August 29, 2007
Editorial / new York TIMES
A Sobering Census Report: Americans' Meager Income Gains
The economic party is winding down and most working Americans never
even got near the punch bowl.
The Census Bureau reported yesterday that median household income rose
0.7 percent last year — it's [sic!] second annual increase in a row—
to $48,201. The share of households living in poverty fell to 12.3
percent from 12.6 percent in 2005. This seems like welcome news, but a
deeper look at the belated improvement in these numbers — more than
five years after the end of the last recession — underscores how the
gains from economic growth have failed to benefit most of the
population.
The median household income last year was still about $1,000 less than
in 2000, before the onset of the last recession. In 2006, 36.5 million
Americans were living in poverty — 5 million more than six years
before, when the poverty rate fell to 11.3 percent.
And what is perhaps most disturbing is that it appears this is as good
as it's going to get.
Sputtering under the weight of the credit crisis and the associated
drop in the housing market, the economic expansion that started in
2001 looks like it might enter history books with the dubious
distinction of being the only sustained expansion on record in which
the incomes of typical American households never reached the peak of
the previous cycle. It seems that ordinary working families are going
to have to wait — at the very minimum — until the next cycle to make
up the losses they suffered in this one. There's no guarantee they
will.
The gains against poverty last year were remarkably narrow. The
poverty rate declined among the elderly, but it remained unchanged for
people under 65. Analyzed by race, only Hispanics saw poverty decline
on average while other groups experienced no gains.
The fortunes of middle-class, working Americans also appear less
upbeat on closer consideration of the data. Indeed, earnings of men
and women working full time actually fell more than 1 percent last
year.
This suggests that when household incomes rose, it was because more
members of the household went to work, not because anybody got a
bigger paycheck. The median income of working-age households, those
headed by somebody younger than 65, remained more than 2 percent lower
than in 2001, the year of the recession.
Over all, the new data on incomes and poverty mesh consistently with
the pattern of the last five years, in which the spoils of the
nation's economic growth have flowed almost exclusively to the wealthy
and the extremely wealthy, leaving little for everybody else.
Standard measures of inequality did not increase last year, according
to the new census data. But over a longer period, the trend becomes
crystal clear: the only group for which earnings in 2006 exceeded
those of 2000 were the households in the top five percent of the
earnings distribution. For everybody else, they were lower.
This stilted distribution of rewards underscores how economic growth
alone has been insufficient to provide better living standards for
most American families. What are needed are policies to help spread
benefits broadly — be it more progressive taxation, or policies to
strengthen public education and increase access to affordable health
care.
Unfortunately, these policies are unlikely to come from the current
White House. This administration prefers tax cuts for the lucky ones
in the top five percent.
{would Hillary be any different?]
--
Jim Devine / "In the years since the phrase became a cliché, I have
received any number of compliments for my supposed ability to 'think
outside the box.' Actually, it has been a struggle for me to perceive
just what these 'boxes' were — why they were there, why other people
regarded them as important, where their borderlines might be, how to
live safely within and without them." -- Tim Page (THE NEW YORKER,
August 20, 2007).
