Issues & Insights

Lies, Democrats’ Damned Lies About Wages, And Statistics

I&I Editorial

As is their well-practiced custom, the Democratic presidential candidates continue to screech about stagnant wages, and an economy that doesn’t work for everyone.

We’re not saying they’re lying. Let’s just say the truth is out there and they’re missing it.

In the first set of debates, New Jersey Democratic Sen. Cory Booker said that he was seeing “every single day that this economy is not working for average Americans.” Sen. Elizabeth Warren, Massachusetts Democrat, groused about “an economy that does great for those with money and isn’t doing great for everyone else.”

Tuesday night, the first evening of the second round of debates, Ohio Democratic Rep. Tim Ryan complained that union members’ “wages have been stagnating.” The following evening, Julian Castro, secretary of Housing and Urban Development under President Obama, was quite sure that “the idea that America is doing just fine is wrong.” 

It’s a familiar beef. Not long ago, Democratic Sen. Bernie Sanders claimed that “for the last 45 years the average American today has not seen a nickel more in real wages than he or she got 45 years ago.” More recently, Warren has lamented “a generation of stagnant wages.”

Even President Trump has brought up “decades of flat wages.”

The numbers don’t seem to back the narrative, though., using Bureau of Labor Statistics data, has shown that after falling for about 20 years, wages have been climbing since the mid-1990s.

Not all agree that the measurement used by is the best way to determine if we’re better off than we were in previous decades. So forget for one moment the data and think about what today’s wages can bring compared to wages in the 1960s and 1970s.

Economist Donald Boudreaux, inspired by work done in 1999 by Michael Cox, then chief economist at the Dallas Federal Reserve, and journalist Richard Alm, has produced a particularly useful method of comparing different eras — how many hours it takes the average worker to buy goods and services. Boudreaux looked at 400 items from a 1975 Sears catalog and found only a single item that required the buyer to put in more time at work to purchase today than it did four decades earlier — men’s work boots.

A microwave oven, however, requires only six hours of labor now but took 93 hours of work in 1975. A man had to toil for 1.5 hours in those days to earn enough to buy a pair of jeans yet needs only 20 minutes today. That same fellow who makes enough before his lunch hour to buy an automobile battery today would have had to put in a full day and another hour the following morning to afford it in 1975.

“For all of the other goods in my sample — including, but not limited to, clothing, household appliances and furniture, recreational equipment, and auto supplies — the amount of time that a typical American worker today must work to earn enough income to buy those goods is less than in 1975, and in most cases it is much less.”

At about the same time, Buffalo, New York, journalist Steve Cichon looked at a 1991 Radio Shack newspaper ad and found that of the 15 electronics products on the page, 13 of them, costing a total of $3,055 then ($5,225 in today’s dollars), could be replaced with a $200 cell phone, which alone performs all of the functions of those items.

Incidentally, paying for that phone, says economist Mark J. Perry, would take “fewer than 10 hours (9.82) of work at the average hourly wage today of $20.35,” while those 13 products would in 1991 have required “290.4 hours of work” — nearly two months — “at the average hourly wage then of $10.52.”

No matter how long anyone worked 30 years ago, few could afford a mobile phone then. They “were so rare that the sight of them generally caused people to stop and gawk,” says columnist and economic adviser John Tamny. And they were phones only at that point. Cell phones now “are actually supercomputers that fit in our pockets” using technology that “would have set consumers back many, many millions not too long ago.”

Consequently, nearly everyone has a cell phone today no matter what their wages are.

Despite what the Democrats are saying, we’re all better off than we were three, four, or five decades ago. Even those at the low end of the wage scale have material goods today that would have taken a big bite out of a rich man’s wallet 30 years ago. Tamny points out that a Tandy 5000 — marketed as the “most powerful computer ever!” — cost $8,900 in 1989, yet “nowadays one can buy a brand new Hewlett-Packard computer that’s exponentially more powerful than the 5000 for $200.”

Despite the facts, we will keep hearing throughout the Democratic debates and the 2020 campaign that Americans are falling behind, the implication being that freedom is failing and the government needs to commandeer the economy. But it’s capitalism performing its “miracles” in a free market that has created an environment in which an American needs to work only a little more than one day to acquire the modern conveniences that would take seven weeks of work to buy not that many years ago.

— Written by J. Frank Bullitt

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  • I disagree, in 1980 I could buy llbean pants for $40 now they are $80. I still have some from 1980 but the new ones don’t last. The cost of milk and eggs is hiring and hurts everyone. I can’t eat computers no matter how cheap the chips.

  • Anthony and Keith are expressing logical fallicies because they are for left loons and don’t wat to admit Trump is doing good things

    • Thanks for such an insightful and thoughtful response. It added greatly to the conversation.

    • There are significant deficiencies in this article’s argument. The comparison of the price of some random computer today to the top of the line computer back then is probably the worst example they try to glean information from. While I do think the economy is doing better and getting better for most people, comparing the cost of singular goods today with the their cost now is only partially worthwhile. The are factors beyond this country’s economic fitness that can affect that data. For instance, part of the reason why clothes are generally cheaper today is because we’ve outsourced the production of those goods to countries with cheaper labor.

      I think a better indicator for this is what is the cost in manhours to get a house today versus back then? This is something obviously not in a Sears catalog. I’d be interested to see this data point.

  • Why no mention of probably the two most
    important items, housing and health care?
    This is a good example of confirmation bias
    where the smarter you are the easier it is
    to find facts that confirm your beliefs and
    ignore those that do not.

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