In his post “Living on a single income in modern America,” Kevin Drum examines a survey from American Compass showing widespread concern that it’s no longer possible to support a middle-class lifestyle with a single earner. He runs the numbers, though, and, in inflation-adjusted dollars, “Individual men earned more in 2020 than in 2010. More than in 2000. More than in 1990. More than in 1980. As much as in 1970. And way more than in 1960.”
He adds, “The American Compass report makes the usual point that even if earnings are flat, expenses have gone up in some important categories: rent, health care, education, and so forth. True enough. But expenses have also gone down for things like food, clothing, and TVs. It’s about a wash in the end.” Indeed, that’s what adjusting for inflation is supposed to do: allow comparisons over time.
He then offers three possible explanations:
- Alex Tabarrok theorizes that we have more money for stuff but less time for it—so we rush through everything and feel harried even though our standard of living is actually as high as it’s ever been.
- Another possibility is that we really do have less money for common goods because we spend a lot of it on stuff we didn’t even have half a century ago: computers, videogames, the internet, cell phones, and so forth. We can argue all day long about whether this tsunami of new technology really improves our standard of living,¹ but there’s no question that on a pure money basis it makes us seem a little poorer because we’re spreading our income around on more stuff.
- Finally, there’s waste. We buy and then discard an awful lot of stuff these days, which means that much of our income is squandered and actual consumption of stuff we enjoy has gone down. This makes us seem poorer because, in a way of our making, we are. If we lived a little more carefully, we’d probably all end up a little happier and more prosperous too.
Tabarrok’s explanation doesn’t strike me as plausible in that we have more leisure time than ever.
Drum’s two explanations have some merit but are actually a subset of what I think is really going on. More on that shortly.
In his conclusion, though, Drum pulls a rope-a-dope:
Then again, here’s a final possibility: it’s all a mirage. We’re not mostly dissatisfied with modern life. Long-term polls certainly don’t show it—not among men vs. women, not among the entire population, and not among the middle-aged
He produces graphs General Social Survey data over the last half century, showing relatively mild fluctuations in happiness over that period. And then ends with a zinger:
Despite all this, if you carefully choose to write only about the borderline working class—as our news outlets and scholars so often do—you can certainly get the impression that everyone is living hand to mouth. In reality, it ain’t so.
While I think this is generally right, it strikes me perfectly plausible that Americans are simultaneously 1) generally happy, 2) living a richer lifestyle than their 1970s forebears, and 3) stressed out of their minds about their economic status.
It’s true that American men earn almost exactly what they did in 1970 in inflation-adjusted dollars. But we’re living 2023 lifestyles. As Drum notes, that includes a lot of technology that simply didn’t exist in 1970 and a lot of throwaway consumption on fast fashion and the like. We live in radically bigger houses. We drive much nicer and more powerful cars. We go out to restaurants much more regularly. And we’ve done it largely on the basis of two incomes (and greater debt).
My late father was already expressing frustration with this trend forty years ago, as married women with children were just starting to work outside the home routinely. He realized his one income was increasingly competing with two. And Elizabeth Warren—who was decidedly more in favor of this trend than my father—identified the Two-Income Trap two decades ago. Men earning what they were in 1970 wasn’t enough to keep up with the Joneses in 2004; it sure isn’t in 2023.
Essentially, then, this is classic relative deprivation. Men have stayed even in earning power over the decades but the standard of living is increasingly based on dual earners. The household could still afford a 1500-square foot house, one modest automobile, and a modest one-week vacation on one income. They’d still be better off in most tangible ways than their 1970s counterpart. But they’d feel poor in comparison to the modern lifestyle.
This is all compounded by a radically different media environment. We have a much better idea how the other half lives now. Indeed, the curation of social media means we actually have an idealized sense of how others live.
