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Middle-class Americans have more income than they did 50 years ago, but the squeeze is real.
The New York Times recently profiled a family of three earning $500,000 a year and living in a one-bedroom apartment on Manhattan’s Upper West Side. The husband is a software engineer, the wife a data scientist. Their largest monthly expense—$4,200—is daycare for their 1-year-old. Rent is $3,900. They save $10,000 a month. “I think we’re middle class for this area,” the husband said. “We’re doing OK.”
The internet reacted predictably: Half a million dollars is middle class? These people are out of touch. The Times is out of touch for running it.
The reaction misses the economics. A recent CBS News/YouGov poll found that 83% of Americans say it’s harder to buy a home than it was for previous generations, and 77% say it’s harder to raise a family. They aren’t wrong. But the explanation is more complicated than either side’s populists admit.
Continue reading the entire piece here at the Wall Street Journal (paywall)
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Roland G. Fryer, Jr., a John A. Paulson Fellow at the Manhattan Institute, is Professor of Economics at Harvard University, an entrepreneur, and co-founder of Equal Opportunity Ventures.