Scott Winship of the Progressive Policy Institute has written a careful and very worthwhile post on how middle class families have fared over the last few decades.

First, consider what many progressives consider “the good old days”—the height of the pre-1970s economic boom. In 1973, the median inflation-adjusted income was higher than it had ever been and higher than it would be again until 1978—$45,533 (in 2008 dollars). Call this the gold standard before, in the conventional progressive telling, things started going south. How much did things go south? Well, in 2008 the median was $50,303. That’s right—about $5,000higher (after adjusting for changes in the cost of living). This improvement understates things because households also became smaller over time, and because the inflation-adjustment here probably overstates inflation. For instance, if one uses the Bureau of Economic Analysis’s Personal Consumption Expenditures deflator, the increase from 1973 to 2008 was about $7,700, or 18 percent. Not only does that still not adjust for declining household size, it also doesn’t include changes in taxes, non-cash benefits, the value of health insurance, and capital gains. Incorporating these adjustments shows an increase in living standards that is more like 40 percent. Rather than household income, others on the left point to stagnation in men’s wages (women’s wages have increased dramatically by any measure). For example, the Economic Policy Institute estimatesthat the median male worker’s hourly wage was $16.88 in 1973 and $16.85 in 2007. However, EPI’s figures show that when fringe benefits are taken into account, the median male worker’s hourly compensation increased by somewhere between 5 and 10 percent over this period. And these estimates don’t use the PCE deflator. Nor do they account for changes in taxation and public benefits—the very means we use to mitigate low income.

Winship also adds the following:

It is certainly true that wage growth has been slower since 1973 than in the two previous decades. But that isn’t a realistic bar to use. The U.S. was the only major economy left standing after World War II, and there was little foreign competition putting downward pressure on manufacturing wages and jobs. The period between WWII and 1973 was anomalous—it could not have been expected to have lasted.

I’m hoping that Lane Kenworthy, a left-of-center social scientist at the University of Arizona, will write a response.

My own view is that while Winship makes a strong case that middle class compensation has increased, I still think that the policy mix hasn’t been as conducive to a rising standard of living as it ought to be. “Middle-class squeeze” is a real phenomenon rooted in the rise of two-earner households, as Elizabeth Warren and Amelia Warren Tyagi famously argued (not always but often persuasively) in The Two-Income Trap, and the concomitant intensification of positional competition. Ultimately, I don’t think that the intellectual debate over wage stagnation has as much impact as policy intellectuals think it does on the perception of “middle-class squeeze.” If I’m earning a middle class wage and you tell me that I’m doing far better than I would have in 1973, it’s not obvious that this will make much of a difference to me in light of my anxieties regarding my economic future and that of my children. But I’m not sure I’m right about this.