We need to elect Barack Obama to save the middle class, say the Democrats. But how much does the middle class really need saving?
If you're at a Catholic shrine, it's a good idea to show respect for the Virgin Mary. In New York, a Yankees cap will make you look right at home. And among a Democratic crowd, you can never go wrong by lamenting the decline of the middle class and the stagnation of wages.
I don't have to tell Barack Obama. He makes a habit of claiming that "wages are shrinking," working families have lost ground, and the country desperately needs his "Rescue Plan for the Middle Class." His economic program rests on the unshakable conviction that everyone except the wealthy is doing worse and worse all the time. If elected, he will find sympathetic ears among Democrats in Congress, where never is heard an encouraging word.
In the midst of alarming headlines, it's easy to persuade people that things are worse than they used to be. The only problem is that aside from the transitory effects of the current turmoil, they aren't.
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Terry Fitzgerald, a senior economist at the Federal Reserve Bank of Minneapolis, says the answer is simple. Far from declining, he writes, "the economic compensation for work for middle Americans has risen significantly over the past 30 years."
The mistake made by the School of Gloom is looking only at wages, narrowly defined. According to the Bureau of Labor Statistics, average hourly earnings of production and nonsupervisory workers, adjusted for inflation, fell by 4 percent between 1975 and 2005. But those figures deceive because they omit fringe benefits like health insurance, pensions and paid leave, which make up a bigger share of total compensation than before. The numbers also rely on a mismeasure of inflation.
When those flaws are corrected, a very different trend leaps off the page. Median wages, says Fitzgerald, rose 28 percent between 1975 and 2005. Nor were the gains restricted to Bill Gates and Hannah Montana: Significant gains occurred in the middle as well.
That's not to argue that everybody is better off -- and the article doesn't. But we should put all the doom and gloom in perspective. Unless our "leaders" respond to the current panic by tearing everything apart, we've got a pretty good economic system that allows for plenty of growth and prosperity.