Has Americans' earning power remained stagnant, or even declined, over the last thirty years?
That's what some would have you believe. For example, last July, in a "snapshot" of the state's economy, the Arizona Republic reported that "in constant, 1982 dollars, [average wages in the private sector] amounted to $8.21 per hour, compared with $8.25 per hour in May 2003," lamenting that real wage growth had not kept pace with the impressive job creation in Arizona.
In Myths of Rich & Poor: Why We're Better Off Than We Think, Dallas Federal Reserve VP, Michael Cox, and co-author Richard Alm marshal a wealth of data to take aim at this common misperception.
As Cox and Alm show, a straight comparison of real wages doesn't adequately capture the productivity gains that have made us, even the least well-off among us, better off than we were a generation or two ago.
Consider the following example. In 1950, it took the average worker an hour and 44 minutes to earn enough money to pay for a three-minute call from New York to Los Angeles. By the late 1990s, the same three-minute call could be purchased with just two minutes of work.
Cox argues that America's and, by extension, Arizona's, impressive economic performance is the result of a relatively benign regulatory regime that permits the free flow of capital, goods, and people. Continued prosperity in Arizona requires a commitment to policies that have brought success in the past.
High taxes reduce the incentives people have to invest in businesses opportunities. Heavy regulation can constrain entrepreneurs' ability to grow businesses and create jobs. And attempts at curbing "urban sprawl" often have the unintended consequence of making housing prohibitively expensive, as evidenced by California.
Cox is particularly excited about the potential for a new wave of growth, one that he dubs the "Imagination Age." On Thursday, February 3, he'll keynote the Goldwater Institute's fiscal policy conference in Phoenix to speak about his vision of a new economy in which entrepreneurs continue to create innovations that improve our lives in an environment largely free of government intrusion.