Better than the Great Depression

by John Quiggin on September 22, 2004

Daniel Akst contributes yet another in a seemingly endless series of articles reminding American workers that they should “stop whining”, since they are far better off than were their forebears during the Great Depression.

What is striking about this genre is that the choice of the Depression is not an accident. You have to go back that far to get a comparison that gives a clear-cut, unqualified and substantial improvement in the pay and conditions of US workers across the board. Real hourly wages for men with high school education are now around the levels prevailing in the 1950s[1]. Since it’s difficult to make comparisons with the war decade of the 1940s, it’s necessary to go back to the 1930s to get a clear-cut improvement.

Correction and apology I got so annoyed by the appearance of the Depression comparison, that I failed to read the entire article properly. Akst ends by pointing out

It is noteworthy that in news media coverage of job stress, the emphasis is usually on educated middle-class professionals who, in fact, have many choices – including a lower-pressure job or simply working less. All this hand-wringing over the suffering of the relatively fortunate only distracts us from the plight of Americans whose work lives are really stressful: those who are paid $7 or $8 an hour, don’t have health insurance and lack the skills or education to better their lot.

Life for these workers is a tightrope act without a net, so the least that we lucky ones can do is stop whining. Better yet, we can honor their labor by adopting social policies, like national health insurance, a higher minimum wage and tougher limits on unskilled immigration, that will ease their struggle. It will cost us something, of course. But for the working poor, yoga won’t cut it.

which makes a lot of the points I would have wanted. I withdraw my criticism of Akst and apologise for misreading him. Thanks to commenter Steve Carr for pointing this out. (As there has been plenty of discussion, I’ll leave the rest of the post unchanged for the record) end correction

Of course, given enough space, there are all sorts of arguments that can be made to say that a comparison of real hourly wages for men is not the right one. Benefits such as health insurance have generally risen by more than wages. Women’s wages have risen a lot. The consumer price index doesn’t give any weight to increased product variety and arguably doesn’t make a big enough adjustment for quality. And so on.

But then, it’s easy to turn a lot of these things around. Low-wage workers are increasingly being excluded from employer-provided health benefits. There are plenty of services where quality has declined. Unions are weaker and employers more ruthless in firing unwanted workers than in the 1950s.

On balance, the decline in measured real wages for high-school educated workers probably overstates the welfare loss incurred by such workers. Hence, they are a bit better off now than similarly qualified workers in the 1950s. But the difference is far from clear-cut, which explains the continual resort to comparisons with the Depression.

But to conclude in the spirit offered by Akst, we should stop whining. If the trends of the past three decades resume, after the brief interrruption of the late 1990s, we’ll soon be reading about how much worse things were during the Industrial Revolution, or the Dark Ages, or the Paleolithic Era.

fn1. I couldn’t find a good series on hourly wages going back to the 1950s. But the Federal minimum wage is the relevant standard for millions of workers. It’s currently at the same real value as in the mid-1950s, and falling.

{ 35 comments }

1

dsquared 09.22.04 at 11:02 am

Every time we make one of these posts, about a thousand amateur experts on hedonic pricing come out of the woodwork and it always amazes me. Surely to hell, a proposition like “the lot of the average worker has improved over the last fifty years” ought to be the sort of thing which is easily provable and jumps out of the numbers. Surely to hell, in order to support the claim that the position of the average worker is better than it was fifty years ago, you shouldn’t need to resort to all sorts of soft numbers, subjective assessments about technology and all that rubbish? Something very weird has gone on here.

2

derrida derider 09.22.04 at 11:35 am

Well of course the lot of the average, and even the median, worker has improved – even in the US. That does jump out of the numbers.

It’s the lower deciles the argument’s about. And the lack of unambiguous progress here is indeed worrying.

3

dsquared 09.22.04 at 11:46 am

Of course you’re right; I got carried away with my own polemic, sorry.

4

abb1 09.22.04 at 12:14 pm

The average certainly has improved over the last fifty years, but has it improved over the last thirty years? This is where soft numbers and subjective assessments come to play. And if we’re talking about the thirty-year period, my impression is it’s not the lower deciles, it’s the bottom 80% or something like that.

