Poorer than your parents?

Brink Lindsey writes,

The huge wave of Hispanic immigration over the past generation has been good for the immigrants and their families, and good for the country as a whole. But this big influx of relatively low-skilled immigrants has to have depressed median income compared to what it otherwise would have been. Unfortunately, I’m not aware of good studies that quantify the effect.

But there is a much deeper problem, I think, than the comparison of demographic apples and oranges. And that is the comparison of purchasing power apples and oranges.

The issue here is the one of calculating “real income” in constant dollars. The problems associated with such calculations are usually framed in terms of correcting for inflation — i.e., for changes in the overall price level. But a far bigger problem, especially when you are comparing incomes over relatively long time periods, is that an increasingly major component of purchasing power in the later time consists of the power to purchase goods that weren’t available at any price in the earlier time.

...Do what you want as far as adjusting for inflation, but there’s still the problem of all the goods that simply weren’t available back then: personal computers, the World Wide Web, cell phones, cable and satellite TV, DVDs and iPods, airbags, anti-lock brakes, automatic teller machines, aspertame, LASIK surgery, CAT-scans, home pregnancy test, and ibuprofen, just to name a few.