Pay­checks hit high for mid­dle class

ME­DIAN IN­COME UP 3.2% TO $59,039 IN 2016 But Cen­sus Bu­reau re­port shows wor­ry­ing dis­par­i­ties

The Washington Post - - FRONT PAGE - BY HEATHER LONG

The in­comes of mid­dle-class Amer­i­cans rose last year to the high­est level ever recorded by the Cen­sus Bu­reau, as poverty de­clined and the scars of the past decade’s Great Re­ces­sion seemed to fi­nally fade.

Me­dian house­hold in­come rose to $59,039 in 2016, a 3.2 per­cent in­crease from the pre­vi­ous year and the sec­ond con­sec­u­tive year of healthy gains, the Cen­sus Bu­reau re­ported Tues­day. The na­tion’s poverty rate fell to 12.7 per­cent, re­turn­ing nearly to what it was in 2007 be­fore a fi­nan­cial cri­sis and deep re­ces­sion wal­loped work­ers in ways that were still felt years later.

The new data, along with an­other cen­sus re­port show­ing the rate of Amer­i­cans lack­ing health in­sur­ance to be at its low­est ever last year, sug­gest that Amer­i­cans were ac­tu­ally in a po­si­tion of in­creas­ing fi­nan­cial strength as Pres­i­dent Trump, who tapped into anger about the econ­omy, took of­fice this year.

Yet the cen­sus re­port also points to the sources of deeper anx­i­eties among Amer­i­can work­ers and un­der­scores threats to con­tin­ued eco­nomic progress.

Mid­dle-class house­holds are only now see­ing their in­come eclipse 1999 lev­els.

In­equal­ity re­mains high, with the top fifth of earn­ers tak­ing home more than half of all over­all in­come, a record. And yawn­ing racial dis­par­i­ties re­main, with the me­dian African Amer­i­can house­hold earn­ing

only $39,490, com­pared with more than $65,000 for whites and over $81,000 for Asians.

Econ­o­mists and pol­icy ex­perts won­der whether the gains will con­tinue. The me­dian in­come had surged since 2014 be­cause mil­lions more Amer­i­cans found full-time jobs, but there is lit­tle ev­i­dence that em­ploy­ers are rush­ing to of­fer raises to those who al­ready are em­ployed. With­out more wage gains, mo­men­tum could slow.

Mean­while, the rate of peo­ple with­out health in­sur­ance de­clined only slightly last year, to 8.8 per­cent, the Cen­sus Bu­reau said.

The Trump ad­min­is­tra­tion is widely ex­pected to cut back on pro­grams that pro­mote en­roll­ment un­der the Af­ford­able Care Act, mean­ing that the ranks of the 28.1 mil­lion unin­sured Amer­i­cans might grow.

“There’s a dan­ger that this is as good as it gets,” said Peter At­wa­ter, pres­i­dent of Fi­nan­cial In­syghts. “We are al­ready at a 16-year low in un­em­ploy­ment. The like­li­hood of sig­nif­i­cant job growth from here is lim­ited.”

Trump promised that a com­bi­na­tion of tax cuts, in­fra­struc­ture in­vest­ment pack­ages, rene­go­ti­ated trade deals and the re­peal of Obama ad­min­is­tra­tion reg­u­la­tions would de­liver a burst of job cre­ation and at­ten­dant eco­nomic growth.

So far, no such boom can be found.

In Trump’s first seven months, the U.S. econ­omy has added about 25,000 fewer jobs per month than it did dur­ing the last seven months of Barack Obama’s pres­i­dency. In a more pos­i­tive sign, the gross do­mes­tic prod­uct grew at an an­nual rate of 3 per­cent in the sec­ond quar­ter of 2017, ac­cord­ing to a fed­eral re­port is­sued in late Au­gust.

Much of Trump’s agenda re­mains pend­ing, how­ever, either await­ing ac­tion by his ad­min­is­tra­tion or bogged down in Congress. And while most econ­o­mists think it is too early in Trump’s term for his ad­min­is­tra­tion to have a mea­sur­able ef­fect on the econ­omy, there are real doubts about whether he will be able to en­act his agenda, par­tic­u­larly af­ter his health-care ef­fort died in the Se­nate. Both his tax re­form and in­fra­struc­ture ef­forts face sig­nif­i­cant hur­dles in Congress.

“Where is the ex­tra progress go­ing to come from? You have grow­ing un­cer­tainty that Wash­ing­ton will be able to cre­ate any sort of tax re­lief or in­fra­struc­ture plan,” At­wa­ter said.

For now, though, the econ­omy is re­turn­ing to pre-re­ces­sion lev­els, as in­di­cated by sev­eral bench­marks. The na­tional un­em­ploy­ment rate was 4.4 per­cent in Au­gust, just about the same as pre-re­ces­sion lev­els. And in July, U.S. em­ploy­ers had gen­er­ated enough jobs to re­store na­tional em­ploy­ment to where it stood be­fore the re­ces­sion started in 2007, even af­ter ac­count­ing for pop­u­la­tion growth in the in­ter­ven­ing decade.

The house­hold earn­ings are wel­come news for the mid­dle class, which, af­ter leaps for­ward in the 1990s, strug­gled amid the slow over­all growth of the early 2000s and was dev­as­tated by the re­ces­sion.

The in­come in­crease ex­tended to al­most ev­ery de­mo­graphic group, Cen­sus Bu­reau of­fi­cials said. The fig­ure the agency re­ported Tues­day was the high­est on record. The agency re­ports that in 1999, me­dian house­hold in­come, ad­justed for in­fla­tion, was $58,655. Agency of­fi­cials cau­tioned that the bu­reau changed its method­ol­ogy in 2014, com­pli­cat­ing an ex­act his­tor­i­cal com­par­i­son.

Ju­lian West, of Phoenix, is one of the many Amer­i­cans whose lives im­proved dra­mat­i­cally last year.

For much of the re­cov­ery, he could find only “dead-end” min­i­mum-wage jobs at car­washes and dis­count stores.

“I was re­ally strug­gling,” said West, 44, who was forced to move back in with his par­ents.

In 2016, he went to a temp agency in Phoenix and landed a job that paid $18 an hour. It did not last, but the re­cruiter called again and moved him to the job he has now at BB&T Bank mon­i­tor­ing car-loan pay­ments and re­pos­ses­sions. The job pays $16 an hour, with am­ple op­por­tu­nity for over­time pay, he said.

“I’m slowly sav­ing and pay­ing off bills,” West told The Wash­ing­ton Post. He re­cently moved into a small stu­dio apart­ment, now that he’s earn­ing $35,000 a year. “I’ll be mid­dle class again if I keep my spend­ing to bare bones.”

West cred­its Obama with bring­ing the econ­omy back. He did not vote for Trump, but he hopes some­one with the busi­ness ex­pe­ri­ence of the pres­i­dent can help the work­ing poor.

Many Amer­i­cans are op­ti­mistic, as West is, that their for­tunes will con­tinue to im­prove. A Gallup poll re­leased Tues­day found that 64 per­cent of Amer­i­cans think their “stan­dard of liv­ing” is im­prov­ing, the high­est per­cent­age since the fi­nan­cial cri­sis, while only 19 per­cent feel their stan­dard of liv­ing is de­clin­ing.

“To­day’s cen­sus re­port is un­am­bigu­ously good news: on in­come, on poverty and on health in­sur­ance,” said Bob Green­stein, the founder and pres­i­dent of the Cen­ter on Bud­get and Pol­icy Pri­or­i­ties, a left-lean­ing think tank. “The goal should be to con­tinue this progress.”

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