Bruce Meyer on the Middle Class, Poverty, and Inequality

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🗓️ 3 October 2011

⏱️ 60 minutes

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Summary

Bruce Meyer of the University of Chicago talks with EconTalk host Russ Roberts about the middle class, poverty, and inequality. Many economists and pundits argue that the middle class has made little or no economic progress over the last 30 years, that poverty rates are stagnant or rising, and that inequality has increased dramatically. Meyer, drawing on his research over the last ten years, argues that these conclusions are either false or misleading. He argues that standard measures of economic progress and inequality are based on faulty inflation data or a misplaced focus on pre-tax income instead of post-tax income or consumption.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links to
0:26.5	another information related to today's conversation. Our email address is mailadicontalk.org. We'd
0:33.6	love to hear from you.
0:36.7	Today is September 27, 2011, and my guest is Bruce Meyer, the McCormick Foundation professor
0:45.6	in the Harris School of Public Policy at the University of Chicago. Bruce, welcome to Econ Talk.
0:50.6	Glad to be here. Our topic for today is inequality and the standard of living of the average
0:56.8	American. You hear a lot in books in the in the blogosphere among pundits that the middle class
1:05.7	is being hollowed out that incomes for all but the top 1% or maybe the top 20% are stagnating,
1:12.6	that the gap between rich and poor is grown inexorably, that the American dream is dead,
1:17.1	that America is no longer the land of opportunity. Particularly alarming is the claim that these
1:22.3	changes have occurred at a time until recently of great growth in national income. Very healthy
1:28.0	growth in the U.S. in per capita income between the early 1980s and the mid-2000s. Yet the
1:33.4	claim is made that the rising tide did not lift all boats. Rather, it only lifted the big rich yachts,
1:41.0	the dinghies of the poor and the middle class didn't share in that tide of improved material well
1:45.6	being. What are your thoughts on these claims? They're basically wrong and that's what
1:54.5	10 years of research by myself and James Sullivan at Notre Dame has shown. If you measure incomes
2:06.4	better accounting properly for inflation, median incomes have gone up by about 50% since 1980.
2:15.6	If you look at consumption, it's gone up by a similar amount to over that whole period,
2:21.4	though exactly when it went up slightly different from the income pattern.
2:31.4	You're going to argue that that is just a correction for a mistake in measure of inflation.
	...

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