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You can’t have it both ways

Summary:
Progressives often cite median income data when trying to show that average Americans do not benefit from rising productivity. Real median income (by some measures) has been fairly flat since 1973. I’ve done numerous posts pointing out that this income data is extremely misleading, indeed almost useless. In material terms, living standards are obviously much higher than in 1973 (a period I can recall.)  Scott Winship has also exposed a number of flaws in the stagnating income hypothesis. But let’s say I’m wrong and the median income data is meaningful. In that case this data would also be highly relevant: The stereotypical embodiment of America’s high university costs, much loved by journalists, is the part-time barista with a liberal-arts degree and a six-digit

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Progressives often cite median income data when trying to show that average Americans do not benefit from rising productivity. Real median income (by some measures) has been fairly flat since 1973.

I’ve done numerous posts pointing out that this income data is extremely misleading, indeed almost useless. In material terms, living standards are obviously much higher than in 1973 (a period I can recall.)  Scott Winship has also exposed a number of flaws in the stagnating income hypothesis.

But let’s say I’m wrong and the median income data is meaningful. In that case this data would also be highly relevant:

The stereotypical embodiment of America’s high university costs, much loved by journalists, is the part-time barista with a liberal-arts degree and a six-digit debt. Such luckless espresso-pullers undoubtedly exist, but they are far from typical. The average recipient of a bachelor’s degree in America graduated with $16,800 in outstanding debt. Though this is 24% higher than it was in 2003, it seems unlikely to trigger the kind of indentured servitude so often imagined.

Keep in mind that this is for grads with a bachelor’s degree, who are the creme de la creme of our labor market.  Many Americans don’t go to college, and many who do get only 2-year degrees.  And yet even for this elite group the typical student debt is only $16,800.  Surely this is not a problem that progressives need to be concerned about!

Progressives probably view the $16,800 figure is being misleading, as they advocate that taxpayers (including those who didn’t go to college, or just went to community colleges) need to pay off this debt. Perhaps the figure is misleading, just as the income data that progressives use in their articles on the plight of average Americans is misleading.  But you can’t have it both ways.  Either median income and median debt data are both useful, or neither are.

PS.  The Economist article is unclear as to whether they are describing the median debt level or the average debt level.  In context, it seems more like the median.  (They refer to the “average recipient”, meaning “typical”.)  If it were the average debt level then my point would be even stronger, as the median debt is certainly well below the average.

Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment". In May 2012, Chicago Fed President Charles L. Evans became the first sitting member of the Federal Open Market Committee (FOMC) to endorse the idea.

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