The American Standard of Living - For Better or For Worse
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Is the distribution of income in the United States becoming more unequal? Does the average American today have a higher or lower standard of living than the average American of a generation ago? Will the next generation have a higher or lower standard of living than today's generation? In this Economic Minute, Peter Passell of The New York Times argues that although labor still captures about two-thirds of national income, only skilled workers have benefited. On the other hand, W. Michael Cox and Richard Alm of the Federal Reserve Bank of Dallas argue that "by harnessing the natural power of income distribution, free markets have routinely brought the great mass of Americans products once beyond even the reach of kings."
Go to The New York Times , and read the article by Peter Passell, "Rich Nation, Poor Nation. Is Anyone Even Looking for a Cure?"
Answer these questions based on the article.
Who has received the benefits of economic growth during the past quarter century?
According to the Rand Corporation, what happened to the real income of the bottom tenth of American families between 1973 and 1995?
Why should we be concerned by a more unequal distribution of income?
Why do some economists believe this trend is of little concern?
- After reading this article, do you feel the American standard of living is getting better or worse?
Now go to the Federal Reserve Bank of Dallas , and read "Time Well Spent " by W. Michael Cox and Richard Alm. This publication shows how much time it takes at an average hourly wage to buy a variety of goods and services today and yesterday.
Go to page 7, "Our Daily Bread." What has happened to the number of minutes worked to buy food between 1919 and 1997?
Go to page 6, "Gimme Shelter." What has happened to the amount of hours worked per square foot of housing between 1956 and 1996?
- Go to pages 18-19. What has happened to the work time spent to buy the products on this page?
When you read the data, do you feel the American standard of living is getting better or worse?
Could the Peter Passell conclusion and the W. Michael Cox and Richard Alm article both be correct?
- What can you do to improve your future income and standard of living?