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Busting middle-class myths

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Monday, Jan. 7, 2013, 9:08 p.m.

The new year is a natural time to mimic the Roman god after whom this long, cold month is named. Like Janus, we can look not only forward but also back. While looking back is easier than looking forward — unlike tomorrow, yesterday has already happened — it's not as easy as it might seem. The past is clouded with myths that distort our backward glances.

One of these myths is that middle-class Americans are today in a bad way economically, compared with middle-class Americans' wonderful well-being in halcyon days gone by. Specifically, legions of “progressive” pundits, politicians and professors point both to the 1950s and to the 1970s as decades in which ordinary Americans thrived in ways that ordinary Americans today can only dream of.

The economics (if not the social attitudes) of the 1950s are beloved by today's “progressives” because that was a decade of unusually high marginal tax rates, record-high labor-union membership and very few foreign competitors for American firms. “Progressives” also recall the 1970s fondly because that was the decade just before the tax-cutting, deregulating Reaganites inflicted their Neanderthal ideas on the nation.

Given “progressives'” uneasy grasp of economics, it's no surprise they're so easily persuaded that middle-class Americans today are being shortchanged. After all, tax rates are now generally lower (the top personal income-tax rate when Reagan took office was 69 percent!), private-sector labor unions are dying, more foreign firms compete against American firms and much of the deregulation of 30 years ago remains in place.

What's not open to question is the fate of America's middle class today. We are better supplied today by the private market than we have been at any time in history — period. Whatever the source of this prosperity, those who question that it's real ignore powerful evidence.

As in my last column, let's compare today to decades past. This time let's look not at clothing but at basic home appliances.

In particular, how many hours did a typical, non-supervisory American have to work in the past to furnish his home with Sears' lowest-priced versions of each of these items: automatic clothes washer and dryer, full-size refrigerator-freezer, 30-inch electric range-oven combo, television, electric vacuum cleaner, automatic toaster, 10-cup electric coffee maker and 20-gallon electric water heater?

An ordinary American worker in 1956 had to toil for 456 hours — nearly three months — to buy all of these commonplace household items from Sears.

By 1975, an ordinary worker had to spend much less time — only 252 hours, just over a month and a half — than did his 1956 counterpart to buy the same items from Sears.

But what about today? Is it true that economic gains for America's middle class have stopped since Gerald Ford occupied the Oval Office?

Here's evidence that those gains have not stopped: An ordinary American worker today, to buy the same bundle of items from, needs to work a mere 105 hours — just about two and a half weeks. That's nearly a month less work time than was required in 1975, nearly nine weeks less than was required in 1956.

Happy New Year!

Donald J. Boudreaux is a professor of economics at George Mason University in Fairfax, Va. His column appears twice monthly.

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