The question of the cost of living in the United States is intimately connected to the issue of the so‐​called “wage stagnation,” which is typically blamed on economic liberalization that started under President Carter, gathered steam under President Reagan, and peaked under President Clinton.

According to a 2015 report issued by the Economic Policy Institute, a pro‐​labor think tank based in Washington, D.C., “ever since 1979, the vast majority of American workers have seen their hourly wages stagnate or decline. This is despite real GDP growth of 149 percent and net productivity growth of 64 percent over this period. In short, the potential has existed for ample, broad‐​based wage growth over the last three‐​and‐​a‐​half decades, but these economic gains have largely bypassed the vast majority.”

True, adjusted for inflation, average hourly earnings of production and nonsupervisory employees in the private sector (closest approximation for the quintessential blue‐​collar worker that I could find) have barely changed between 1979 and 2015. In October 1979, average hourly earnings stood at $6.51 or $21.20 in 2015 dollars. In October 2015, average hourly earnings stood at $21.18 – slightly below the inflation adjusted 1979 level.

Looking at the average hourly earnings, however, ignores at least three very important factors: expansion of non‐​wage benefits, fall in the price of consumer goods and rise in price of services, such as education and healthcare.