We're Richer Today. Period.

Don Boudreaux

Tyler, Arnold, and other bloggers have mentioned this nice study by Terry Fitzgerald that appears in the Minneapolis Fed's September 2007 issue of The Region. (It's the first of three articles; the remaining two articles by Fitzgerald on this topic aren't yet published.) In this opening number, Fitzgerald offers

a glimpse of the key findings from this article on wages. Microeconomic statistics showing stagnation, and macroeconomic statistics exhibiting growth, measure “wages” quite differently. When the data are adjusted so that they more closely measure the same conceptual object, the disparity between the microeconomic and macroeconomic statistics largely evaporates, and I find that labor income per hour for middle America has not stagnated. Rather, the economic compensation for work for middle Americans has risen significantly over the past 30 years.

This conclusion (and Fitzgerald's analysis from which it follows) makes sense to me. While being aware of the dangers lurking in the practice of drawing conclusions about complex reality from one's own personal experiences, I nevertheless am certain that ordinary Americans today are immensely wealthier than they were 30 years ago. I well remember the mid-1970s. All telephones in middle America were attached to walls or desks; the television repairman was still necessary; going on-line was something New Yorkers did whenever they queued -- which, back then, they did often in order to buy gasoline for their automobiles that broke down much more frequently than do today's cars. This was a time before cable t.v. was widespread, and before anyone but the super-rich could watch movies on demand in their own homes. Prepared foods in supermarkets were tasteless and probably toxic. And no one outside of New York City and a handful of other major metropolitan areas had any hope of browsing in a bookstore with a respectable selection of titles.

For further evidence that the 1970s was no golden age of abundance, come shop with me from a 1975 Sears catalog - and then let's see how much these goodies will cost us.