Our Wages Are Stagnant and Our Budget Is Tight—so Let’s Eat Out Tonight !

Who are you going to believe, the Bureau of Labor Statistics or your own lying eyes?

Based on wage data from the BLS, it has become a settled, uncontroversial, widely-recognized “fact” that wages have not increased in the U.S. for many decades. Consequently the great American middle class is imploding and living standards are, at best, stagnating. All the financial payoff from rising productivity has gone to greedy “millionaires and billionaires” such as Bill and Hillary Clinton. Thus a recent NYT column referred to “the fact that real wages have been flat for about four decades, while productivity has increased by 89 percent.” Paul Krugman wrote last year, “wages for ordinary workers have in fact been stagnant since the 1970s.” Bernie Sanders laments that “despite some improvement, the 40-year decline of the American middle class continues . . . . Nearly all of the new income growth since the recession has gone to the top 1 percent.”

There’s just one problem. If we leave the never-never land of economic statistics and take a look at the real world, it is obvious that middle-class consumers live much better today than their parents ever did. There’s all the free stuff on the Internet. Airbags and anti-lock brakes. Smart phones for the masses—Maria, the lady who cleans Donald Trump’s fantastic and exquisite and incredibly palatial executive suite, has a much better phone than The Donald had in his limo twenty-five years ago.

It’s not just electronics . . .

. . . . Consider restaurants, a superfluous luxury that people can easily do without if they are living on a tight budget. And rather than focus on national trends—the tens of thousands of Starbucks and Dunkin Donuts; the zillions of McDonalds and Burger Kings; the burgeoning gourmet burger category; the legions of middle-market “casual dining” establishments such as Appleby’s and Red Lobster; not to mention overpriced steakhouse chains such as Del Frisco’s and Morton’s—let’s look at a single town: Morristown, New Jersey, where I grew up.

It’s a middle class town in an affluent part of northern New Jersey. It’s hardly a boomtown like some parts of Florida or Texas, because Jersey’s economy has been systematically mismanaged–battered by the high taxes and over-regulation of a corrupt Democratic legislature and three incompetent governors prior to Chris Christie. Morristown’s affluence, relative to other towns in north Jersey, has declined in recent decades due to an influx of impecunious, hard-working Hispanic immigrants.

From Greasy Spoons to High-end Steakhouses

I returned to the “old neighborhood” to see how things have changed. When it comes to restaurants, they have changed a lot. Back in the 1970s there were a few small eateries—a couple of “greasy spoon” lunch counters, a few pizzerias, a diner, a forlorn little Chinese restaurant called The August Moon, and an Italian “bar and grill” featuring weak drinks and pasta drowning in red sauce.

Today, by contrast, Morristown has dozens of restaurants that on weekends attract thousands of diners from the surrounding area. I did a census using Google Maps. In the downtown area alone there are no less than 64 restaurants, of which 10-15 are very expensive or fairly expensive. Some of the 64 are big places that can accommodate well over a hundred diners. I count 11 Asian, 8 Italian, 1 French, 5 steak houses / upscale American, 12 casual American, 6 Mexican, and 6 pubs. Also 4 coffee shops, 2 ice cream parlors, 7 delis, and 2 pizza joints.

Sure, a few of these places mainly serve the weekday lunch crowd–but not too many, because Morristown has only one large office building. The number of downtown workers has not increased much since the 1970s. These restaurants mainly depend on dinner business, particularly on weekends when droves of suburbanites—both families and bar hoppers—come to Morristown to spend money, hang out, and have a good time. Crowds spill out onto the sidewalk in front of hot bars. These are normal middle class Americans, not Barack and Bernie’s “millionaires and billionaires.”

This is new. When I was a kid nothing much happened in Morristown on a Saturday night. Despite Democratic mismanagement of the state’s economy, living standards in northern New Jersey are far better than in the 1960s, which Paul Krugman naively hails as a time of unparalleled affluence. (By the way, if Krugman wandered down to Nassau and Witherspoon Streets he would notice a similar restaurant boom in his erstwhile hometown, Princeton, NJ.)

Never Mind

Bernie Sanders, Hillary Clinton, and the New York Times are out of touch with reality, operating on a false premise. Despite the inequality hysteria, the middle class is alive and well, somehow surviving the systematic economic malfeasance known as Obamanomics. The last thing the middle class needs is the Sanders solution—transferring funds from the private economy to Washington bureaucrats who already have much higher incomes than average Americans. As Scott Walker noted in the debate, six of the richest counties in the nation are in the DC area.

Copyright Thomas Doerflinger 2015. All Rights Reserved.




About tomdoerflinger

Thomas Doerflinger, PhD is a prominent observer of American capitalism – past, present and future. http://www.wallstreetandkstreet.com/?page_id=8
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