by Scott Winship
I hope you’re enjoying the roundtable discussion as much as I am. Because it doesn’t really matter if I enjoy it. And even if it did matter, I certainly wouldn’t say on this blog that I didn’t enjoy it. Not that I’m saying now that I actually don’t enjoy it. I mean…uh….
Look, I’m a data junkie. I live for this stuff. In that spirit, I want to play devil’s advocate and raise a possible explanation for the paradox of middle-class expressions of insecurity amidst middle-class affluence. Jacob Hacker tries to resolve the paradox by arguing that affluence is fragile — that incomes are fluctuating up and down more than Third Way realizes and that a snapshot average implying affluence doesn’t reflect this reality. I’m not sure this explanation really is adequate though — it would still mean that Americans are affluent on average, just that they typically have an equal number of under-average years and over-average years around this affluence.
Ruy explains the paradox by arguing 1) that the optimism of the middle class is misguided to some extent and 2) that middle-class families are insecure but correctly think they will do better in the future because people earn higher wages and salaries as they age. But if they are worried about (future) declines in living standards, how can they think that they will do better in the future? So this seems like an inadequate explanation to me as well.
As an advocate of Satan (seems like a weird phrase when you put it that way….), let me throw out another possibility: it’s the I’m OK-They’re Not Syndrome at work. In The Optimism Gap, journalist David Whitman described a phenomenon common to a number of areas of public opinion. People will often perceive society to be in trouble or declining on some indicator while at the same time perceiving themselves to be doing quite well. So the educational system is a mess, but my kids’ school is just fine. Politicians are corrupt, except for mine. Family values are a thing of the past, except in my family where they thrive.
Similarly, people tend to report that economic conditions and living standards are bad and getting worse but believe they are doing well and will do better. All too often, we give more credence to their assessment of the state of the union than to their assessment of their own life, even though they have far more information about the latter. And we have statistics that seem to indicate their state of the union is correct.
But Whitman shows that we are often measuring the wrong things. If one looks at per capita compensation (wages plus benefits) or consumption and uses a better adjustment for inflation, things look better than ever (because family size has declined, fringe benefits have increased in value, and the standard CPI understates increases in purchasing power). It’s true as Elizabeth Warren notes that two-worker families are ubiquitous now, but living standards have improved enormously. (Whitman quotes Robert Samuelson suggesting that couples who want to get by on just one paycheck could live as well as their parents by “unplug[ging] their air conditioners, sell[ing] one of their cars, discard[ing] their VCRs and PCs” and not paying for their kids’ college expenses.
As an example, I’ve always suspected that the income instability estimates of the sort Jacob relies on are driven by the models used to produce them and complications such as which age groups are and are not included in the data cranked through the model. Does anyone else find it difficult to believe that over ten years, the typical family’s income in their worst year will be less than one-fourth their income in their best year? Raise your hand if that’s ever been true for you (not counting spells of education).
I don’t want to push this advocacy for the devil too far — I agree with much of what the roundtable discussants have to say about the contemporary economy and the shift of risk onto individuals. And this whole discussion ignores the poor. But I do think it is easy for pundits and researchers to seize hold of a potentially mistaken conventional wisdom — just as survey respondents might — that obscures reality to some extent, which is what the Third Way folks are ultimately arguing. Regardless, even if Whitman is correct that insecurity is largely unwarranted, that doesn’t change the political reality that people think there’s insecurity out there. That means that this perception must be attended to. As Whitman remarks, “It’s what voters think the economy is, Stupid.”