There’s been a story going 'round. The story says America’s middle class has been stagnating. It has been since the 1970s, say purveyors of the story—you know, people like Robert Reich.
"After three decades of flat wages during which almost all the gains of growth have gone to the very top," Reich wrote in 2010, "the middle class no longer has the buying power to keep the economy going."
But this stagnation story is misleading at best.
In the Wall Street Journal, Donald Boudreaux and Mark Perry take Reich and other such storytellers to task about the very idea of middle class stagnation.
It is true enough that, when adjusted for inflation using the Consumer Price Index, the average hourly wage of nonsupervisory workers in America has remained about the same. But not just for three decades. The average hourly wage in real dollars has remained largely unchanged from at least 1964—when the Bureau of Labor Statistics (BLS) started reporting it.
So how does one explain this? Isn’t the middle class stagnating? I sat down with Professor Boudreaux to discuss this misleading meme.