The actual conditions we face over recent decades with the dark stories that we hear with those conditions of diamerican experience and that the critics of ther market economy those are among the most important of those critics the controversial pieces i am resistant to be told everything is fine. But it is an argument that you will see here tonight that is a fairly supportive thesis in the book. When the smartest social analyst and policy thinkers in washington the chair and senior fellow of economic studies at the Brookings Institution with the future of the middle class and the author of a number of books including dream orders. And the format is very simple. And the moderator brief conversation and with the q a. So lets welcome michael strain. [applause] thank you for that very generous introduction. It contains the argument that you are making the American Dream is not dead the subtitle it is excellent cover theres nothing to read on the inside but we will talk about that. So what do we mean by the American Dream . There are many definitions with the freedom to choose how to live yourou life and a good family and a comfortable retirement that a big part of the American Dream and the popular imagination. So based on economic success whatever part you are most interested in the particular definition with a large economic component the idea that your kids will grow to be better off than you and that you can do better yourself and to see the economic outcome. And that they can grow up to be a billionaire grow up to be president. And with the American Dream is dead and this is during the primaries of the 2016 cycl cycle, after he was elected with the american carnage and how terrible everything is and this is a characteristic of his presidency. Lso i tell the story of his family about how they came to america and didnt have a lot of education and across generations and told the story when he was running for president in 2016 as an example of the American Dream being alive. In the past few years he tells me the same story with the same set ofme facts except uses the view that that path is no longer possible the American Dream has disappeared. The rich get richer everybody else falls behind it is rigged and for Bernie Sanders the dream is a my nightmare. 70 percent of americans have not seen a real wage increase in 50 years. And then the billionaire investor say the American Dream isre i lost and the dark e we are living through says the American Dream is dying. It is bipartisan and something you can hear from. And from business leaders. And from business leaders. Is that it is misplaced. And to have High Expectations for their economic and outcomes and the wage growth but the good thing to face the serious economic challenges and also to face very serious social challenges. Im not trying to diminish or sugarcoat board to ignore any of the real problems that we face instead im trying to be accurate about theo broad picture of the american experience. How American Life is experienced by typical people and most people in those circumstances. I think we are focus so much on the pockets of real struggle that we are confusing those pockets of struggle for the common experienceac facing people. I think the American People keep hearing that their experience is the same of those who are suffering and struggling. I dont want to deny their suffering or their struggle but those are atypical situations and the common experience is much more positive than the narrative suggests. But the economy delivers for American Workers income has not been stagnant for typical workers over the past three decades but the quality of life has improved significantly for households over the past severalit decades the middle class has been bhollowed out but it creates and destroys we hear about the destruction of Creative Destruction but not about the creativity. And if you look you see a new middle starting to form where the old middle was eroded. America is broadly characterized by upward economic mobility. With a couple other assertions that the narrative matters and we need to do more to advance the dream for the next generation. So very briefly, went to give richer the opportunity to respond and then have discussio discussion, i cant cover all that but i will do the best i can. I thought it would be better to have real disagreement than me come appear in lecture for an hour. The economy is delivering for workers in the bottom 10 percent have grown over the median over the last several years the Unemployment Rate without a High School Diploma is further below the longterm average than College Graduates currently. Not supervisory workers are growing faster than overall average wages. The argument from the gains that it is rigged against workers who are not at the very top and not supported by the data. Right now currentlyeri the recovery is reaching wide rtswath including the least skilled and least experienced and most vulnerable workers. The next argument of stagnant wages this is a graph of wages this is a graph of the wages of non supervisory workers in manufacturing reason and construction and nonsupervisory workers and services that include a group of workers that is 80 percent of all workers four out of five think of them as workers and not managers i plot the average wage of workers in that Group Adjusted for inflation and i want to make some simplefl observations. What you see throughout the sixties and seventies there was rapid and sustained wage growth. Then what you see from the mid seventies through the mid 19 nineties this group of workers did not do so well. We see stagnant and declining wages. Since the early through mid 19 nineties, icy wages going up. I dont see them being stagnant. There are periods wages are not growing during the 30 year