Richard Burkhauser on the Middle Class

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4.7 • 4.3K Ratings

🗓️ 9 April 2012

⏱️ 69 minutes

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Summary

Richard Burkhauser of Cornell University talks with EconTalk host Russ Roberts about the state of the middle class. Drawing on recently published papers, Burkhauser shows that changes in the standard of living of the middle class and other parts of the income distribution are extremely sensitive to various assumptions about how income is defined as well as whether you look at tax units or households. He shows that under one set of assumptions, there has been no change in median income, but under a different and equally reasonable set of assumptions, median income has grown 36%. Burkhauser explains how different assumptions can lead to such different results and argues that the assumptions that lead to the larger growth figure are more appropriate for capturing what has happened over the last 40 years than those that suggest stagnation.

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 March 29, 2012 and my guest is Richard Berkhauser of Cornell University, Rich
0:44.0	Welcome to Econ Talk. Thanks for to be here.
0:47.8	Our topic for today is the economic status of the middle class. We hear a lot of talk about
0:52.9	the middle class is disappearing. My colleague Tyler Cowan talks about the great stagnation.
0:59.2	There's a view that the rich are getting richer. Everyone else is either treading water
1:02.4	or falling behind. So inequality is growing. And of course, there are statistics to back.
1:07.2	These claims up in the median wage rate has grown very little, if at all, since the 1970s
1:11.6	and there does appear to be growing inequality. But it turns out a lot of these data are subject
1:17.9	to interpretation. Decisions have to be made by researchers on what they mean. And what
1:24.1	we're going to talk about today is a paper that you've done with Jeff Lairmore and Cassali
1:27.6	Simon from the March issue of the National Tax Journal, which is called, your article
1:33.2	is called a second opinion on the economic health of the American middle class. And what
1:38.0	you show is depending on how you define income and the unit of analysis, you can get a very
1:42.0	different take on what is happening. So start off by telling us what you did and how
1:48.0	you came to the project.
1:50.0	Sure. Well, I've been looking at issues of income and poverty for the last 30 years,
1:57.8	really. And my efforts in this regard actually go back to at least 10 years ago when people
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