5

Brock 09.22.04 at 12:38 pm

But … but … they have VCRs … and color TVs … and microwaves.

How can those ungrateful louts not recognize how wonderful their life is?

6

Ken Hirsch 09.22.04 at 1:21 pm

While your intended point about Akst’s article is right, your own claims are even more fallacious.

First, the minimum wage is not a good way to compare wages. Only three percent of hourly workers make the minimum wage or lower. That percentage has varied over the years, too.

Second, comparing “men with high school education” over so many decades is not really very helpful. In 1960, only 40% of adults were high school graduates (or more). Now the number is 84%. It’s much more accurate to compare fixed percentiles rather than educational categories that have changed composition so much.

Third, and maybe most importantly, it’s not even true that workers aren’t better than they were in the 1950s. Workers did not fare well in the 1970s and 1980s and were about the same level in 1992 as they were in 1973, but they were far better off than they were in the 1950s. In the 1990s, wages for the median and lower went up to all-time highs. They have gone down a little in the current recession, but are still much better than the 1950s!

7

John 09.22.04 at 2:16 pm

Anybody else feel like they’re in “Player Piano”, by Kurt Vonnegut? Right down to an idiot president from Texas.

8

abb1 09.22.04 at 2:48 pm

“I am a convinced advocate of economic and social equality because I know that, without it, liberty, justice, human dignity, morality, and the well-being of individuals, as well as the prosperity of nations, will never amount to more than a pack of lies.”

— Mikhail Bakunin, 1871.

The guy knew it over 130 years ago.

9

Giles 09.22.04 at 3:32 pm

Here are some better figures:-

http://www.econ.umn.edu/~eckstein/research/QR-011504.pdf

I think the important point that come sout is that as JQ says, male High School Drop out earnings have been flat and school educated have nearly been flat.

But you also need to beaer in mind that more people who would have just been high school graduates in the 1960 are going to college now – so part of the flatness is caused by the removal of the most “able” candidates from the sample.

The question is whether class, as this post implies, should be implicitly defined by education – as opposed to something else.

10

asg 09.22.04 at 3:54 pm

As someone, I forget who, once said, in 500 years, food, clothing, shelter, and health care will all be so abundant as to be free or trivially priced, and the left will still be moaning about the unconscionable inequality that comes from poor people not owning their own spaceships. I guess that’s just a subjective assessment about technology, though.

11

Jack 09.22.04 at 4:11 pm

So wehn people talk about how everything went wrong in the 1960s, we know what they mean now — the poor had a good decade.

12

Chuchundra 09.22.04 at 4:18 pm

John, I’m glad I’m not the only one who thinks about Player Piano when I read this stuff.

King Midas himself could not afford even one vacuum tube!

13

Steve Carr 09.22.04 at 4:23 pm

John, you’re complaining about people drawing ever-fine distinctions to explain away the data. But you’re doing exactly the same thing here. First, you say “real hourly wages with men with high school education,” which excludes about half of all Americans today. Then, that somehow morphs into “real hourly wages for men,” implying that the median wage for men has not risen since meaningfully since the 1950s. You know how completely wrong this is. And the idea that minimum-wage workers — a sizeable percentage of which today are high-school kids with after-school jobs or people supplanting their incomes — are representative of American workers as a whole makes, as someone has already pointed out, little sense.

You say that low-wage workers have been increasingly excluded from employer-provided health benefits. But what percentage of all workers (let alone low-wage workers) had health insurance in the 1950s? Fewer than 20%. Again, the comparison to the 1950s is meaningless.

More important, the comparison to the 1950s points up the importance of taking immigration into account. In the 1950s, immigration from most of the world’s countries — and in particular from the developing world — was limited to very small numbers. That all changed in 1965, when the doors were effectively opened. One consequence was that the pool of less-educated, unskilled workers got significantly larger. That undoubtedly drove down the average wage of those workers (which is the group you seem to be talking about). But I think you’d be hard-pressed to argue that the US would have been better off had we kept all those people (the vast majority of whom got jobs) out.

