Matt Yglesias just wants to believe…
…that Census data showing real median household income is slightly below 1989 levels is wrong, so he went searching for another data source to support his hunch. (Real means adjusted for inflation; median means right at the middle of the income distribution, with half of all households above, and half below.)
In his first post on the topic, “Median family income since 1989: Is the stagnation real?,” Yglesias drew on an assortment of feelings to make his Slate-ish contrary case: bigger better cars, bigger better TVs, MP3 players, and, of course, the Internet. Therefore, the Census report is fishy. But the Census figures come from a survey of over 50,000 households (technical details here), which sounds like a more reliable source than Matt’s gut. And they’ve been at it for decades—family data begins in 1947, and household data in 1967.
But, perhaps realizing that anecdata doesn’t really cut the mustard, Yglesias found himself an actual data source, the Consumer Expenditure Survey (CEX) from the Bureau of Labor Statistics (BLS) to support his hunch. (It’s abbreviated CEX so as not to confuse it with the Current Employment Statistics [CES], the source of the monthly payroll data.) So he rolled out his discovery in a piece posted on Friday, “BLS incomes have risen since 1989.” Anyone familiar with U.S. income stats knows that this is ill-advised. But you need not have read deeply in the income literature—all you need do is read the BLS’s FAQ, which advises against relying on CEX income data:
If you want to relate the expenditures of consumers to their income and characteristics, the Consumer Expenditure Survey is the primary source of data. However, for users interested only in income information, data published by the Census Bureau of the U.S. Department of Commerce may be a better source of information. Data from the Current Population Survey are based on a much larger sample size. For income information, visit the Web site www.census.gov/hhes/www/income.html….
So the BLS itself recommends using the very Census data that Yglesias wants to dismiss.
More on income and poverty figures in the next issue of Left Business Observer, now in preparation.
LBO News from Doug Henwood 
It’s definitely not one of his better posts. I get the jist of what he’s trying to argue, which is that on the “consumption” side, people have a lot of things better than in 1989: better phones, better cars, (possibly) bigger houses, less crime, and so forth. Wage levels aren’t everything – both wages and costs of living factor into living standards. But his argument was lazy and full of anecdotes, which he eventually tried to bolster with some inferior data sources once it became clear that the former wasn’t defensible.
The Scott Winship response he cites is a bit better. Winship acknowledges that the drop in real household income, but argues that it balances out by 2011 if you factor in both cash and non-cash government payments into household income (the study cited only factored in the value of monetary assistance). I’d still argue it’s not a good thing that the fall in household income was only mitigated because of assistance as opposed to actually rising incomes, but it’s at least a response.
OK, so how about incorporating the negative value of: insane waits in order to fly on an airplane, longer and longer traffic jams, higher cancer rates, poorer quality food (not to mention higher and higher medical insurance premiums for worse and worse doctor visits).
i think what his piece really means is that matt yglesias’ standard of living has gone up
The plasma TV and Facebook surely rivals inventions such as the internal combustion engine, penicillin, mass electrical production and the washing machine. To name only a few of the mass wave of inventions that peaked in the early 20th century.
There’s a strong case that the washing machine was a more important invention than the internet. Try washing one’s clothes by hand for a week, or better yet, at a local creek – like a good portion of the world still does. If only the 95% male field of economics would debate such matters.
The overall point being is that we are not in a new world of relentless innovation that justifies a gigantic and increasing income gap, or that has changed everything. People like Yglesias often seem ahistorical.