period, yes but on the whole of your choice is to characterize this as stagnant or increasing i think it is quite clear over the last three decades the most accurate way to characterize this that wages have been increasing. Look at this. It is common to go back to 1973. One of the things i want to do in the book is argue the comparisons between 73 and 2020 is too long of a window. But its common to go back to 1973 wages going 20 percent over the call stagnant or spectacular but i wouldnt call it stagnant but i will argue that this debate among wages with thee, policy community often gets hung up on the price index to in just one to adjust for inflation. Really we should be debating the starting year less time debating the price index and more time debating the actual. We are making the comparison over. Why the default of 73 or 79 when there is a 30 year period wages are going up. I argue the start of 1990 because the politicians argue wages have been stagnant for decades and people refer that as their wages those who are currently working. 1973 was 47 years ago for the purpose of a policy debate , more recent year to those who are working seems pretty straightforward. 1990 was a big cycle the summer of 1990 is close to a99 structural break in this series and i mean if you start in 1973, you are conflating a period of stagnation and decline with a period of growth and that is what is to calculate growth over where wages are growing where wages are stagnating and dont conflict if you try to get a handle on what wages are doing. 1990 was roughly 30 years ago you hear talk of several decades that seems like a reasonable time to gole back. But adjusted for inflation one t the ways we could sidestep all the debates is not just go back 50 years if you go back ten years they agree a lot more strongly than if you go back 2 30. So one way not to get mired down in the debate over a shorter time. But even if you do want to go back to the seventies its really not a complete picture to argue wages have been stagnant. Instead you can characterize the two different periods what you should be saying is that wages stagnated throughout the seventies and eighties and the 19 nineties and then since then wages have been growing. That seems to be a much more complete characterization of the behavior. 33 percent growth over the last 30 years. And not fast enough and lets acknowledge but it is more wrong than a right instead of one third of purchasing power so quickly about the price indices that adjust wages using growth the closer you get and not to go back so far. Median wages have grown by 24 percent wages by 10 percent have grown by one third and wages for the 30th ghrcentile are roughly around there as well so worth that workingclass so that is not stagnation if you look at the post tax imposed transfer income it has gone up by 44 percent if you look at the bottom 20 percent you see it has gone up by two thirds and again not stagnant income inequality is stagnant or declining if you look at the income series of that gene coefficient which a Standard Measure of inequality you see a significant increase in the eighties and nineties and since the Great Recession when concern about inequality exploded you say a 7 percent decline using post tax and transfer income if you look at Market Income you see an increase of 2 percent. This is another example of the narrative how it is not kept up with the data and hasnt been true for three decades inequality was growing rapidly in the eighties and nineties but it has been growing much less rapidly. And the ratio of Weekly Earnings of the 90th percentile or those not shown any Significant Growth over that. People care about inequality. And we cover this very briefly this chart shows concern against actual inequalities so Public Perception if they are getting richer versus the actual behavior theres not much of a relationship it actually thats a negative and if you look at this graph this is concern of inequality and wage growth and you can see that wages are growing throughout the 19 nineties and concern is going down. Measured inequality is going up wages are going up. People care more how they are doing than the a actual behavior of the rich poor gap. My third big point life was better decades ago this is very important to me personally. And you can see Significant Growth and conditioning over this. But more seriously they are have a significant about Transportation Safety and the idea that life was somehow better 30 or 40 years ago even for the White Working Class borders on the absurd if you take that argument seriously it is impossible to imagine that anybody would go back in time 40 years ago the matter their current social Economic System is now. Middleclass jobs this shows the hollowing out and you see the employment waffle in the middle with production workers and Clerical Workers these are the jobs with political failures and to see and increase along with high wage jobs with the economic dislocation considerable suffering in the lives of many people and our coalition between expectations and reality. And is very serious with economic. And those constituted 30 percent of total employment and then if you look from 70 to the present that those only constitute 23 percent so that is a significantnt decline. So what happened to these workerss . Oh whole lot ended up moving into a higher income h bracket so the red line shows the share of households making between 35,100,000 has gone down considerably but replaced with households earning more than 100,000 not replaced with those earning less so that story of disruption so i will skip over this in the interest of time that if you focus excessively on the projection one production and clerical jobs then you do see they are declining their total share of