14

Steve Carr 09.22.04 at 4:36 pm

I’m also more than a little mystified by why you’re attacking this particular Akst column, in which he’s mainly criticizing people who earn six figures but complain about how stressful their jobs are. In fact, the conclusion of the piece argues that the media’s attention to the plight of the stressed-out professional is insidious precisely because it distracts our attention from the plight of unskilled American workers who aren’t paid enough and don’t have benefits.

Akst ends by calling for the adoption of “social policies, like national health insurance, a higher minimum wage and tougher limits on unskilled immigration, that will ease their struggle.” Is this really a business writer you should spend your time attacking? Did you even read the article?

15

Steve Carr 09.22.04 at 4:40 pm

I’m also more than a little mystified by why you’re attacking this particular Akst column, in which he’s mainly criticizing people who earn six figures but complain about how stressful their jobs are. In fact, the conclusion of the piece argues that the media’s attention to the plight of the stressed-out professional is insidious precisely because it distracts our attention from the plight of unskilled American workers who aren’t paid enough and don’t have benefits.

Akst ends by calling for the adoption of “social policies, like national health insurance, a higher minimum wage and tougher limits on unskilled immigration, that will ease their struggle.” Does this really sound like someone who’s telling low-income workers (the subject of your entire post) to stop whining?

16

abb1 09.22.04 at 6:06 pm

As someone, I forget who, once said, in 500 years, food, clothing, shelter, and health care will all be so abundant as to be free or trivially priced, and the left will still be moaning about the unconscionable inequality that comes from poor people not owning their own spaceships.

This is not about the “poor people”, though, as in disabled, drug addicts or unfortunate in some other way. This is about majority of the people, people who do most of the work.

17

elspi 09.22.04 at 6:31 pm

< ...I forget who, once said, in <500 years, food, clothing,

18

R. Porrofatto 09.22.04 at 6:45 pm

Two factors I think should be considered when discussing how much better off workers are now compared with 50 or more years ago are the two-income household and debt, both of which are radical shifts. Yes, low-income may have color TV’s now, but they have to work that much harder and pay a lot of interest on the money they borrow to maintain this wonderful “lifestyle.”

From ABCnews.com:

Consumer debt — which includes credit cards and car loans — has more than doubled over the past 10 years… The average amount of credit card debt per household is about $7,000, and for the 60 percent of credit card holders who do not pay off their balances each month, the average amount is closer to $12,000.

In 2000, the average person seeking help from the National Foundation of Credit Counseling… had a gross average income of $29,738 and a debt load of $26,337 — almost 89 percent of their income. Even more startling is that debt load does not include members’ housing loans. In 1995, the average member’s debt load was around 71 percent of their income.

19

epist 09.22.04 at 6:48 pm

Let me see if I can reproduce the structure of asg’s argument. . .

Premise 1: Assume the truth of some very different and very distant future scenario

Premise 2: Assume your opponent’s position in the above counterfactual is laughable

Conclusion: Your opponent’s current position is laughable

I don’t think either ‘straw man’ or ‘ad hominem’ really captures this. It’s more like ‘straw man ad hominem in a rocket ship to the planet non sequiter’ or something.

20

R. Porrofatto 09.22.04 at 6:50 pm

Two factors I think should be considered when discussing how much better off workers are now compared with 50 or more years ago are the two-income household and debt, both of which are radical shifts. Yes, low-income may have color TV’s now, but they have to work that much harder and pay a lot of interest on the money they borrow to maintain this wonderful “lifestyle.”

From ABCnews.com:

Consumer debt — which includes credit cards and car loans — has more than doubled over the past 10 years… The average amount of credit card debt per household is about $7,000, and for the 60 percent of credit card holders who do not pay off their balances each month, the average amount is closer to $12,000.

