Prices are rising on the very things that are essential for climbing out of poverty.
A college education has become a necessary passport to financial stability. It’s hard to hold a job if you’re chronically ill. Working full-time is difficult if you can’t pay somebody to watch your child. While a high-definition television is nice, it won’t permanently improve your circumstances. And psychology has told us that the stress of financial instability, of not knowing whether you’ll be able to pay your next bill or get enough hours at work, is part of what makes poverty such a horrible experience. Humans also tend to judge their experiences relative to their immediate surroundings, so the fact that the poor are materially better off than during the Carter era doesn’t offer them much personal solace.
Derek Thompson points out another key distinction:
When you look at the items in red with falling prices, they largely reflect industries whose jobs are easily off-shored and automated. The secret to cutting prices (over-generalizing only slightly here) is basically to replace American workers. If you can replace U.S. labor with foreign workers and robots, you’re paying less to make the same thing. Look back at the items toward the bottom of the graph. Our clothes come from Cambodia. Our toys come from China. Meanwhile, Korea, a world-leader in electronics and auto manufacturing, has the highest industrial robot density in the world. Cheap things aren’t made by American humans.
Now consider education, health, and childcare, the blue sectors above where prices are rising considerably faster than average. These are service industries that employ local workers. They are not, to use the economic term, “tradable.”