Americans Are Doing Better On Less-Why?
Bruce Bartlett provides his opinion on the anomaly of why Americans who have experienced wage stagnation over the past few years are not wholesale in protest against the Republican economic program. Because while wages have slightly dropped and medical benefits take up a larger slice of employer provided compensation (and do not forget the bite taken by higher gas prices):
[P]eople continue to move up out of the working class into the middle and upper classes. According to the Census Bureau, the percentage of all households with an income below $25,000 per year (in 2005 dollars) fell to 27.1 percent last year, from 27.6 percent in 2004. In 1995, 28.9 percent fell into this income class. In 1985, the percentage was 30.5 percent. In 1975m it was 33.1 percent.
At the same time, the percentage of households that are considered well-to-do -- those with an income above $75,000 (in 2005 dollars) -- rose to 28.3 percent last year, from 27.9 percent in 2004. In 1995, only 24.4 percent of households had that much income, up from 20.2 percent in 1985 and 14 percent in 1975.
In short, despite all the talk about the rich getting richer at the expense of the poor, the fact is that the percentage of households with low incomes has fallen and the percentage of those with high incomes has risen.
I would also add that people are seeing greater family wealth through the increased value of their homes and the regular increase of retirement savings through 401k plans. If you can maintain a decent lifestyle while your assets accumulate and your children grow up and out of the house (when they are 30?), your financial situation is much stronger than most of those from prior generations can claim. And you will support a low tax, high growth economic policy.
Thanks Bruce for your economic analyses sans the book sales advertisements.