Strain, director of economic studies s a i, widely published scholar in a comic finance and many other areas in his new book is an exceptionally clear and broad overview of the state of American Economic life, the actual conditions we face, the trends over recent decades, the dark stories we hear in our politics about the conditions americans have experienced and what our prospects are. Things are better than the mood of our politics and the critics of the market economy would sometimes suggest, we do face risks and maybe the mood and those critics are among the most important of those risks. It is a controversial thesis. As a conservative im resistant to being cheered up and told everything is fine but it is a powerfully argued thesis it as you will see a very thoroughly supported thesis. Joining us to respond to mikes argument is richard reeves, one of the smartest policy thinkers in washington, the whitehead chair and senior fellow of economic studies at the brookings institution, director of the brookings initiative on the future of the middle class and the author of any important articles and a number of important books including most recently dream orders, how the american middle class is leaving everyone in the dust, why that is a problem and what to do about it. Our format is reasonable. Mike will offer an overview of the argument of the book, richard will offer a response. I will moderate a brief conversation between the two of them and we will draw you into the conversation with some q and a. Lets welcome michael strain. Thank you for coming and thank you for the generous introduction. The title of the book contains the argument i am making that the American Dream is not dead at the subtitle makes the secondary argument that it is an excellent cover in the reason for any of you to read anything on the inside of it but we will talk about that anyway. What do we mean by the American Dream . There are many definitions that mean Different Things to different people, the freedom to choose how to live your own life, have a good life, a good family, Strong Community and comfortable retirement, Home Ownership is a big part of the American Dream in popular imagination. I would argue a key part of the dream is economic success, no matter what specific flavor of the American Dream your most interested in or your particular definition everybodys definition involves a large economic component. Loosely defined the idea that your kids will grow up to be better off than you, the idea you can do better yourself through hard work and you can see your economic outcomes advanced. Then there are the rags to riches component, also a strong economic component the poor kids can grow up to be a billionaire or president , that sort of thing. That is what i focus on, the economic component because it is so central to everybodys shared understanding of this important motivating national concept. The National Conversation assumes the American Dream is dead. Donald trump with his usual nuance has said the American Dream is dead. This was his theme during the primaries of the 2016 cycle. His theme after he was elected, his inaugural address discussing american carnage and how terrible everything is, he has pivoted in the last few months which is good but it is a defining characteristic of his presidency. Marco rubio told about his family, how his family came to america without much education across generations. He told the story when he was running for president in 2016 as an example of the American Dream being alive. In the past few years he tells the same story with the same set of facts but uses it to argue that that path is no longer possible. The American Dream has disappeared. A little foreign, the rich get richer, everyone else falls behind, the game is rigged, bernie sanders, for many the American Dream has become a nightmare for josh holly, 70 of americans havent seen a wage increase in 30 years, Nobel Prize Winning economy from the clinton administration, the American Economy a billionaire investor, the American Dream is lost, Tucker Carlson referring to the dark age we are living through, the American Dream is dying. My point is this is bipartisan, something you hear from senior elected officials in both parties, Business Leaders and Public Opinion leaders, there is a consensus. My point is the consensus is misplaced. My goal is not to be contrarian. Americans have High Expectations for their american outcome, their wage growth, High Expectations for the success their children will have. That is a good thing. America does a series economic challenges and america faces serious social challenging, not trying to diminish or sugarcoat or ignore any of the real problems we face. Im trying to be accurate and trying to be accurate about the broad picture of the american experience. How American Life is experienced by most people in those circumstances. We are focusing so much on pockets of real struggle for we are confusing those pockets of struggle for the common experience facing people and i think the American People keep hearing that their experience is the same as the experience in places where people are really struggling. I dont want to deny their suffering rather struggle but i do want to say those are atypical situations in the common experiences, much more positive than the narrative suggests. Todays economy is delivering for American Workers. For typical workers in the past three decades. The quality of life has improved for most households over the past several decades. Middleincome jobs have been hollowed out, economic dynamism creates and destroys. We hear about the Creative Destruction or the creativity and