In 2000, the average person seeking help from the National Foundation of Credit Counseling… had a gross average income of $29,738 and a debt load of $26,337 — almost 89 percent of their income. Even more startling is that debt load does not include members’ housing loans. In 1995, the average member’s debt load was around 71 percent of their income.

21

abb1 09.22.04 at 7:23 pm

Nah, I think asg does have a point, albeit a weak one. Clearly 100% equality is neither desirable nor possible. There is no reason to complain about inequality as such.

But if it’s true that 80% of the population have received no benefit (or almost none) of the productivity increase during the last 30 years, then something definitely is rotten. Someone has been stealing their share of the productivity increases.

22

HP 09.22.04 at 7:23 pm

In other news, the average American today is less likely to die from infectious disease than he was during the Influenza Pandemic of 1918. Also, interstate commerce has picked up considerably since the Civil War. I’d further like to point out that America’s government representatives are more responsive to the needs of citizens than they were in 1768.

23

lynne 09.22.04 at 7:25 pm

Steve Carr:

Was supplanting instead of supplementing income a Freudian slip?

24

RT 09.22.04 at 7:30 pm

I think workplace stress shouldn’t be so casually dismissed. No, I’m not gonna take pity on people with six-figure incomes; they can fend for themselves.

Your typical middle-class cubicle-dweller has it better in many ways than his predecessor from 30-40 years ago, the middle-class factory worker: safer job, longer life expectancy, and better pay as well.

OTOH, s/he is generally a ‘professional’ who doesn’t fall under the protections of the Fair Labor Standards Act, so overtime hours can be required of our cubicle dweller (if she wants to keep her job), but no overtime pay goes with it. He doesn’t have a defined-benefit pension plan – just a 401(k) which winds up getting dipped into during periods of unemployment. Health insurance is a confusing thicket to navigate. Median household income was 32% higher in 2003 than in 1967 (in constant dollars), but that’s a pretty small payoff for having gone from stay-at-home moms to two-worker couples. And that’s a big source of stress right there: we’re all doing the chores on evenings and weekends that the wife would have done while her husband was at work, back in the day.

So as a Democrat and a liberal, I don’t think stress is anything to laugh at. I think that it’s one hell of an issue for us, and we’re ignoring it. By and large, we have failed to respond to what the typical workplace is today, and what the typical worker’s needs are today.

Many of their problems aren’t amenable to government solutions, but some are. For one, overtime pay should be a middle-class entitlement. Could do something like: everyone making $60K/yr or less gets time-and-a-half after 40 hours; everyone making more, gets paid the same overtime wage that someone making $60K gets.

25

Steve Carr 09.22.04 at 7:47 pm

Yeah, things were so much better back when “the wife” was at home doing all the chores. Certainly that’s what Betty Friedan thought.

The idea that increasing your income by a full third (and that number is understated in any case) is a small payoff seems to me decidedly improbable. It would be very easy to re-create a 1967 middle-class lifestyle — in terms of size of house, number of cars, amount of travel, number of televisions, quality of food, etc. — on a one-person, lower-middle-class salary. Even with all the problems with revealed preference, surely the fact that people aren’t interested in that, and instead spend money the way they do — and work in order to be able to spend money the way they do — has to tell us something about what they want.

26

abb1 09.22.04 at 8:13 pm

They want that cash the CEOs, CFOs, CTOs, CIOs and VPs of marketing are stealing from them every day. If they don’t they should.

27

JRoth 09.22.04 at 8:24 pm

Steve C-

One word: daycare. Most couples I know where both work have run the numbers and discovered that daycare eats up a huge percentage of the second earner’s salary. Not quite enough to make it worth quitting, but not so little that people are actually enjoying much of that 1/3 increase.

A second word would be healthcare. Obviously it’s gotten better, but that’s irrelevant if 40+ million Americans can’t afford any insurance at all, and so only see a doctor in the ER. Here’s a simple, objective equation for you: zero healthcare is less than outdated healthcare.

28

Chris 09.22.04 at 8:40 pm

Oh my god!!! I can’t believe someone actually seriously wrote this… It’s 100% insanity.

