Third Way Lost

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Promising to “explode the myths of populism,” the Third Way issued a new report today with rosy statistics about the prosperity of the middle class. The problem is that the stats are loaded.

The lead statistic is that median income in the US is “around $70,000, not the $45,000 that most progressive economists cite.” The numbers cited by “progressive economists” are plain old Census numbers, not some flukey, small-sample study. What Third Way doesn’t say in the press release is that they arrived at the new $70,000 number by cutting out all young earners and all old earners. Since those age groups tend to have lower incomes, income for the remaining subset increases. This is just a third-grade math trick: cut out those who make less money, and the median rises. Third Way might have added that if you cut out those who earn more money, the “median” income is lower. Either way, cutting out wide swaths of the population doesn’t change the fact that the family in the middle earns $45,000.

Third Way engages in a similar sleight of hand by noting that married couples are earning more each year. I wrote a whole book about that, but I didn’t see it as good economic news that the only way a typical family in America has been able to increase its income has been to send more people into the workforce. Yes, two paychecks tend to be larger than one. But the harsh reality remains: A fully-employed male today earns less (in inflation adjusted dollars) than his father earned back in 1972. That’s not progress. And for everyone trying to live on one income, or paying for childcare and more transportation costs to try to pull in a second income, life looks a lot tougher than it was a generation ago.

Some of the Third Way proposals are good, but I don’t understand this enterprise. The Third Way paints in hues of pinks and reds by leaving out the old, leaving out the young, and leaving out the singles. Then it criticizes others for “mischaracterizing” what is really happening to American families.

Is the Third Way Lost?

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