Yesterday we received some welcome news from the Census Bureau (PDF). Between 2014 and 2015 median incomes rose for the first time since 2007:
Summary of findings:
• Real median household income increased 5.2 percent between 2014 and 2015.1 This is the first annual increase in median household income since 2007.
• The number of full-time, yearround 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.For most demographic groups, the 2015 income estimates were statistically higher than the 2014 estimates.
All of that is good news and, well, good news is better than bad news.
How good is the good news? Not particularly:
- Real median household incomes remain below the level they were in 2007.
- In 2007 they were below the level they were in 1999.
- In other words from an income standpoint (which interests me a lot more than GDP) we’ve barely recovered from the recession of 2001-2002 let alone the Great Recession.
- Fewer Americans are employed now than were in 2007. That’s in absolute numbers not just percentages.
- The highest income earners have become considerably richer while those in the bottom half of income earners are worse off than they were 15 years ago.
- Neither political party shows much interest in changing things.
In my view much of that is because both of our political parties are ideological rather than pragmatic and ideology doesn’t take you too damned far. The alternative view is that both political parties are pragmatic and have been successful at accomplishing their goals. That’s just too cynical for me.
Those high numbers in 1999 and (about) 2006 coincide with bubbles. Depending upon where you draw your line in order to account for the lows and highs, I suspect we are not that far off from what you would anticipate with steady non-bubble growth, but rather just a bit low. I agree that too much has gone to the top, but given the bipartisan support for this, and given that the wealthy now own the media and the think tanks AND have only members of their own class running for POTUS, not much optimism about changing this.
Steve
It beats the alternative, to be sure. But to carry Steve’s point to its conclusion, we have a bubble today as well. In fact, 2015 is really the last year before things flattened in the public equities markets.
What to use as a baseline is a difficult judgment. Personally I’d say post the Great Inflation and globalization. I wouldn’t therefore draw a line that results in 2015 incomes just below trend.
We always seem to come back to two issues in these posts: stagnant incomes driven to a material extent by immigration and imports, vs improved purchasing power due to competition and imports. And the Fed transferring incomes from savers and their fixed income securities, to equity holders.
Wouldn’t be the first time the pragmatic serving their core constituency’s interests have used the ideologues.
Steve and Guarneri bring up a good point: what do you use as the baseline? 2007? 1999? Why not 1982? Or 1973?
There’s actually a good reason to use 1973. Real median hourly wages have been basically flat since then. Household incomes rose between 1973 and 1992 because with women coming into the workforce there were more incomes per household. There’s something that doesn’t get enough attention. Most women haven’t entered the workforce for reasons of self-realization. That’s an upper middle class conceit. They’ve been driven in by economic necessity or in an attempt at maintaining a standard of living.
None of this changes the reality that there’s been a bipartisan consensus to ensure that wages remained low.
Well, now that women are in the workforce, I’d say we should boost household income again by employing more children. It would also greatly reduce childcare costs. What’s not to like?