There are plenty of things wrong with the U.S. economy, and practically everybody knows what they are. Unemployment is way too high. Pay is stagnant, and raises scarce. Government debt is out of control. For many, it feels like it's harder to get ahead. And America as a whole seems to offer fewer opportunities.
[In pictures: 12 ways our quality of life is improving.]
There's plenty of data that suggests that's all true. Yet America remains one of the most comfortable places in the world to live, and prosperity is still well within many people's reach. It just depends on how you define it.
It's normal after a recession for consumers to stay jittery and for a sense of gloom to persist. People tend to measure their well-being against what they had a few years ago, and it takes a while to regain lost ground. The 2007-2009 recession was rougher than most, which means a full recovery could take years. And persistent problems like growing income inequality, stagnant incomes, and millions of workers with outdated skills are genuine problems likely to keep economic output lower than it might be under better conditions.
But progress in America has always proceeded in fits and starts, with some periods of rapid gains and other moments of adjustment, particularly when new technology like the Internet—or the railroads, or the automobile—upends old industries and creates new ones. "Unfortunately, we are in one of those slower-growth episodes now," says Terry Fitzgerald, an economist at the Federal Reserve Bank of Minneapolis who has conducted detailed studies of middle-class living standards. "Times are tough for millions of people. But the last 150 years have been filled with books decrying the end of good times, only to be proven wrong."
Nobody disputes the fact that high unemployment, soaring healthcare costs, and a turbulent economy have caused hardship for too many Americans. And the middle class appears to be shrinking, with fewer haves and more have-nots. Despite all that, however, longer-term gains in quality of life remain largely intact—including many improvements we tend to take for granted. "People care about more than GDP," says Michael Cox, a professor at Southern Methodist University and former chief economist at the Federal Reserve Bank of Dallas. "Living standards also involve leisure time and recreation, variety in choice of diet, working conditions, and safety and security. And most of those things are still getting better."
When measured against the heady days of 2006 and early 2007—when many Americans' wealth was artificially inflated thanks to the twin housing and stock-market bubbles—conditions today do seem disconcerting. But measuring today's living standards against longer-term trends reveals many ways we're better off than we were not long ago. Using data supplied by Cox and other sources, I've highlighted some of the ways that living standards continue to improve. Here are a dozen ways we're better off than we might realize:
Longevity. Life expectancy for a baby born today is 78.3 years, a number that has consistently gone up, regardless of economic downturns. Rising life expectancy reflects all sorts of improvements in medicine, public health, consumer behavior, and workplace safety. Healthcare may be more expensive than ever—a serious hardship for many families—but it is also adding years to our lives and improving the quality of that time. Studies show that seniors in particular enjoy much better health than they once did.
Household wealth. The typical household has taken a big hit over the last few years, thanks largely to the loss of home equity. But peak levels of household wealth, which occurred in 2007, were inflated anyway, and longer-term trends remain positive. Median household net worth today is about $104,000, 3.3 times what it was in 1970, after adjusting for inflation. And it's about $17,000 higher than in the early 2000s, before the housing boom and bust caused huge distortions in home values. That's real, measurable wealth that helps people get ahead.
Homeownership. The cornerstone of the American Dream is the ability to own your own home, and once the chaos caused by the housing bust settles, there's a good chance homes will be just as attainable as they once were—maybe more. The homeownership rate today is about 67.8 percent. That's down from the peak of a few years ago—due largely to foreclosures by people who could no longer afford their mortgage payments—but it's still higher than in 1970, when it was 64.2 percent. Some forecasters think the homeownership rate will ultimately fall back to historical norms, but it might also stabilize at a higher long-term rate. One reason is that homes are more affordable today than they used to be. In 1970, it took 17 percent of a typical family's income to make the monthly payment on a median-priced home, according to the National Association of Realtors. Today it takes about 14 percent. And banks say tough lending standards should start to ease this year or next.
Personal space. In 1970, the average size of a new home was about 1,500 square feet. Today, it's about 2,521 square feet, which is 68 percent larger. There are fewer people living in the average home, too, so each person has more space. In 1970, each resident of a home occupied 478 square feet, on average. Today, each person occupies 996 square feet. Many kids get their own bedrooms, some kitchens rival those in restaurants, and 90 percent of new homes have a garage.
Comfort. Yesterday's luxuries are today's necessities. In 1970, just 34 percent of new homes were built with central heat and air conditioning, according to Cox's data. Today, it's 90 percent. Just 27 percent of homes had a dishwasher in 1970. Today: 58 percent. It's a similar story for washers and dryers, frost-free refrigerators, and many other appliances that make life just a little bit easier.
Connectivity. In 1970, 87 percent of U.S. homes had a phone. Today, at least 95 percent of homes do. Mobile phones and the Internet didn't exist back then, of course. Today, there are nearly as many cell phones as people in America, and 83 percent of households have Internet access, according to the Telecommunications Industry Association. It's fair to ask whether 24/7 communication has enhanced our lives or merely enslaved us to battery-powered gizmos, yet connectivity is clearly something Americans value—since they spend a lot of money on it. Shopping from home via the Internet is one obvious way technology has made life more convenient and allowed shoppers to save time and money.
Mobility. In 1970, 80 percent of households owned a car. Today, 92 percent of households do. And not just one. In 1996, there were 1.92 vehicles per household, according to research firm Polk Automotive. Today, there are 2.06 vehicles per household. Some analysts think more families need two cars because they need two incomes to get by, yet Americans also continue to buy bigger cars than they need for everyday commuting, which suggests freewheeling road trips and family vacations still determine what sits in the driveway.
Safety. Fatal accidents are a rarity today, which wasn't always the case. The rate of motor-vehicle fatalities is one-fourth what it was in 1970, a huge, if unheralded, success story. The odds of dying in an airplane crash have declined by an even larger margin. And the proportion of workers killed or disabled on the job is 84 percent lower than in 1970.
Education. The percentage of adults over age 25 with a college degree has gone from 10.7 percent in 1970 to 29.5 percent today. And the percentage with a high school diploma or equivalent has risen from 52.3 percent to 86.7 percent over the same time period. The quality of public education is a growing concern, yet rising college enrollments—despite education costs that are growing faster than inflation—reflects the high value Americans place on education. Good thing. Most Americans could still use more.
Leisure. The average workweek today is about 34.3 hours, down from 37.1 hours in 1970. Some Americans are working fewer hours, and earning less pay, simply because they can't find more work. But over time, the workweek has shrunk largely because the U.S. economy has gotten more productive, with workers able to earn a living in fewer hours, leaving more time for other activities. American workers, on average, also enjoy 22.5 days of paid vacation and holiday time each year—about the same as it was 10 years ago, but seven days more than in 1970.
Entertainment. Nearly every home in American has a color TV today, compared with just 34 percent in 1970. And 79 percent have cable, compared with 6.3 percent in 1970. Watching TV doesn't necessarily make us better off, but record hours spent in front of the tube suggest we enjoy it, at least.
Recreation. Besides watching a lot of TV, Americans do many other things that suggest quality of life remains high for many. The average person spends about $2,300 per year on recreation, more than four times as much, after adjusting for inflation, as in 1970. There are about 127,000 adult softball teams today, compared with 29,000 in 1970. The number of tennis players has gone up faster than the overall population. And attendance at professional sporting events, which can easily cost $100 per person or more, has skyrocketed. Apparently there's something to cheer about in America after all.
Corrected on 1/20/2011: A previous version of this story incorrectly named the Telecommunications Industry Association.