employment but then you see there is Significant Growth and other types of middle wage jobs healthcare support occupations transportation, education and training and personal care and services so apparently we need. More chefs. So i wasnt lying. And those Sales Managers are right there at the bottom. The moral of the story Creative Destruction also that it destroys and we hear about the destruction on the creativity but what is happening in the middle wage occupations where Technology Comes along and replaces some workers but that creates a new opportunity and workers need to take an take advantage and in doing so. So that economic change would end up hurting those workers you are trying to help. So rags to riches i wont explain in any great detail but just to see what share of people that are born in the bottom make it to the top and its about 7 percent. What share of people who have learned in the top make it to the bottom . I cannot read that but it looks likekes l 8 percent. Its not common its not the norm or something toot be expected. But you can go from the bottom to the top in america. If you want to look at rags to comfort you see considerably more upward mobility and to end up rising for the middle class at a pretty good clip. The measure of upward mobility is not that relative ranking i just want to ask are you doing better than your parents did . And what i have done is look at people in their forties today and their Household Income if you are 20 something year old today are you earning more than your parents earned when they were the same age . Three quarters of people in their forties today have a higher Household Income than their parents did when they were in their forties. If you were born in the bottom 20 percent, 86 percent of those 40 yearolds have a higher Household Income than the parents had in their forties this should be considered upward mobility. And across those two4 generations and if youre in the bottom 20 percent these are not trivial games. What about earnings . It includes government transfers. So of those that were in their forties how many of them earned more many in the labor and their father earned in his forties . At the bottom its about 80 percent. Because people in their forties were raised the whole lot of them so that central tendency is pushed down and so if you were raised in low income bracket for the working class it is three quarters through 80 percent. How much more for the working class was 30 percent. I have some material prepared on the threat to the American Dream but i will put a hold on that until we get to the discussion so i copied this pretty much verbatim from the Washington Post today really what you should do is buy the book and then by the oped. But i would now like to invite richard read up to the stage i want toer thank richard for doing this. So the ideas on tackling this book are difficult and not straightforward and plenty of reasons for disagreement so thinking about how to put this together, i thought it would be better to have that on display here at the event rather than me present my version of the situation. And i was thinking to myself whos the most thoughtful person i can find to present that compelling counter narrative . He was not available so i asked my friend richard if he wuld come. [laughter] he was happy to do so. [applause] thank you for that kind introduction michael strain has written a clear and compelling and grounded in the wellwritten book so with that agreement then to focus on the useful disagreement and somenk general comments with a broader debate and to focus on those incentives is it true we are pessimistic because its working for us in some way. Lets start with the agreement first of all i agree its an overstatement of what is affecting us the middle class the american carnage i think that is true. In fact wage and Income Growth are solid, not spectacular but not stagnant seems to be the right word to be using an pricing that world war ii economy is a very strong growth followed by stagnation followed by more growth. One of the problems of the debate in the postwar years were the exception when you have the economy that hastice grown at 4 percent per year for 25 years and you will got one get a lot of People Better off. So thataf era of history cast a shadow. Because at some level those who are old enough to remember , that was not the norm but the exception. We believe that trade is good. The china shock was geographically targeted and magnified in certain places and to estimate the impact had less than a one percentage point impact for that ratio. But there is a risk to prosperity to immigration and social harmony through racial animosity. There is a risk from dynamism people needing jobs with a sharp decline in geographical mobility of americans is another reason to worry about dynamism. We agree it is way beyond economic utility with purpose and structure and i strongly agree with michael statement on page 135 the government needs to do more to advance Economic Opportunity to those who need it most. And for areas of disagreement come i dont think he needs to be a fancy government to be anti populist thats for limited government a dim view of democrats and someone with the free market as michael is but it seems to me you can think about it differently because it takes to to tango. The government can survive the Human Capital market and reward risk taking and hard work rather than being opposed with that role of government for what you put out as you balance your way. Too much of one you were will fall so im thinking of less than anxiety for fear of the future and in my home country with a free market arguments of healthcare the great thing is if you never have to worry where your healthcare is coming from and i dont plan on getting to