Now, if you are going to use the home ownership data to demonstrate how living standards are changing the stagnating argument is the correct line of analysis to take.

Right?

I guess it depends on your biases doesn't it? If we are talking about things like the nominal price of oil, then by God yes we are at all time record (not really), but when we really are at an all time high in home ownership (with admittedly very, very slow to no growth over the last decade or two) then no, it is stagnate.

Steve — Yes the Boskin comittee recommended changes to the cpi and BLS implement them.

Moreover, they went another step and created the cpi-rs that went back historically and recalculated what the cpi would have been using the new methodologies. It shows inflation was about half a percent lower.

Census now uses the cpi-rs to calculate the real income data used for historical comparisons.

IIRC they didn't implement everything, but it is good to know that they are using the better index number in calculating these series.

If you examine a wide range of data series you find that almost without exception they show the US experienced a sharp slowing of real income growth or improving living standards around 1980 and that the sharp increase in income inequality
since 1980 has made the problem worse.

Those saying this is incorrect need to demonstrate that for some reasons the data
became much less reliable about this time.

I see many people talking about problems with the CPI, but I have yet to see any serious arguments that the CPI became less reliable after 1980 then it was before 1980. Even Gorden with his studies never claimed that the CPI was more accurate in earlier eras.

So do you want to adjust the CPI down so we see stronger growth after 1980 but not make the same adjustment to the pre-1980 data?

I'm not arguing for such a selective use of the CPI. However, I'm pretty sure that all sources of bias have not been removed and quanitfying them is highly problmatic. The point is that if we did adjust incomes correctly, then things would look better. Maybe not a heck of alot better, but better none the less.

Hal,

So, if it hasn’t seen any growth, then it doesn’t matter if there’s more goodies as they’re essentially all going to the rich and the super rich.

Not quite. I'll leave to you as a homework assignment. Oh, and it isn't that there is no growth in incomes at the lower end, just that the growth is not all that great.

The fact that some people who were poor participated in this does nothing what so ever to rebut this.

The problem here Hal, is that you seem to assume that that there is no income mobility people, move from one income quintile to another all the time. Some don't and some move gradually. For example, college students often rank at the bottom of the income distribution, but upon graduating and finding a job often move to a higher quintile, such as the middle quintile. I've pointed to some of the data on this, but you just march on completely oblivious to such data. And you haven't supported any of your assertions so far.

And in any event as has been pointed out, income does not translate into standard living very easily save when we can take into account individual levels of welfare. For example, if income stays the same for a given individual, but he has new goods from which to consume from that move him to a higher level of welfare, then he is strictly better off. Now, this doesn't have to be the case, but the income distribution does not capture this kind of change.

The reason I ask is because I work with a small family practice clinic. I'm in an extremely poor city in the extremely poor south and our patient demographics is largely from the most notoriously poor community. Yet nearly everone has some kind of coverage. If they work they have BCBS. If they don't they have Medicaid or Medicare or both.

Until last year, most of our patients had better dental coverage than the doctors and nurses who took care of them. Now our local university offers dental at an increased rate to employees.

I'm just curious how these figures are acheived. And if the methodology is sound, how the heck did these hovellites in Lower Alabama avoid being included in this statistic?

In MadMatt's USA today they stipulate:

"The percentage of working-age Americans with moderate to middle incomes who lacked health insurance for at least part of the year rose to 41% in 2005, a dramatic increase from the 28% in 2001 without coverage, a study released on Wednesday found."

So, we have a group of workers, not all Americans. A group of workers with some mysterious income range who represent the 41%.

But by my math (which I am NOT very mathematically inclined so correct me if I'm wrong):

if we have 298 million (CIA Fact Book)
and

according to the article there were 45.8 million sans insurance

isn't that 18%?

Even that seems high from what I see.

Lunacy

No, my first point is that "the poor" and "the middle class" and "the rich" are not the same people in 2006 as they were in 1976. Obviously, few of the 1976 poor grew up to be Bill Gates. But some substantial portion moved into the middle class and some sizable number of the middle class moved into the wealthy class. Presumably, through bad decision-making, bad luck, death, inheritance redistribution, and other factors, some sizable portion of the 1976 "rich" have down-migrated as well.