you see a new middle starting to form where the old middle has been eroded. America is characterized by economic ability. Another a few assertions, the narrative about the American Dream matters and we need to do more to advance and secure the dream for the next generation. Very briefly i want to stand here for 20 minutes and give richard the opportunity to respond and have some discussion. I will do the best i can. I thought it would be better to have real disagreement then have me stand here and lecture for an hour. The economys delivery for workers, Weekly Earnings for workers in the bottom 10 are faster than growth over the last several years. The Unemployment Rate for workers without a High School Diploma is below the average of the Unemployment Rate for college graduates, wages for nonsupervisory workers growing faster than overall average wages since last february. The argument that the gains from the hot economy are occurring only to people at the top, the game is rigged against workers who are not at the very top is not supported by the data. The recovery is reaching wide loss of the labor market including the least experienced and most vulnerable workers. My second argument wages are not stagnated for decades. This is a graph of wages. This is a graph of the wages of nonsupervisory workers, production workers in manufacturing, construction workers in construction and nonsupervisory workers in services. These include this group of workers, 80 of all workers, 4 in 5 workers, you can think of them as workers, not managers. The average wage for workers in that Group Adjusted for inflation and i want to make simple observations. What you see is throughout the 1960s into the 1970s there was rapid and sustained wage growth for this group of workers. What you see is from the mid1970s to the 1990s this group of workers did not do so well. You see stagnant and declining wages. Since the 1990s ic wages going up. I dont see wages being stagnant. Are there periods wages arent growing during that period . Yes, but on the whole if your choice is to characterize this as stagnant or increasing i think it is quite clear that over the last three decades the most accurate way to characterize this is wages are increasing. It is common to go back to 1973. One of the things i want to do in this book is argue comparisons from 1973 and 2020 is too long a window to make comparison but it is common to go 1973, wages are growing 23 since 1973. I wouldnt call that stagnant or spectacular but i certainly wouldnt call it stagnant. I would argue we should not compare 1973. This debate about wages among the policy Community Gets hung up on what price index to use to adjust for inflation. I want to say what we should be doing is the starting year. Less time debating, the price index, more time debating the actual period we are making the comparison over. 19731979, you see a 30 year period where wages have been going up. I argue it starts in 1990. When politicians and opinion leaders argue wade said been stagnant for decades people here that as referring to their wages, the wages of people currently working. 1973 was 47 years ago. For the purpose of the policy debate a more recent year, a year that is more relevant for people that are working seems pretty straightforward. 1990 was a Business Cycle peak, the summer of 1990 is close to a structural break in the series, seems to occur around the mid1990s. What i mean by that is if you start in 1973, what you are doing is comparing, conflating appear go of stagnation and decline with the period of growth and that to me seems statistically inadvisable. Instead point growth over appear go wages are growing and calculate stagnation when wages are stagnating and dont conflate the two if youre getting a handle on what low wages are doing. 1990 was 30 years ago. You hear a lot of talk about several decades, that seems like a reasonable time to go back. It is harder to adjust for inflation the further back in time you go. One of the ways to sidestep these debates, which frightened excuses not to try to go back 50 years. If you go back ten years the price index agrees more strongly than if you go back 20, if you go back 20 they are more strong than if you go back 30. One way not to get into a price index debate is to focus on shorter time period. My main point is even if you want to go back to the 70s it is not a complete picture to argue wages have been stagnant. Instead i think you characterize the two different periods. If you want to go back to the 70s fine. What you should be saying is wages stagnated throughout the 70s and 80s into the 90s and since the early to mid 90s wages have been growing. That seems to me to be a much more complete characterization of the behavior. 32 growth, 42 growth over the last 30 years. Is that properly described as stagnant, slow growth in the top one , significant increase of purchasing power and we shouldnt be content with it. Not stagnant but not fast enough and lets acknowledge it is different from what is happening at the top but it is more wrong than right to describe this as stagnant and instead of one third increasing purchasing power significant. Lets make the point about the price indices. This is a graph that adjusts wages and you see the closer you get to the present the more the price indices agree. Another argument not to got back so far. What do percentiles look like . Medians have grown by 24 . Wages of grown by a third, the 20 have grown by a third and wages for the 30 have grown roughly around there as well. Median wages of gone up by a quarter and workingclass and lowincome wages of ghana by a third. Not stagnation. What about income . Cbo