“The point isn’t to validate some specific policy agenda, but to introduce a new set of facts that should help inform the starting point for our debates.”
That is how Oren Cass, director of American Compass, describes his latest work. Entitled The Cost-of-Thriving Index: Reevaluating the Prosperity of the American Family, Cass argues that economists are not using the correct facts to determine how well the average family is doing financially. He explains why the traditional measures of inflation versus wage growth are inaccurate, and don’t match the experiences of working people.
Instead, Cass proposes a new way to understand the economic challenges Americans face. Instead of a cost-of-living index, Cass proposes a cost-of-thriving index. This new index is supposed to better describe the costs a family of four incurs while trying to live a comfortable, modern life, by comparing a “basket” of goods most American families purchase to the income of a fully employed man, aged 25 or older.
According to Cass’s analysis, the cost of the standard “basket” of goods that an American family of four must pay- which includes housing, health insurance, transportation and college- comes to more than $54,000 annually. Meanwhile, the annual income of the man Cass has chosen to measure against is $53,352.
Policymakers, think-tank directors and economists need to spend more time with qualitative data. That is, they need to write and think more about how people feel about their current economic situation. Yet the feelings of individuals are often dismissed as anecdotal evidence. Policy and decision-making should be based on facts, or so the thinking typically goes. But if the facts produce conflicting reports, why is it more reliable than what people are telling us they are experiencing?
Perhaps it’s not time for a new index or reinterpretation of the same facts. Perhaps it’s time to pay attention to what American workers are saying.
• More than three-quarters of fully employed Americans say they live paycheck to paycheck.
• Almost the same amount feel that they’re not saving enough money for retirement, or have no idea how much they have saved.
• 46% of Americans feel that they are not paid enough for the work they do.
When asked, Americans are communicating their experiences quite clearly.
The coronavirus-induced shutdown provides yet another anecdotal point.
American (and perhaps global) society is so overleveraged that the need for more than a trillion dollars of stimulus became apparent after only two weeks. Despite all of the economic indicators and facts to the contrary, no one can afford to be out of work for even a few weeks.
While it’s commendable that Cass has designed a new measure to describe the economic challenges that Americans are facing, we already have all the information we need, if we would simply listen. The anecdotes, also known as the people, have been sounding the alarm bells for a long time. They knew the problem before Mr. Cass did, and they may know the answers too.
Jamil Ragland writes and lives in East Hartford. You can read more of his writing at www.nutmeggerdaily.com.
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