Tuesday, September 13, 2016

American income booms, poverty shrinks. But inequality persisting

Here is a lead I bet you didn’t expect to read today.
After eight lean years, Americans finally got fatter paychecks in 2015 — their first significant hike since 2007 and the biggest since record keeping began in 1968. The U.S. median household income rose 5.2% to $56,516, the U.S. Census Bureau reported Tuesday.
That sounds pretty good, almost too good to be true. Let’s take a look inside of the Census Bureau’s release to get the numbers behind the headlines.
Real median household income increased 5.2 percent between 2014 and 2015. This is the first annual increase in median household income since 2007.

•The number of full-time, year-round workers increased by 2.4 million in 2015.

•The official poverty rate decreased by 1.2 percentage points between 2014 and 2015.

•The number of people in poverty fell by 3.5 million between 2014 and 2015.
And even the “first annual increase since 2007” line is misleading in a good way, because the Census Bureau actually means it’s the highest inflation-adjusted household income since ’07 (we had an increase real household income in 2013, though it’s a bit confusing because on top of any increase was a boost of $1,700 that year because of changes in how “income” was defined to the sampled population).

What I found heartening inside the Census Bureau report is that some of those reported income gains got distributed across the spectrum of Americans, instead of just going to the rich. Don’t get me wrong, 2015 was yet another good year for rich people (in fact, the share of income going to people making $200K or more jumped from 5.7% to 6.1%, the highest level since the Census Bureau started tracking this stat in 1967), but finally everyday Americans ended up better off as well.

Median household income, US 2015
10th percentile $13,239 (UP $969 vs 2014)
20th percentile $22,800 (UP $1,343)
40th percentile $43,511 (UP $2,278)
60th percentile $72,001 (UP $3,711)
80th percentile $117,002 (UP $4,611)
90th percentile $162,180 (UP 4,520)
95th percentile $214,462 (UP $7,656)

A big caveat with these gains by individuals in the 20th and 40th percentiles is that this merely returns their inflation-adjusted incomes back to where they were in 2007-2008, just as the Great Recession started to hit. By comparison, the 80th, 90th, and 95th percentiles have never been higher, even during the dot-com Bubble years of the late ‘90s. On the other side, the 10th percentile is still a lower figure than it was 20 years ago, even with last year’s sizable increase. So if many people worry that they’re still struggling to maintain the same standard of living that they had 10 years ago, and feel angry that the rich continue to get further ahead, they’re correct to feel that way.

But those low-end gains are still a nice reversal from what we had seen in recent history, and it helps to explain how the poverty rate had its largest one-year drop since the beginning of the Great Society in the 1960s, Poverty is now at its lowest levels since 2008, and it appears that Wisconsin had a similar nationwide drop, with a 3-year estimate of 11.9% in poverty compared to 13.2% in 2014, if you dig inside the state averages which are buried within the Census Bureau's data tables.

However, as good as these Census Bureau stats are (and make no mistake, these are great numbers), they also remind us of the hole that Bush’s Great Recession slammed into this country, because it takes a massive bump in income and drop in poverty just to get back to where we were at the end of the 2000s. And now that we’ve seen what kind of damage such a Bubble-popping recession can cause, I think it has made many of us less trusting of the sustainability of any economic growth, let alone any gains that we might get from it. A lack of trust that is probably warranted, by the way.

It looks like we’ll get more info with more details on the state level for income tomorrow, so look for that. But it’s worthy to know that as a presidential election approaches, Barack Obama is set to hand off an economy that had a great 2015, and has largely gotten back to where it was before the Great Recession hit. Now, some groups are still struggling while the rich are doing better than ever, but things look a whole lot better in this country than it did on this date 8 years ago, when Lehman Brothers was in the process of going bankrupt over the weekend. And we better not forget that fact.

1 comment:

  1. The country is doing better as a whole, but I have a sense that Wisconsin is still lagging far behind. I don't believe median income is going up in this state. Even if it is, cost of living is increasing at a quicker pace.