Krugman and Inequality of Free Time

by James Sherk

Are things really getting better all the time? Many liberals (and some conservatives) believe the economy has stagnated over the past generation. They contend middle-class living standards have improved little since the early 1970s. Last week Matthew Yglesias made a good point

Houses are bigger, cars are better, we have more appliances. We’re also pretty clearly better entertained today than we were 40 years ago. More TV stations, more streaming content, much easier access to the back catalogue of older movies and audio recordings.

He asks an important question: If this is true, yet we’re stagnating, what do we have less of? He also goes on to note that Americans are also healthier and better-educated than in years past. So “what exactly is stagnating?”

On Monday Paul Krugman gave a simple answer — family time. He argues:

American families have more stuff, but they have managed to afford that stuff only by being two-income families, with ever less family time — unlike their European counterparts, who have gained in shorter hours and vacations what they lost in stay-at-home wives. It’s not hard to think of reasons for this divergence; many of them come down to sharply rising inequality and the rat race this inequality creates.

Fortunately, economic research does not bear out Krugman’s intuition. Mark Aguiar, now of Princeton University, and Erik Hurst, of the University of Chicago, have studied time use in depth. They find that Americans have more leisure time than they did a generation ago.

Krugman is correct that women spend more time in paid jobs than before. But women also spend much less time doing unpaid household work. Overall, men and women enjoy three to six hours a week more free time than in the 1960s — Americans have more leisure today than a generation ago.

Krugman may have jumped to the opposite conclusion because of a different trend: rising leisure inequality. Not all Americans have more free time. Starting in the mid-1980s Americans with a college education or better began spending more time at work. A lot of people in Paul Krugman’s social circles are in fact more strapped for time now than in the past.

But that is not true of the broader economy; Krugman has it backwards. As my colleagues Rea Hederman and David Azerrad pointed out last year, lower-income Americans have not sacrificed their family lives to keep up with the Joneses. It is only the upper-middle-class Joneses who are working longer hours to bring home their larger paychecks.

That may or may not make a wise tradeoff, but it hardly demonstrates economic stagnation. Yglesias has it right — most Americans are better off now than 40 years ago.