Obviously, one would rather start "rich" than "poor," for a variety of reasons. The poor and the children of the poor have numerous barriers to success that the rich and their children lack in their quest for continued success (although regression to the mean does tend to move the offspring of the super rich further down the ladder than their parents). Still, there is substantial mobility at the individual level that Marxian focus on class misses.

The second point, that income and lifestyle are not synonymous, though, is my main point, which is why it gets three paragraphs and the other gets only one.

Surely, you've heard of regression to the mean? Obviously, if something expands from 45% to 65% in relatively short order, it's not going to keep expanding at that rate. There's simply radically less room for growth.

We're likely pretty close to the theoretical high here. A substantial chunk of the population is mobile and otherwise not in a position where buying a home makes much sense.

I didn't own a home until I was 31 years old, despite having at various points before that been in a financial position to afford one. After graduating college, I was a single Army officer subject to the whims of the service, including rapid repostings. It made no sense for me to own a home. As a graduate student, I couldn't afford a home nor would it have made sense to buy in any case since I'd be moving in 3 years. Then, I had a one-year appointment as a sabbatical replacement professor and then took a job teaching community college that I rightly figured I'd be leaving once a better opportunity presented itself. Finally, upon securing a tenure-track position at a better institution, I jumped into the market.

Most young people, especially single young people, are never going to be in a position where buying a home makes sense even if it's affordable. And even the lack of affordability for a 20-year-old single is hardly something we would expect the economy to "fix."

Those saying this is incorrect need to demonstrate that for some reasons the data
became much less reliable about this time.

I see many people talking about problems with the CPI, but I have yet to see any serious arguments that the CPI became less reliable after 1980 then it was before 1980. Even Gorden with his studies never claimed that the CPI was more accurate in earlier eras.

So do you want to adjust the CPI down so we see stronger growth after 1980 but not make the same adjustment to the pre-1980 data?

It's either that you're point is irrelevant, or you're actually trying to make a point. And that point is surely something more than "some poor people win, so there".

BTW, is my response to Steve ever going to show up or do I have to repost? Your system claims I have already posted it, so I assume you have it.

The quote you post from Kevin states the issue quite clearly:

Instead of everyone seeing their incomes double, the poor and the middle class have seen almost no growth, while the rich and the super-rich have seen their incomes skyrocket.

So, if it hasn't seen any growth, then it doesn't matter if there's more goodies as they're essentially all going to the rich and the super rich.

The fact that some people who were poor participated in this does nothing what so ever to rebut this.

Moreover, they went another step and created the cpi-rs that went back historically and recalculated what the cpi would have been using the new methodologies. It shows inflation was about half a percent lower.

Census now uses the cpi-rs to calculate the real income data used for historical comparisons.

I'm not ignoring the distribution issue, just arguing that income is only one variable and that lifestyle is ultimately more important. The distribution of goodies across the board is much greater than it was in 1976 and, as I note in the post, the lifestyle gap between the classes has likely shrunk (granting that it's difficult to quantify).

The distribution issue, especially the "risk" issue to which Kevin alludes, is interesting and worth discussing in its own right. That's a separate discussion, though.

For example home ownership is at a record high.
But look at the record.

From 1900 to 1940 it stayed very constant at around 45% of the population. By 1950 it rose to 55% and in 1980 it reached 64.4% In 2000 it was 66.2%.

So what you had was an era from 1940 to 1980 when home ownership expanded massively-- almost a 50% gain. But since 1980 it has only expanded 3%.

So yes, you can say we are at record home ownership. Or, you can use exactly the same data to show that since 1980 home ownership has
stagnated with virtually no improvement, especially compared to the previous era.

Now, if you are going to use the home ownership data to demonstrate how living standards are changing the stagnating argument is the correct line of analysis to take.

Right?

If you define “winning” as the top 1%, then certainly few “win.”

Again, if the top 1% income earners get the lion's share of the income, then Kevin's point regarding a "winner take all" economy is correct. You're completely ignoring the distribution, which is the entire point here.