Michael Strain

Households in the bottom 20% have arguably done even better in terms of their income growth than typical households. Here, we have to be careful and precisely define what we mean by income. If you think of income holistically as the flow of financial resources households receive for use in consumption or savings...

Households in the bottom 20% have arguably done even better in terms of their income growth than typical households. Here, we have to be careful and precisely define what we mean by income. If you think of income holistically as the flow of financial resources households receive for use in consumption or savings...

Then you want to include transfer programs, programs like Social Security or programs like food stamps or programs like housing assistance, government transfer programs. And there, if you include government transfer programs, income growth since the early 1990s has actually been faster at the bottom than it has in the middle.

Then you want to include transfer programs, programs like Social Security or programs like food stamps or programs like housing assistance, government transfer programs. And there, if you include government transfer programs, income growth since the early 1990s has actually been faster at the bottom than it has in the middle.

It's mostly a story of upward economic mobility. And so if you look at the late 1960s or early 1970s and compare that to today, what you see is that, yes, the share of households earning middle incomes, defined as $35,000 to $100,000, has fallen by over 10 percentage points. But you haven't seen an increase in the share of households earning less than $35,000.

It's mostly a story of upward economic mobility. And so if you look at the late 1960s or early 1970s and compare that to today, what you see is that, yes, the share of households earning middle incomes, defined as $35,000 to $100,000, has fallen by over 10 percentage points. But you haven't seen an increase in the share of households earning less than $35,000.

That share actually has fallen by around 10 percentage points as well. Instead, you've seen a big increase in the share of households earning more than six figures. That share has tripled over this time period. So yes, the hollowing out of the middle has been a disruptive process, but it's mostly been a story of upward economic mobility.

That share actually has fallen by around 10 percentage points as well. Instead, you've seen a big increase in the share of households earning more than six figures. That share has tripled over this time period. So yes, the hollowing out of the middle has been a disruptive process, but it's mostly been a story of upward economic mobility.

Yes, I agree.

Yes, I agree.

I worry about that precisely because the game is not rigged and precisely because that central moral promise of capitalism that yes, in a capitalist society, people have unequal outcomes, but those outcomes are largely driven by work effort, by choices, by risk tolerance, and by skills and talents.

I worry about that precisely because the game is not rigged and precisely because that central moral promise of capitalism that yes, in a capitalist society, people have unequal outcomes, but those outcomes are largely driven by work effort, by choices, by risk tolerance, and by skills and talents.

The fact that that central moral promise of capitalism holds actually means that if political leaders demotivate everybody in society or demotivate a large share of people and dim the aspirations of Americans, that will have an impact on economic outcomes.

The fact that that central moral promise of capitalism holds actually means that if political leaders demotivate everybody in society or demotivate a large share of people and dim the aspirations of Americans, that will have an impact on economic outcomes.

If you tell everybody that the game is rigged, that hard work doesn't pay off, and that there's nothing they can do to better their economic outcomes, then they may aspire to less. They may work less hard. They may dim their aspirations. And then you end up with the situation that you're concerned about, where people's wages are not growing as rapidly as we would like.

If you tell everybody that the game is rigged, that hard work doesn't pay off, and that there's nothing they can do to better their economic outcomes, then they may aspire to less. They may work less hard. They may dim their aspirations. And then you end up with the situation that you're concerned about, where people's wages are not growing as rapidly as we would like.

Their incomes are not growing as rapidly as we would like. There's less innovation in the economy than we would like. And so in kind of a perverse way, that populist rhetoric, that negative rhetoric can create the problems that it incorrectly argues exist.

Their incomes are not growing as rapidly as we would like. There's less innovation in the economy than we would like. And so in kind of a perverse way, that populist rhetoric, that negative rhetoric can create the problems that it incorrectly argues exist.

Well, we can strengthen the American dream by calling people to their best selves, by challenging people and giving people the confidence that if they work hard and if they take risks and if they invest in themselves, that that will pay off. I think we can do some concrete things beyond those sorts of important cultural messages.

Well, we can strengthen the American dream by calling people to their best selves, by challenging people and giving people the confidence that if they work hard and if they take risks and if they invest in themselves, that that will pay off. I think we can do some concrete things beyond those sorts of important cultural messages.