The Shrinking Middle Class in America

[Boris Godunov]

if he doesn't practice it and this doesn't give a very strong case that it is reasonable does it? Rather it is just some theoretical limit.

If he shows it's possible, that goes a long way towards showing it's reasonable.

But he's not the only one. You can find a lot of information about there about people who reduce their total daily living expenses to mere dollars a day. There's books published on how to do it.

And why should we use your friends anecdote as a lower limit for what's reasonable? That's just dumb.

[Al B. Sure!]

Actually not. The first-order effect of a decline in the real value of wages would be a DECLINE in hours worked, until that decline started threatening an individual's ability to acquire necessities.

If intertemporal substitution has had such a pronounced effect then you'd see less unemployment as wages rise, correct?

[Boris Godunov]

If real wages have increased, why do we go into debt?

Because it's easier to go into debt now than it was 40 years ago?

Credit cards were not ubiquitous and certainly not nearly as convenient back then. Louis CK said it perfectly: "I remember that when I didn't have any money in my bank account, then I couldn't buy any more stuff..."

By and large, people paid by cash or check, which means they had to have the money. People usually only went into debt for big-ticket items by taking out bank loans.

Today we've got a heck of a lot more stuff that people are willing to go into debt for than there was 40 years ago, and the means to do so is much easier.

[Kuciwalker]

If intertemporal substitution has had such a pronounced effect then you'd see less unemployment as wages rise, correct?

1) Inflation reducing unemployment is actually a well-known and thoroughly studied phenomenon.

2) Only with commensurate increases in productivity (nominal or real, corresponding to whether the wage increase is nominal or real), else increased propensity to choose work over leisure would be countered by decreased demand for labor.

[Al B. Sure!]

1) Inflation reducing unemployment is actually a well-known and thoroughly studied phenomenon.

2) Only with commensurate increases in productivity (nominal or real, corresponding to whether the wage increase is nominal or real), else increased propensity to choose work over leisure would be countered by decreased demand for labor.

You're smart and careful. FYI, during the Depression, real wages rose with unemployment though output declined. There were a few quarters just before US entry into WW2 where real wages, unemployment, and production all rose simultaneously, though.

The stagflation of the 70's is another scenario where inflation and unemployment rose together; GDP growth slowed but real GDP continued to increase regardless.

With your idea, you have to give some consideration to the possibility of a lag between price inflation and wage inflation. I was reading a paper published by the Federal Reserve Bank of Cleveland that discussed how price inflation tends to precede wage inflation.

However, all this is in the short-term.

[Kidlicious]

This is the situation. After World War II american workers enjoyed a period where the productivity gains went to their wages. That happened despite a flood of cheap imports. Go figure that one. But since we've had a flood of cheap imports and corporations have gone on a campaign to outsource every single one of our jobs wages have stagnated while productivity keeps increasing. Now another interesting detail is that we even had lots of immigration in the 50's and 60's yet wages kept increasing. So everyone wants to blame immigration for low wages. It's very clear to anyone who has the capacity to think. Globalization has not made the average american richer. The fact is that without it we would be much better off. In fact, it's hard to even imagine how good things could have been if people didn't listen to the idiots who said that cheap imports and outsourcing were going to improve our lives.

[Kidlicious]

I bet people in the 1970s were a lot more frugal with their food costs than we are today. Fast food and eating out has exploded within the last two decades. In the 70s and earlier, people ate at home much more. As was mentioned, that $7.33/day average food expense includes the fact that many, many Americans spend more money than they have to buying unnecessary "frill" food items.

I've yet to see any convincing evidence that when it comes to food expenditures, people's income today doesn't go as far as it did 40 years ago. If anything, I'd bet the average American has the ability to buy larger quantities and variety of foodstuffs at their disposal today than they have at any time in the past.

There are a lot of things that people spend money on these days that keep people working. If people didn't spend money like they do they probably wouldn't have jobs.

[Hauldren Collider]

Kidicious values employment over production, not really surprising, but he basically what we have is kidicious:economics::creationists:biology.

[Kidlicious]

Kidicious values employment over production.

Only someone with a brain the size of a pee would get that from my post.

[Kidlicious]

In fact employment is production you idiot. Go stick your head in a hole or something.

[Kidlicious]

Kidicious values employment over production

I think you mean employment over profits. Don't you? No one could possibly be as stupid as you pretend to be.

[giblets]

How does globalization lead to more unemployment? If there's a trade-off between unemployment and inflation, and globalization pushes down prices, wouldn't that allow more expansionary fiscal and monetary policy?

[Kuciwalker]

You're smart and careful. FYI, during the Depression, real wages rose with unemployment though output declined. There were a few quarters just before US entry into WW2 where real wages, unemployment, and production all rose simultaneously, though.

The stagflation of the 70's is another scenario where inflation and unemployment rose together; GDP growth slowed but real GDP continued to increase regardless.

Dude, I'm not an idiot and I'm not completely ignorant of economic history. I said it was a well-studied effect, not that it was an iron rule. I used the wording I did precisely because of stagflation.

[GePap]

Quality of life is a subjective value measured relative to those around us. Arguing about whether the existance of cell phones today points to a higher "standard of living" than in 1970 is nonsense, since the vast majority of the population did not even imagine such devices, meaning that no one cared that they didn't have it. Also, professing preference for living now as opposed to the past is also utterly irrelevant until someone figures out time travel...Though it would be an interesting question about time travel if it became readily and commonly available - would individuals in that time chose to relocate to other timelines?

As for the main question of whether the "middle class" is shrinking, I have seen no attempt in the thread to define a common definition of "middle class", which makes any further debate on that point difficult at best.

As for food costs, the percentage of an Americans income devoted to purchasing food has declined, specially since the government embarked on its long term agricultural policy of creating vast quantities of cheap calories. I have no doubt that the rise of obesity over the same period of time is closely linked to this policy (which can be most clearly seen in the vast expansion of serving sizes).

[Kuciwalker]

Quality of life is a subjective value measured relative to those around us.

1) see re: Jaguar below. If you are going to define quality of life as subjective and relative to the rest of the population, then you should be honest and just say there's no point in technological progress at all.

2) Good thing I'm not using it!

Arguing about whether the existance of cell phones today points to a higher "standard of living" than in 1970 is nonsense, since the vast majority of the population did not even imagine such devices, meaning that no one cared that they didn't have it.

1) Jaguar's already pointed out the logical incoherence of reifying the hedonic treadmill.

2) Good thing that's not the point I'm making!

Also, professing preference for living now as opposed to the past is also utterly irrelevant until someone figures out time travel...

Good thing those aren't the options I'm choosing between!

As for the main question of whether the "middle class" is shrinking, I have seen no attempt in the thread to define a common definition of "middle class", which makes any further debate on that point difficult at best.

Good thing that's the the issue being contended!

Wow, 4 for 4 on the strawmen there, gepuppy.