or 2013 care at 2013 prices? Most of us wouldn’t hesitate to choose the latter.

1980’s care I can pay for, vs. 2013 care I can’t? Yeah, let me think about that one.

Asides from that, it’s complete BS that the increase in costs has anything to do with the increase in quality, since the US does not in fact have the best healthcare in the world, yet has the most expensive healthcare in the world. Quite the contrary, the US is below average in many aspects of healthcare as compared to other OECD countries, while at the same time spending 2.5 times the OECD average on healthcare costs. And many of the procedures cost more than in other countries, as well:
table comparing costs of 7 common medical procedures in several European countries, Canada, Australia, and U.S. Prices in the U.S. are consistently highest

And lastly, it’s not actually relevant that current care is more technologically advanced. A middle-class by definition should be able to afford a middle-level of care, regardless of its level of advancement.

Second, this wage figure ignores the rise over the past few decades in the portion of worker pay taken as (nontaxable) fringe benefits. This is no small matter—health benefits, pensions, paid leave and the rest now amount to an average of almost 31% of total compensation for all civilian workers according to the BLS.

You mean the ridiculously more expensive healthcare makes up a larger chunk of a paycheck? Shocking. Also, pensions are rarely pensions anymore, they’re 401k, which just became nearly worthless during the world economic crisis, regardless of how much money people put into them.

Third and most important, the average hourly wage is held down by the great increase of women and immigrants into the workforce over the past three decades. Precisely because the U.S. economy was flexible and strong, it created millions of jobs for the influx of many often lesser-skilled workers who sought employment during these years.

You can tell this is ass-backwards bullshit by the part where women are unskilled workers (the impressive sexism of that aside for a moment). The reality is once again the opposite: jobs entered into by women have become de-skilled as they entered them.
Aside from that… when a job that used to be a highly trained union job, but is now classified as a low-skilled non-union job, that means fewer middle-class jobs. When these jobs disappear entirely, and are replaced by non-unionized, unskilled service industry jobs, that’s once again fewer middle-class jobs. It’s not the magical appearance of uneducated wimmins and furriners that is causing this shift of the US workforce. It’s the lack of affordable education, de-skilling, and de-unionizing of jobs that did that; and those jobs were then filled by people entering the workforce, including women and immigrants.
And on the note of “unskilled labor”… you know what an easy solution to that problem is? Providing training and education for said labor; another thing that’s increasingly hard to come by, because education is becoming more expensive, because apprenticeships for union-jobs are becoming scarce, and because ever higher levels of education are required for ever lower-skilled work.

Since almost all lesser-skilled workers entering the workforce in any given year are paid wages lower than the average, the measured statistic, “average hourly wage,” remained stagnant over the years—even while the real wages of actual flesh-and-blood workers employed in any given year rose over time as they gained more experience and skills.

apparently only people who’ve been in the middle-class in the 1980’s count. O.o
Dudes, having a larger proportion of people in poverty jobs by definition shrinks the Middle Class.

No single measure of well-being is more informative or important than life expectancy. Happily, an American born today can expect to live approximately 79 years—a full five years longer than in 1980 and more than a decade longer than in 1950.

which is also still below OECD average, by a whole year. It also rose slower than in other OECD countries, and slower than in the 40’s, 50’s, and 60’s. But once again, this doesn’t actually tell us shit about the Middle Class, since this is an U.S.-wide average. What might tell us something about the situation of the Middle Class is the fact that the life expectancy gap between the poor and the rich is growing; and unless we assume that the rich have gained enormously and/or poor people are dying much younger at much higher rates, the most likely explanation is a shifting of people out of the middle-ground. You know, a shrinking middle class.

According to the Bureau of Economic Analysis, spending by households on many of modern life’s “basics”—food at home, automobiles, clothing and footwear, household furnishings and equipment, and housing and utilities—fell from 53% of disposable income in 1950 to 44% in 1970 to 32% today.

I notice that housing, education, and healthcare are not listed.

while income inequality might be rising when measured in dollars, it is falling when reckoned in what’s most important—our ability to consume.

consumption is what’s most important?! *barf*

Despite assertions by progressives who complain about stagnant wages, inequality and the (always) disappearing middle class, middle-class Americans have more buying power than ever before.

Considering the ridiculous degrees of indebtedness of Americans, this is a horribly callous thing to say. And kind of wrong, since increased debt accounts for the increased consumerism; it’s not an indicator of Middle-Class-ness.

They [...] have much greater access to the services and consumer products bought by billionaires.

like 1st class education, 1st class healthcare, protection from volatile energy prices and increased natural disasters? Oh, that’s not what you meant, is it. You meant gadgets. Oh well then: since both Bill Gates and a college student can afford an iPad, that must mean the Middle Class isn’t shrinking. WTF?

Incidentally, I looked at income distribution in the U.S. in 1980 and 2010. in 1980, median income was $44000; in 2010, it was $49000. The percentage of people living in neighborhoods between 80% and 125% of that median shrunk in that time from about 55% of the population to just over 40% of the population.

Looks to me like the middle segment of income earners in the U.S. shrunk. Huh.

6 comments on “The WSJ has opinions on non-rich folks again

  1. Jadehawk says:

    *reads own post*

    I’m going to get sued for suggesting Gates might buy an Apple product, won’t I.

  2. Mr. Fire says:

    Sorry in advance if my html is all borked; I’m not sure which ones will work.

    Precisely because the U.S. economy was flexible and strong, it created millions of jobs for the influx of many often lesser-skilled workers

    Your subsequent critique of this argument reminded me of a specific example: the so-called Texas Miracle.

    consumption is what’s most important?! *barf*

    I don’t know if it was a conscious act on your part to tie the concept of overconsumption to vomiting, but I think it’s pretty fucking poetic.

  3. David Marjanović says:

    I notice that housing, education, and healthcare are not listed.

    What does “housing and utilities” mean? It is listed.

    Texas Miracle

    Such delightful snark!

    I don’t know if it was a conscious act on your part to tie the concept of overconsumption to vomiting, but I think it’s pretty fucking poetic.

    FTW.

  4. Jadehawk says:

    What does “housing and utilities” mean? It is listed.

    oh, hey, turns out I can’t read.

    Anyway, I can’t imagine how one could say that housing and utilities have gotten cheaper. We spent the last decade and a half in a housing bubble, and then it burst and people suddenly were foreclosing left, right, and center.
    And the housing bubble made rent higher, too, without making rentals cheaper after the collapse. I suspect statistical shenanigans.

  5. Joan Skinner says:

    Globalization put the American middle class on a level playing field with workers everywhere. Even for those whose jobs weren’t outsourced, the shift tilted the power balance decidedly in favor of the employers, at the expense of workers. While capital could flee across borders in search of a better or cheaper opportunity, labor was stuck at home. That made it far harder for Americans to demand higher wages. With Wall Street focused on quarterly returns, bosses no longer recognized the self-interest in generous pay. Henry Ford’s virtuous circle had been transformed into a downward spiral.

  6. David Marjanović says:

    It’s not that simple. Outsourcing exists over here as well, but it hasn’t hit that hard. I think that’s because of the existence of strong unions and socialist/Social Democratic parties.

    From western Europe, jobs moved first to places like the Czech Republic, then Ukraine, then China, now Vietnam – and then where? Wherever the jobs go, incomes rise and unions become stronger, yet the size of the world is limited. The downward spiral, such as it is, can’t go on for much longer.

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