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Ben Shapiro: The Myth of America's Wage Stagnation | Opinion

America is in the midst of a political realignment. That realignment is based around one particular issue: globalization. From Donald Trump on the Right to Bernie Sanders on the Left, an odd consensus has formed, suggesting that free trade is a net detriment to the United States, that Americans have been left behind by the presence of foreign competition, that the quality of life for those who aren’t at the top of the economic pile has degraded over time.

Supposedly, we are in the midst of a great economic slump, in which people who work hourly haven’t gained one iota for some forty years, while those who work on Wall Street have cleaned up. Economic mobility, the argument goes, has declined; we’ve been divided into a hierarchical structure from which non-elites cannot escape.

The key data point in this argument is wage stagnation since 1979. Since 1979, the average hourly wage for American workers hasn’t risen, yet the salary for workers in white collar professions has risen dramatically. This is evidence that an entire class in the United States has been left behind.

But what if that statistic is fatally flawed? What if it turns out that those who aren’t in the top 1 percent or the top 10 percent have benefitted remarkably from globalization and liberalization of regulation?

That happens to be the truth. As it turns out, there are several factors that simple wage statistics ignore. For example, as Marian L. Tupy points out at Reason.com, non-wage benefits have expanded dramatically since 1979—so dramatically that “they could amount to as much as 30 or even 40 percent of the workers’ earnings.” Those non-wage benefits include everything from paid vacation to health care coverage. Economist Edward Conard explains in his book The Upside of Inequality:

"Misleading income measures assume tax returns—including pass-through tax entities—represent households. They exclude faster-growing healthcare and other nontaxed benefits. They fail to account for shrinking family sizes, where an increasing number of taxpayers file individual tax returns. They don’t separate retirees from workers. They ignore large demographic shifts that affect the distribution of income. Nor do they acknowledge that consumption is much more evenly distributed than income. More accurate measures show faster income growth, especially for non-Hispanic workers, and wage growth that parallels productivity growth."

GettyImages-512174403 The most important factor wage statistics ignore is the decrease in prices relative to wages on consumer items. iStock

The most important factor wage statistics ignore is the decrease in prices relative to wages on consumer items. A dollar is worth more when it is exchangeable for more goods and services. And that’s precisely what’s happened in consumer goods—precisely the goods you’d suspect would be most impacted by free trade. According to a study conducted by Human Progress, the time spent to acquire key household goods has decreased massively since 1979: 52 percent for refrigerators; 95 percent for microwaves; 65 percent for gas ranges; 71 percent for gas grills; 94 percent for convection ovens; 61 percent for dishwashers. Trade did what it was supposed to do: lower prices. That means our dollar goes further than it used to, which is probably why, as of 2005, virtually all poor households in the United States had a refrigerator, television, stove and oven, and 8 in 10 had a microwave and air conditioning.

Where are Americans lagging behind? In three specific areas: education, healthcare, and housing. The costs of all three have risen dramatically. What else do all three have in common? Heavy governmental subsidization and regulation. The cost of college education has skyrocketed thanks to governmental subsidization of student loans, driving up demand; the cost of healthcare has skyrocketed thanks to heavy federal and state regulation, resulting in huge administrative costs; the cost of housing has increased dramatically thanks to zoning laws most prevalent in liberal areas.

But, say the critics, the middle class is dying because of those high cost items. How can we celebrate cheaper consumer goods when hourly workers can’t afford a home, a college education, or healthcare? There are two answers to this question: first off, stop regulating the living hell out of these areas of American life, and these products will be treated like consumer products by the market. Second, it’s simply false to suggest that the American middle class is dissipating: in 1979, 12 percent of Americans were upper middle class; as of 2014, 30 percent were.

So before we start discarding the economic policies that have resulted in more widespread prosperity in America than ever before, we might want to think twice and check our statistics. Sometimes, a simple number isn’t the end of the story.

Updated | This piece has been updated to mention the quote from The Upside of Inequality.

Ben Shapiro is editor-in-chief of The Daily Wire and host of The Ben Shapiro Show, available on iTunes and syndicated across America.​

The views expressed in this article are the author's own.​​​

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