Are Living Standards Truly Stagnant?

“It may turn out that the widespread belief that most Americans’ incomes have stagnated for years is, well, false or at least overstated,” Robert Samuelson argues for The Washington Post.

“In a provocative new study, economist Bruce Sacerdote of Dartmouth College reviewed the material well-being of the poorest 50 percent and 25 percent of Americans. What he concluded was that even these families had achieved a ‘meaningful growth in consumption . . . [despite] a prolonged period of increasing income inequality . . . and a decreasing share of national income accruing to labor.'”

“If true, the result is not a pervasive stagnation of living standards — or even declines — but what Sacerdote calls a ‘slow and steady’ advance that, to varying degrees, has permeated the income spectrum. Of course, that conclusion is likely to be challenged, because it rests heavily on controversial technical issues in estimating inflation. In addition, many political leaders and economic commentators, of both parties, have a vested interest in criticizing government economic policy.”

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