‘OTOH, s/he is generally a ‘professional’ who doesn’t fall under the protections of the Fair Labor Standards Act, so overtime hours can be required of our cubicle dweller (if she wants to keep her job), but no overtime pay goes with it…Median household income was 32% higher in 2003 than in 1967 (in constant dollars), but that’s a pretty small payoff for having gone from stay-at-home moms to two-worker couples. And that’s a big source of stress right there: we’re all doing the chores on evenings and weekends that the wife would have done while her husband was at work, back in the day….So as a Democrat and a liberal, I don’t think stress is anything to laugh at…Many of their problems aren’t amenable to government solutions, but some are. For one, overtime pay should be a middle-class entitlement… Could do something like: everyone making $60K/yr or less gets time-and-a-half after 40 hours; everyone making more, gets paid the same overtime wage that someone making $60K gets.’

Now, I fall into the category of rich, capitalist pig – so many will dismiss this out of hand. But, this person is saying that a couple making $60K a year should be entitiled to time and a half overtime pay because they have to do chores on the weekend (and that causes stress).

Please!!

I have never seen anyone before cry ‘victim’ for someone making $60K/yr. But this person is not only crying victim, s/he is demanding that folks like me (who work 70-80 hours per week and are in the top 2-3% of national earners) fund an entitlement that compensates those people for having to do chores at night and on the weekend (thereby creating stress).

Would a better answer be to have those people either choose to quit their ‘high pressure’ job and find a job that fits with their desired lifestyle? Why create a government entitlement? That doesn’t solve the problem, it just requires more of the tax paying base to compensate those folks for their own stupidity?

I like CT, but sometimes you people make my head spin with your insanity!

29

John Quiggin 09.22.04 at 8:56 pm

As several people have pointed out, Akst’s column was directed mainly at upper-income earners complaining about workplace stress. So in this case, he could have avoided the Depression comparison completely, by writing something like:

“Stop whining! What about the stress faced by minimum-wage workers who haven’t seen a real wage increase since the 1950s”

But oddly enough, he didn’t choose to go this way.

30

John Quiggin 09.22.04 at 9:01 pm

As an aside, it’s well known that “executive stress” is a myth. All kinds of stress-related illnesses are more prevalent among blue-collar and low-pay, low-status workers than among bosses.

Again, Akst could have made this point but chose not to.

31

Steve Carr 09.22.04 at 9:11 pm

Actually, John, he chose to go exactly that way. The only mention of whining in the piece is in the last paragraph, which reads in full:

“Life for these [low-income] workers is a tightrope act without a net, so the least that we lucky ones can do is stop whining. Better yet, we can honor their labor by adopting social policies, like national health insurance, a higher minimum wage and tougher limits on unskilled immigration, that will ease their struggle. It will cost us something, of course. But for the working poor, yoga won’t cut it.”

I fail to see how that’s much different from:

“Stop whining! What about the stress faced by minimum-wage workers who haven’t seen a real wage increase since the 1950s.”

Actually, Akst’s is better, since it explicitly calls for policies to remedy the situation and says upper-middle-class workers should be willing to pay for them.

32

John Quiggin 09.22.04 at 9:23 pm

Steve, you’re right. I obviously got too annoyed to read to the end of the column, which is a big mistake. I’ll post a correction.

33

Steve Carr 09.22.04 at 10:16 pm

John, you’re honorable as always. That’s why this site makes one think there actually is a point to comment threads.

34

John Quiggin 09.23.04 at 12:42 pm

“That’s why this site makes one think there actually is a point to comment threads.”

Certainly, there is a point for me. I feel free to try ideas out on blogs without dotting all the i’s and crossing the t’s. If there’s a problem, it will be pointed out to me, pretty forcefully in some cases. But, to me, blogging is like a conversation and unlike, say, a journal article. It’s OK to be wrong from time to time.

35

derrida derider 09.24.04 at 6:58 am

For a more formal treatment of rich whinging about time stress (and the light it sheds on Steve’s comment about increased working time being in part a revealed preference) try this.

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