The middle class, then & now
By Donald J. Boudreaux
Published: Tuesday, December 25, 2012, 9:15 p.m.
Updated: Tuesday, February 19, 2013
Recently in The New York Times, Paul Krugman gazed backed longingly at the 1950s: “America in the 1950s made the rich pay their fair share; it gave workers the power to bargain for decent wages and benefits; yet contrary to right-wing propaganda then and now, it prospered. And we can do that again.”
That decade was indeed one of strong economic growth in America. And while we can debate whether this growth occurred because of, or despite, high marginal tax rates and high rates of worker unionization, I want instead to address Krugman's implication that today's economy — with its lower tax rates and less-powerful unions — keeps middle-class living standards lower than these should otherwise be.
Unfortunately, we can't observe parallel universes: the early 21st century as it actually is and an alternative early 21st century with more of the “progressive” policies that Krugman favors. Therefore, no indisputable conclusions are possible about how well-off middle-class Americans are today compared to how well-off they would be with different policies. But we can at least assemble some facts to put today's condition of America's middle class into clearer perspective.
Specifically, let's look at how much time the typical full-time nonsupervisory private-sector American worker today must toil to buy common household items, and then compare that time to the time required of a similar worker in 1956.
This comparison can be made by consulting the retailer Sears. Sears has always been, as it remains, a retailer for middle-class America.
I just bought on eBay (a convenient retail platform not available in the 1950s!) a fall/winter 1956 Sears catalog. By looking at the 1956 prices listed in that catalog, we can determine how long an ordinary worker back then had to work to buy specific items, such as shirts, shoes, kitchen appliances and lawn-care items.
For example, Sears' lowest-priced power lawn mower in 1956 sold for $46. The typical American worker earned an hourly wage then of $1.89. So the ordinary worker had to work about 24.3 hours to earn enough (pre-tax) money to buy that lawn mower. In contrast, by going to Sears.com, we find that Sears' lowest-priced power lawn mower today sells for $170.99. Because the typical nonsupervisory worker in America now earns an hourly wage of $19.84, that worker today must work only about 8.6 hours to buy a similar lawn mower.
That is, a simple power mower costs a typical worker in 2012 only about a third of the work time that a simple power mower cost a typical worker in 1956. So at least when it comes to power lawn mowers, American workers today are much better off than they were in the mid-1950s.
The same is true, thankfully, for many other goods. A simple ensemble in 1956 of Sears's lowest-priced women's clothing — blouse, jeans, pumps, panties and bra — cost the typical worker in 1956 5.2 hours of work time. A similar ensemble of clothing today costs the typical worker a mere 2.9 hours of work time. That is, such clothing is today 44 percent less costly, in terms of work time required to earn enough money to purchase it, than it was in 1956.
None of the above adjusts for quality changes, and (contrary to its old advertising slogan) Sears didn't sell everything. One can, therefore, always quibble with the value of such comparisons of work time. But as my next few columns will suggest, these comparisons are nevertheless productive and very revealing.
Donald J. Boudreaux is a professor of economics at George Mason University in Fairfax, Va. His column appears twice monthly.
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