computer 3 measures of income. If you look at the post transfer income that has gone up by 44 for median household, marketing, has gone up by 21 . If you look the bottom 20 , it has gone up by two thirds and Market Income by 44 , not stagnant. And if you look at cbos income series and gini coefficient which is a Standard Measure of inequality you see a significant increase in inequality in the 1980s in 1990s, the concern about inequality exploded, a 70 decline in this measure of inequality transferring income, looking at Market Income, you see an increase of 2 . This is another example how the narrative about American Workers is not kept up with the data. Wages were stagnant in the 1970 numplaps1980s. Inequality was growing rapidly in the 80s and 90s. For the past decade it has been growing less rapidly. This is a more straightforward measure of inequality, the ratio of Weekly Earnings from the 90 of the 10 and other measures as well as you see these have not shown any Significant Growth in inequality over that period. Do people care about inequality . This chart here shows concern about inequality against actual inequality. Public perception whether the rich are getting richer versus the actual behavior of the gini coefficient there is not much relationship. The correlation coefficient is negative if you look at this graph, this is a graph of concern about inequality and wage growth and you see that wages are growing throughout the 1990s and concern about inequality is going down. Combine all those together. Measured inequality is going up, concern about inequality is going down, wages are going up. This estimate people care more about how they are doing than about the actual behavior of the rich poor gap. My third didnt big point life was better three decades ago. I like to show this graph of airconditioning. This is important to me personally and you see Significant Growth, airconditioning over this period, perhaps more seriously there have been significant changes in medical care, advances in transportation safety. The idea that life was better 30 or 40 years ago even for the white workingclass borders on the absurd. If you take an argument seriously it is impossible to imagine many people if any would actually go back in time 40 years ago no matter what their current socioeconomic situation is now. Middleclass jobs. This is a chart that shows the hollowing out of distribution, you see employment losses in the middle. Production workers, clerical workers, the jobs with a lot of political failures during the trump era and you see an increase in lowwage jobs along with increases in higher skilled high wage jobs and economic dislocation and suffering in the lives of many people, coalition between expectations and reality, a serious reality of American Economic and social life. To put some numbers on it if you look at low, middle and high wage occupation. And the middle occupations, 23 of total employment, that is a significant decline. What happens to these workers . A lot end up moving into a higher income bracket. You see in this chart, it has gone down considerably. They replace with households earning more than 100 k, not replaced by households earning less than 35 k. The story of disruption has some positives. I will skip over this, if you focus on production jobs, we see that declining with a share of total employment. And with middle wage jobs, these are education and training, personal care and services. I wasnt lying, with Food Service Managers at the bottom. The moral of the story, it also creates. We dont hear about the creativity. With middle wage occupation this. The dynamic capitalist economy. It replaces some workers and tasks. And to assist workers in doing so. The moaning economic change, hurting the very workers you are trying to help. Upward mobility. Rags to riches. I wont explain this in great detail but i did calculations to see what share of people born in the bottom make it to the top and it is 7 person. What share of people who were born in the top make it to the bottom . I cant read that. Looks like 8 . It still happens in america. It is not common. It is not the norm, not something to be expected but you can go from the bottom to the top in america. If you want to temper that and look at rags to comfort you see considerably more upward mobility, people born in the bottom 20 and in the next quintile end up rising into the middle class at a pretty good clip. The measure of upward mobility is not the sort of relative ranking. I want to ask, are you doing better than your parents did . What i have done in these calculations is look at people in their 40s today and their Household Income and say if you are 40 years old today are you earning more than your parents earned when your parents were the same age. 3 quarters of people in their 40s have a higher Household Income than their parents had when their parents were in their 40s. If you were born in the bottom 20 , 86 have a higher Household Income than their parents had in their 40s. This strikes me as considerable upward mobility. Median Family Income was up 54 across those two generations and the bottom 20 is up by 153 . These are not trivial gains. What about earnings . That includes government transfer. I look at men and i say of men in their 40s how many are in more money in the labor market than their father earned when their father was in his 40s, it was 60 . If you were raised in the bottom it is 80 . The reason it is 60 is people in their 40s who were raised at the top, a lot are learning earning less than their dads did so the central tendency is pushed down. Still the norm for men to out earn their fathers and if you were