How Our System Screws the Ordinary People

The Cost of Thriving Index

A right wing economist has come up with a concept called the, “Cost of Thriving” which describes how well being of the average American has been declining.

The argument is that core expenses have increased more rapidly than the CPI, and additionally that “Hedonic Adjustments” which subtracts a deflator because the quality of the products consumed increase, makes the government supplied cost of living data inaccurate.

At its core, a TV shows you shows you shows, no matter how flat it is, a car moves you no matter how many options have become standard features:

Economists and financial experts have been telling us for years how great things are for U.S. workers and consumers. The stuff we buy is dirt cheap, and living standards are higher than ever. Wages are keeping pace with inflation. Inequality probably isn’t as bad as you’ve been led to believe. The stock market is booming!

So why, then, do so many of us feel like we can barely make ends meet?

A new report published by the Manhattan Institute, a conservative think tank, offers a clear explanation for the disconnect between the economy described by economists and the one experienced by regular people. It all boils down to the startling shift illustrated in the chart below. (Above and to the right here)

Lead author Oren Cass distills it as follows: “In 1985, the typical male worker could cover a family of four’s major expenditures (housing, health care, transportation, education) on 30 weeks of salary,” he wrote on Twitter last week. “By 2018 it took 53 weeks. Which is a problem, there being 52 weeks in a year.”

Cass calls this calculation the Cost-of-Thriving Index. It measures the median male annual salary against four major household expenditures:

  • Housing, defined as the annual rent for a three-bedroom house in the 40th percentile of the local housing market.
  • Health care, defined as the annual premium on a typical family health insurance policy.
  • Transportation, defined as the average cost of owning and operating a car driven 15,000 miles per year.
  • Education, defined as the average cost of tuition, fees, and room and board at a four-year public college.


It’s these realities, Cass writes, that are most salient for the middle-class families who tell pollsters they live paycheck to paycheck and worry that their kids’ standard of living will be lower than theirs. Traditional economists might look at the plummeting price of flat-screen TVs as a sign that standards of living are increasing. But how useful is a cheap TV when you can’t afford your insulin?

The fact that a very right wing economist understands that the current metrics of the cost of living are wrong, and that they are obscuring a fall in standard of living.

This is not the sort of thing that I would expect the Manhattan Institute.

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