The Washington Post
Sharp increase in Americans’ wages
GAINS IN INCOME ARE LARGEST IN DECADES Signs that recovery is reaching middle class, poor
Middle-class Americans and the poor in 2015 enjoyed their best year of economic improvement in decades, the Census Bureau reported Tuesday, a spike that broke a long streak of disappointment for American workers but did not fully repair the damage inflicted by the Great Recession.
Median household income, adjusted for inflation, stood at $56,500 in 2015, up from $53,700 in 2014. That 5.2 percent increase was the largest since the bureau started tracking the statistic in 1967. Incomes increased across racial and ethnic groups as well as for both men and women. The gender pay gap narrowed to a record low, with women working full time earning 80 cents for every dollar that men earn.
In addition, the poverty rate fell by 1.2 percentage points, the steepest decline since 1968. There were 43.1 million Americans in poverty for the year, 3.5 million fewer than in 2014. The share of Americans who lack health insurance continued a years-long decline, falling 1.3 percentage points, to 9.1 percent.
The data represents the clearest evidence to date that the nation’s long, slow and topsy-turvy economic recovery has finally begun to deliver prosperity for wide swaths of workers. A combination of forces fueled the gains, including an improving job market, low inflation and rising wages — particularly for low-earning workers who may have benefited from state and local initiatives to boost minimum wages.
At the same time, the Census Bureau report underscored deepening fissures across the country, as some groups of Americans are left behind. All of the income gains effectively came in cities and suburbs, while none of them flowed to rural areas — continuing a trend of economic activity concentrating more and more in a few large metropolitan regions. Previous Census Bureau data has showed that in the years after the Great Recession, America’s leastpopulated counties combined to lose more businesses than they gained.
On health care, states that expanded Medicaid, the health insurance program for the poor, under President Obama’s Affordable Care Act continued to see a decline in their uninsured rate last year at a faster pace than those states that did not expand the program. In states that expanded Medicaid, allowing more low-income people to be eligible, the uninsured rate in 2015 was 7.2 percent. In states that did not expand, the rate was 12.3 percent.
The numbers from the government’s annual report on income, poverty and health insurance complicate the economic narrative underpinning the 2016 presidential election. They were hailed by the Obama administration and by Hillary Clinton, the Democratic nominee, but greeted with silence from Republican nominee Donald Trump, who frequently cites median-income stagnation as a sign of American decline.
“This exceeds the strong expectation that I already had,” Jason Furman, chairman of Obama’s Council of Economic Advisers, said in an interview. “The news here is the growth rates. I’ve read the last 21 reports, including this one. I have never seen one like this, in terms of everything you look at is what you’d want to see or better.”
Some Republicans discounted the improved outlook, saying the overall numbers remain weaker than they should be. House Ways and Means Committee Chairman Kevin Brady (Tex.) said that the number of people still living in poverty is “another disappointing confirmation that too many Americans are still struggling to provide for their families and reach their full potential.”
Still, many conservative economists greeted the data with optimism. James Sherk, an economist with the conservative Heritage Foundation think tank, called the median-income statistics “welcome growth that is long overdue.”
One of Trump’s economic advisers, Stephen Moore, cautioned in an interview that the 2015 increase could be a “blip” that fades in 2016, because the economy is growing slowly, and that the improvement still does not make up for more than a decade of income stagnation.
“It’s a very good thing that we finally have some income growth for middle-class families,” Moore said. “But the most depressing thing about where we stand in America — and I think this is why the Trump phenomenon has taken hold — is that the average American [household] is still poorer today than it was 15 years ago.”
Indeed, despite the gains recorded in 2015, the median income was below the peak median income registered in 1999 — $57,909.
Clinton has argued that the economy is improving under Obama but that working families still need more help to get ahead. Her campaign said Tuesday that the Census Bureau numbers reinforce that view.
“These are really positive numbers by and large. They show real progress,” said Jacob Leibenluft, a senior policy adviser to the Clinton campaign. “This is definitely at odds with the picture that Trump provides.”
Liberal economists said it was encouraging that the gains started with the workers who earn the least. Income grew most for the lowest-earning workers and least for the highest-earning ones, though all income groups experienced improvement.
“We’re finally in the moment when the middle class and some lower-income families are feeling the benefits of economic growth,” said Neera Tanden, president of the liberal Center for American Progress think tank and a Clinton adviser.
Furman, of the White House, credited wage-boosting policy initiatives for some of that increase. “The fact that millions of workers have gotten a raise, as states have raised minimum wages, has definitely had an effect there,” he said.
All told, the gains brought median incomes nearly back to their levels before the recession, after adjusting for inflation. Census Bureau officials said that the 5.2 percent growth rate was not statistically distinguishable from five other previous increases in the data over a 50-year period, most recently the 3.7 percent jump from 1997 to 1998.
Several earlier measures had suggested that 2015 was strong for American workers. Last week, the Agriculture Department released its annual data on hunger in the United States, showing that food insecurity declined substantially last year for the first time since the recession.
Economic growth has lagged in 2016, but the labor market has remained strong, suggesting continued income gains. The unemployment rate declined to 4.9 percent last month. Adjusted for inflation, wages for full-time workers were up by nearly 2 percent in the first half of the year, compared with the same point in 2015.
The University of Michigan’s consumer sentiment index is slightly down from last year, but it remains near its pre-recession high.