Our Standard of Living

We put a good deal of weight behind averages.  Whether it is GDP, GDP per capita, inflation rate, cost of living, or even the cost of gas -- these numbers are national averages that only tell part of the story.  There was a good opinion piece in the NY Times (from Reuters Breakingviews) yesterday about how Americans have gotten used to continual increases in living standards and how the wind has now turned against that trend.

Of course the article is citing the average living standard.  With the polarization of incomes becoming ever more dramatic, the average living standard does not tell the whole story.  Some people are doing better, the wealthiest 10 percent of households got 35% of income in 1980 and got 48% in 2008.  And the other end of the spectrum are the unemployed, now numbering 20 million.  Here is a good article on this subject in Businessweek if you want to read more.

The rising tide is not raising all of the ships.  Those in the knowledge economy that can compete on the world market will do well.  Anyone that wants to earn 10 times what someone offshore earns -- had better figure out how to contribute 10 times as much.