Standards of Living

STANDARDS OF LIVING

STANDARDS OF LIVING include not only the ownership of consumer goods, but also aspects of living that cannot be purchased or are not under an individual's direct control—for instance, environmental quality and services provided by the government. Social scientists debate how exactly to measure standards of living. In a comparison among nations, often the yardstick is per capita national income, although some scholars prefer the related measure, per capita consumption of goods and services. However, using per capita income, or consumption of those goods and services that are measured by economists, to calculate standards of living can obscure both significant social problems and significant noneconomic values. For instance, despite the high per capita standard of living in the United States, infant mortality in some U.S. cities—including the nation's capitol—equals or surpasses that in some countries with extremely low per capita standards of living. Per capita figures in general do not reveal the extent of gaps between rich and poor. Furthermore, not only do income figures not measure such factors as access to safe drinking water or political freedoms, they also do not measure wealth that does not appear as "income." Thus, for instance, value-producing activities such as unpaid household labor may be rendered invisible, though access to the fruits of such labor improves one's living standard.

On the basis of per capita income, the American standard of living has been among the highest in the world since the early eighteenth century, though such an assessment is more complicated than it appears. Early standards of living of America's free citizens, for instance, were boosted by their access to enslaved labor (slaves' standard of living, though it varied somewhat both materially and nonmaterially, was always low). Numerous immigrants, too, have encountered much lower standards of living than they expected upon coming to the United States, though they often raised them significantly for themselves and their children. Nonetheless, Americans have on the whole enjoyed a relatively high standard of living. Long-term changes in the standard of living were probably modest before the 1840s, but have been pronounced since then. Between 1840 and 1970, per capita income, after allowance for price changes, increased sevenfold. The rate of change has varied from year to year, being affected by business cycles and Kuznets cycles (fluctuations of about twenty years' duration, postulated by Simon Kuznets), and has been slightly higher on the average in the twentieth century than in the nineteenth century. Japan and many Western European countries have experienced roughly comparable rates of improvement in per capita income in the twentieth century, although few of these countries have approached the U.S. level.

Standards of living have varied from region to region in the United States. Incomes of families in the Midwest and, especially, the South have tended to be lower than those of families in the Northeast and Far West. This reflects the concentration of farming, traditionally a low-income industry, in the former regions. (The measured differences may exaggerate standard of living differences, because some components of income on farms are inadequately reflected in national income.) Regional differences, after widening between the middle and end of the nineteenth century (because of the effects of the Civil War), narrowed drastically in the twentieth century. This development was the result of the industrialization of the Midwest and the South and the relative improvement in agricultural incomes.

The distribution of income by size has been roughly the same in the United States as in most Western European nations for which data are available. Just before the Civil War, the richest 5 percent of U.S. families probably had about eight times as much income per family as the remaining 95 percent. There does not seem to have been any major change until after the 1920s, when the degree of inequality diminished somewhat, the rich losing and the poor gaining, in relative terms. By the 1950s, the richest 5 percent had about five times the income per family of the remaining 95 percent. From then to the mid-1970s, the distribution was rather stable, those in the middle-income groups gaining slightly at the expense of both rich and poor. After the 1970s, the distribution began to widen, with working families facing an increasingly declining standard of living. Beginning with the adminstration of President Ronald Reagan (1980–1988), and due in substantial part to his policies, the income disparity between the richest and poorest Americans has widened significantly. Weakened labor laws and the exploitation of unprotected immigrants have fueled this disparity and pushed a greater share of the nation's wealth upward to the top five percent, while the bottom third or more have experienced a decline in its standard of living.

BIBLIOGRAPHY

Brown, Clair. American Standards of Living, 1918–1988. Oxford, U.K.: Blackwell, 1994.

Davis, Lance E., et al. American Economic Growth: An Economist's History of the United States. New York: Harper and Row, 1972.

Gallman, Robert E., and John J. Wallis, eds. American Economic Growth and Standards of Living before the Civil War. Chicago: University of Chicago Press, 1992.

Robert E. Gallman / d. b.

See also Consumerism ; Work .