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More Data on Middle-Class Americans

Greg Mankiw links to this interesting essay by Stephen Rose; it’s entitled “What’s (Not) the Matter With the Middle Class?”  I believe it to be a superb essay.  (More on that in a moment.  But first….)

At the very least, the continuing debate over the economic fortunes of ordinary Americans shows the truth of the claim, attributed to Ronald Coase, that “if you torture the data long enough, they’ll confess.”

Data — expecially data from the social sciences — very seldom speak clearly.  They are always the result of highly complex, often conflicting, forces, most of which are not directly observable.  Every statistic, being the result of choices investigators make about how to slice up and label and explore empirical reality, will have some fault, some weakness, something that can be criticized.

Every statistic reported in Rose’s essay can be challenged as missing this or over-emphasizing that; each statistic here can be interpreted differently from how Rose inteprets it.  But, alas, if we’re to understand reality as much as we possibly can, we have no choice but to rely upon statistics and, in every case, to use our knowledge and good judgment to assess their lessons.

So, what do Rose’s data show?  In short, most Americans are thriving.  Here’s a key selection:

It’s true that the middle class is shrinking — but that’s because more families are better off.

The share of prime-age adults in households with real incomes above $100,000 rose by 13.1 percentage points from 1979 to 2004. The share of households making less than $75,000 dropped by 14 percent. Fully 41 percent of prime-age American adults are in households with incomes above $75,000.

Among married-couple households the picture is even brighter. In 2004, the median income for these households was $70,000, and $78,000 for couples with two earners.

I focus on prime-age households (age 25-59), which are 68 percent of the population, because including the very young and the very old distorts the picture of what’s really happening with the middle class. Many young workers get paid very little, but few will keep their low salaries as they move up in their careers. Older Americans distort the wage and income picture because they’re no longer working. Their incomes may shrink, but their standard of living may not diminish. Indeed, Americans age 55-64 have greater net wealth than any other group.


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